Funnel Vs. Flywheel: Which model is right for your business?

If you’ve been in business long enough, you’re almost certain you know the purchase funnel by heart. Perhaps, to the point where you visualize potential customers moving...

Iss Bautista
Iss Bautista July 12, 2019

If you’ve been in business long enough, you’re almost certain you know the purchase funnel by heart. Perhaps, to the point where you visualize potential customers moving through a vertical plane pulled by the relentless gravitational force that is your marketing and sales strategy.

But sometimes, in our pursuit of refining our methodologies to attract more customers, we forget about the actual customer experience. Nowadays, buyers no longer move on a linear path. They are moving back and forth, coming from all directions, and interacting with brands in ways that don’t always apply to the funnel. Plus, there’s a growing distrust of marketers and salespeople.

The antidote to this, as modern marketers and business thinkers have found, is the flywheel model, a new approach to doing business or converting leads. In this model, businesses don’t need to rely on age-old efforts or come up with new ways to widen the funnel. Customers themselves are the force that drives all aspects of business, including service, marketing, and sales. All you need to do is keep the momentum going and eliminate friction—things that slow down the customer experience—whatever that entails.

The flywheel works on the premise that all the energy you spend on keeping customers satisfied will power other important aspects of your business, including revenue growth and scalability. Placing customers at the center of your business will set everything in a smooth, if not effortless, motion.

Sounds like the be-all-end-all model, doesn’t it?

The real answer, though, is still a maybe. So we don’t recommend switching from the funnel to the flywheel just yet. Because your business might just be better off sticking to the proverbial sales funnel.

Allow us to break that down for you:

How the Flywheel Model Works

In mechanics, a flywheel serves as a rotational reservoir of kinetic energy. When a force is applied to the flywheel, it stores surplus energy and, when needed, releases that energy in the form of torque. Flywheels stop due to friction and air resistance. Likewise, they will keep spinning so long as you apply force to them.

As powerful a metaphor a flywheel is, in business, it follows a simple equation:

  1. Identify the biggest areas of opportunity or highest performing aspects of your business.
  2. Weed out the elements that are slowing down your growth.
  3. Apply more force to the strongest areas of your business.

For example:

You discover that your target market is particularly keen on a seamless customer service and would pay a premium on businesses that provide this experience. If you subscribe to the flywheel model, what you’ll do is simplify the steps your customers need to do to get the support they need. Instead of shuffling them from one department to another, as you would with a funnel, train each team to deliver a great customer experience on-the-fly, or invest in chatbots, live demos, and other direct forms of support. This approach is more holistic and proves to be effective across all kinds of customer interactions.

flywheel business model for better growth

The flywheel model ties business growth to customer success. Effort is sustained or increased incrementally throughout the customer experience. 

Simply put, a flywheel model will aim to adjust business processes to fit the needs and desires of customers, because they make up the biggest driving force to success. As HubSpot points out, the goal is to find the most effective and efficient way to attract, engage, and delight customers.

But let’s get things straight. This is not just an assumption. There is, in fact, a wealth of data that supports the feasibility of the model. A Harvard Business Review study reveals that 57% of B2B purchase processes are completed even before buyers reach out to vendors. A bulk of what influenced these customers to convert are third-party review sites, word-of-mouth, and peer-to-peer recommendations. This ties into the fact that 81% of today’s consumers trust their friends’ and families’ opinions more than a business’ advice. And as consumers gain unprecedented access to information to influence their buying decisions, brands will have to scramble to come up with a more transparent and sincere strategy.

Customer value is at the core of every flywheel business. Keep pushing that positive experience and you’ll create a loop of compounding returns on your sustained effort.

Amazon’s early version of the flywheel, as described by Brad Stone, is a typical example. It goes like this:

“…lower prices led to more customer visits. More customers increased the volume of sales and attracted more commission-paying third-party sellers to the site. That allowed Amazon to get more out of fixed costs like the fulfillment centers and the servers needed to run the website. This greater efficiency then enabled it to lower prices further. Feed any part of this flywheel, they reasoned, and it should accelerate the loop.”

