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Why The Flywheel is Replacing the Marketing Funnel

If customer journey mapping is important to you, you may want to get familiar with the flywheel to understand why the marketing funnel is on its way out.

Screen Shot 2018 09 18 at 6.26.32 PMImage Source: TheBritAgency

The “flywheel” has been a popular topic in marketing conversation lately. It’s not a new concept, but within the last year, Hubspot officially declared the funnel dead—replaced by the flywheel—and tweeted videos of marketers blending funnels to smithereens.

 

So what does this mean for small business owners?

 

You’ve likely already noticed that your marketing map looks different now. The vast availability of information as well as purchasing options has reshaped the customer journey. For the sake of marketing, it might be time to reshape your funnel as well.

The Flaws of the Funnel

Saying goodbye to the funnel will be a challenge for many marketers. After all, the concept has been around for over a century.

 

In 1898, E. St. Elmo Lewis developed an advertising concept that moved from awareness to action. By 1924, William W. Townsend proposed visualizing this concept “through a funnel…[which] has helped many salesmen to lead a customer from Attention to Interest, and beyond.”

 

The funnel mentality attracts a wide range of prospects and a small number of buyers. However, the funnel fails to place the customer at the center of the marketing process.

 

When you visualize a funnel, there is no way for buyers who leave the bottom opening to re-enter at the top. Thus, funnel-minded marketers care very much about pushing prospects through the bottom, but don’t consider what happens after the sale is made.

 

While this is the only way a funnel can work in the physical world, in the business world, this is a flawed way of thinking. All marketers know that customers who come out the bottom will directly impact the prospects who enter the top. In other words, the funnel fails to consider the attitudes and experiences of repeat customers or referring customers—for better or for worse.

 

Funnels produce customers, but they don’t consider how customers can help you grow.

 

One individual reflected on a company whose boss was so funnel-minded, that they focused on only one quarter and then “started the next quarter from a standstill with no momentum and no leverage.” The funnel prioritized sales over customer service and stored zero energy for growth.

What is the Flywheel?

The flywheel, on the other hand, is a device that depends on stored energy.

The flywheel was initially used by James Watt to power his steam engine. The machine is incredibly energy-efficient, storing rotational energy in order to power its own movement.

 

Flywheels are a powerful metaphor for businesses, because unlike the funnel (that loses all energy once the sale is made), flywheels can continue to power growth by engaging and delighting current customers.

 

This metaphor also accounts for a loss of energy—we know that customers who leave the funnel unhappy will negatively affect the number of prospects who enter the funnel from the top. The flywheel accounts for both force and friction, which affect the speed and momentum of your business.

 

The flywheel represents a circular process where customers fuel growth.

 

Once your flywheel starts turning, you don’t have to continually pour stuff into it (like you would with a funnel). Instead, your happy customers apply force, either through buying again or referring friends. It’s your job to make your business efficient and your customers will put the energy back into it through advocate marketing.

funnel-to-flywheel

Image Source: Hubspot

Building Momentum

To put a flywheel in motion requires tremendous effort. In other words, your first few marketing efforts are really hard. However, the beauty of the flywheel is that it gains momentum as you gain customers and keep improving.

 

Because flywheels leverage momentum it’s to your advantage to invest in long term strategies rather than short term gimmicks.

 

If you’ve been around for a little while, odds are, you already have some of these forces in place: evergreen content, quality backlinks, social media followers, etc. Building up assets like these will propel your flywheel to spin faster and drive more business.

 

Feeding any part of the flywheel will accelerate its loop. Whether you are attracting new customers, engaging with current prospects or delighting advocates, you are increasing momentum.

 

As long as you can keep your flywheel spinning and eliminate forces working against it, your business will never lose momentum.

Eliminating Friction

In your business, you’ve accepted that some customers will churn. However, it’s important to eliminate as many points of friction as possible in order to reduce churn and maintain momentum in your flywheel.

 

When we discussed the flaws of the funnel, we mentioned that what goes out can not go back in. We know that this is not entirely true (thus, the flaw). Customers who leave your funnel will positively or negatively impact what comes back in your funnel. Thus, the flywheel is a more accurate metaphor for churn and word of mouth.