But like all business models, the flywheel also comes with a caveat. If you misplace your efforts, all that energy will get wasted or be counterproductive. If you’re hell-bent on making the switch, make sure your entire business can be aligned around the flywheel, and that you have the resources and people to support the change.

In Defense of the Funnel

So does this mean that the purchase funnel has become a relic that it needs to be replaced entirely? Is the flywheel the growth model of the future?

The answer? It depends.

There are many businesses that prefer to go the linear path and still succeed tenfold. One advantage of the funnel is that it has well-defined stages that describe a customer’s relationship with your business. This lets you tailor your messaging and adjust your engagement based on where they are in their buying journey.

sales funnel mapping the buying journey

While the funnel works as a unified whole, businesses implement specific strategies for each stage of a customer’s decision process. 

This model has been around since the 20th century for a reason. For one, it’s simple and easy to follow. And, more importantly, it provides a clear direction on how you should allocate your effort and resources. The funnel is also a dependable and adequate representation of how people buy things or hire services in real life, and sometimes, that’s all a business needs.

HubSpot argues that with the funnel, customers tend to be an afterthought. But this doesn’t have to be the case. Sometimes, all it takes is to rethink which strategies should go to which stage of the funnel.

For example, if your business is still gaining ground, consider allocating more resources to your top-of-funnel activities in a way that you’re not only building awareness, you’re also generating buzz and building demand. This way, you’ll boost your chances of capturing more qualified leads. Traditionally, sales efforts come in only at the bottom of the funnel, when they can be at the middle of the funnel to expedite the movement from the interest and consideration phases to intent and conversion. This goes in line with the findings that customers may already have plenty of knowledge of a brand, through referrals and word-of-mouth, even before they get in touch with a sales rep.

The sales funnel can also be treated as more of a “rinse and repeat” framework instead of an end-to-end process. And this makes sense because, let’s face it, even your most loyal customers will forget about you at some point, which means you’ll have to re-engage, or bring them back to the top of the funnel whenever you introduce new products or developments.

So Which Model is Better?

sales funnel vs. flywheel inbound sales and marketing

Both the funnel and flywheel are powerful inbound frameworks of converting leads into sales.

Each has its own strengths, as well as inherent risks. The funnel leaves plenty of room for chance while the flywheel builds on what your business already has. The funnel casts a wider net to capture as many leads and uncover as many opportunities as possible, while the flywheel places all the bets on making customers happy and letting them do a bulk of the marketing. Either way, they both keep the conversation going and generate a response from consumers.

When choosing the right model to use for your sales and marketing strategies, you should first look into your operational process and see if it is simple enough to sustain value, and if it can effectively manage change.

Think about it: if your business relies on less-than-honest tactics to reel consumers in, expect them to walk out the door and complain to their peers about the experience. Trust erodes when you focus on closing deals instead of serving your customers, and more importantly, if you’re unable to deliver on the promises your marketing and sales teams are making.

The complex behavioral and cognitive process today’s buyers go through is not easy to pin down, let alone plan for. But one thing is for sure: both the funnel and the flywheel both ensure you’re not throwing shots in the dark.

Also, it’s one thing to draw up a conceptual model and another to apply it in real life. Your strategy and operational processes must be aligned so you can achieve real growth. And finding alignment is more cultural than procedural. It involves getting leadership buy-in and effectively on-boarding all departments. It’s also imperative to have the technology that allows all aspects of your business to run a healthy and balanced sales pipeline. Lastly, nothing beats the power of a satisfied workforce. Keep your employees engaged, connected, and committed so you’ll have more ambassadors spreading the word about your brand.

Need help refining your marketing strategy? Speak to a chief marketing officer at Growth Rocket and discover ways to streamline your customer experience for growth.

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