 

Flywheels maintain their momentum unless another force works against it. Wherever possible, you need to eliminate friction by simplifying your processes and focusing on customer service.

 

Take all friction out of your purchasing processes. In today’s world, this is pretty easy to do—and it doesn’t cost that much either. Offer a free trial or product as an entry. Invest in IT resources that make customer touch points more efficient. Allow for online purchases and hassle-free returns. Automate repeatable tasks and restructure when necessary.

 

Since customers are the energy that propels your flywheel, any hiccups in customer service will drastically slow your momentum. Train all personnel to put the customers first—sales and service teams must be aligned on this front. The customers will notice if they’re not. Minimize handoffs in customer interactions and provide venues for self-service customer solutions.

Be available 24/7. Educate, connect and delight prospects at every stage of the buyer’s journey.

 

Even if customers leave you, they should have a positive experience on the way out. Besides, they could still recommend your product later.

Customer-Centric Processes

It’s up to you to improve the efficiency of the flywheel by eliminating friction, but customers are the ones who add energy. You will build up marketing and sales opportunities to draw in your first customers. Afterwards, your focus needs to be on delighting current prospects and buyers, so they keep the wheel turning.

 

Customers really are the best marketers you have—in many cases, customers are even better marketers than you are! Rather than try to delete Google reviews or fabricate your online reputation, give customers the tools they need to be successful marketers.

 

Today, customers have about the same information as sales reps. If they have questions about your product, they will Google it. And if the answers aren’t there, they won’t keep looking. It’s up to you to provide meaningful content that drives customers from delight in their interest to delight in their purchase.

 

Then, continue to place customers at the center of your marketing efforts, the center of your organization. This will drive growth. Build meaningful relationships with existing customers by communicating and educating at every stage of the game. The flywheel metaphor recognizes that there is no end to your customer’s conversion process. There is always opportunity for repeat business and word of mouth referrals.

 

In the funnel, the customers are an afterthought. In the flywheel, the customers are the center.

The Funnel is not Obsolete

While the flywheel really is a stronger metaphor for customer-driven growth and marketing, it is not a complete replacement for the funnel.

 

There are many sales, marketing and conversion processes that still resemble a funnel shape in your metrics. This data is invaluable in optimizing processes and having a clear view of your growth potential. But it ought to be thought of in the larger flywheel mentality.

 

Evaluate these funnel-shaped charts in order to make your processes more effective for your customers. Remember, the flywheel is customer-centric. Through every step of the purchasing process, you need to delight customers, even if those customers do not convert.

 

The flywheel does not replace all funnels, but it is an important change in mindset. Flywheels help to align business forces in a way that measurably impacts the customer’s experience. While the funnel has a linear approach to measuring growth, flywheels are cyclical.

 

You can—and should—adopt flywheel-thinking in a way that best represents the cycle that will benefit your business.

Create your own Flywheel

While the popular Hubspot flywheel emphasizes Attracting, Engaging and Delighting, you can adapt the cycle to reflect the processes that work for your business.

 

Amazon’s initial success is famously attributed to flywheel-thinking: attracting customers through low prices thus driving sellers to a loyal audience. The process was cyclical—and for Amazon, it worked.

 

For your business, start by identifying and eliminating points of friction that are working against your momentum. Then, increase customer forces by focusing on impeccable service. And of course, build an unbelievable product.

 

Remember, funnels lose momentum, but flywheels do not. Instead, they leverage their momentum to keep spinning. Any efficiency you build into your flywheel will increase customer-driven energy, creating an unstoppable momentum.

 

 

1 Comment

  1. Martin Lindeskog

    Jaren: Have you read the book, Flip the Funnel: How to Use Existing Customers to Gain New Ones, by Joseph Jaffe? I will link to your post in the next issue of my newsletter, Lyceum Bulletin. As a former purchaser and a certified networker (working according to the referral marketing process, “know – like – trust – ref.,” I have had a hard time to accept the “numbers game” idea of the funnel.

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