Why the Flywheel Model Has Replaced the Funnel and How to Create Your Own

4 years ago

The flywheel has replaced the funnel because it helps your business grow faster and more efficiently. Not a bad reason, right? 

What’s wrong with the funnel?

You’re probably familiar with the traditional sales funnel. It represents your customer’s journey and it begins with your marketing efforts. If these are successful, ecommerce customers may choose to make a purchase, while other prospects will be passed onto your sales team. Sales, sometimes supported by your customer service team, will then do their best to convert those prospects into customers. 

sales funnelAfter that if you want more customers you need to start all over again. You may get some repeat custom but the funnel doesn’t make good use of the leads and customers you’ve worked so hard to get.

Funnels lose the energy put into them once you reach the bottom. The momentum is lost and to drive more business you need to start again from scratch. 

The fact is that the funnel is out of date. Which is not surprising given the fact it was thought up back in 1898, by E. St. Elmo Lewis. It was a great idea at the time, which is evident as it has lasted until very recently - and of course many businesses still use it. But it is outdated.

The funnel’s linear approach to business growth is its weakness and what makes it inefficient. It doesn’t reveal any momentum that is created during marketing and sales processes, nor the drag created where these processes could be improved.

And the funnel doesn’t work anymore because it’s not customer-centric. With the funnel customers are no more than an output, and in the 2020s customers demand more. In fact according to HubSpot’s CEO Brian Halligan, bad customer experience is now a greater business threat than competitors. 

So, what is the flywheel?

The flywheel is a much more suitable metaphor for the acquisition of business today. It’s not just a different word for the same thing. It’s a new way to think about your business, which will help you make different decisions and adjust your strategy to give more value to customers and help you grow more quickly and efficiently.

Why the Flywheel Model Has Replaced the Funnel and How to Create Your Own
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The flywheel concept was launched by the aforementioned Brian Halligan at HubSpot’s INBOUND 2018 conference, 120 years after its predecessor was thought up (although Halligan first heard the term used in a marketing/sales sense by Amazon’s Jeff Bezos). You can find Halligan’s full keynote speech here.

The HubSpot flywheel only effectively replaces the funnel when it uses the inbound marketing methodology to attract, engage and delight customers. Using an inbound marketing strategy you can apply effort to get the flywheel spinning (drive leads), reduce friction where it exists (inefficient processes) and gather momentum (by providing an amazing customer experience). 

What are the benefits of using a flywheel?

If you use a funnel in your business it’s probably time to think about moving to the flywheel model. Why exactly? 

Leverage momentum

The flywheel means you can make use of the valuable momentum you’ve built up with marketing and sales efforts. Rather than let this energy dissipate, it can be used to drive more sales and create more leads through referrals and repeat business. Plus, if you exert more energy your flywheel spins faster, creating more opportunity for growth.

Improve word-of-mouth & referrals

Word of mouth recommendations, referrals and third party review sites are incredibly important for businesses today. Focusing your approach on the flywheel and inbound marketing means optimising your chances of creating delighted customers, who will be happy to promote your brand, sending more business your way.

Optimise internal processes

The flywheel model helps to eliminate friction between your teams when leads have to be handed over - and it minimises how often this is necessary. Direct customer feedback is a great way to improve your processes and reduce points of friction.

Delighting customers matters

Why does delighting customers matter so much? Because delighted customers are the biggest driver of business growth today. So says Brian Halligan, and this is something he’s thought about! Rather than being an afterthought - an output of the funnel - the customer is at the heart of the flywheel. 

Trust is hugely important in business today, and the best way to create trust around your brand is to provide customers with an amazing experience that they will be happy to recommend to others, as well as returning themselves for more of your products or services. 

Here’s what HubSpot has to say on why you should ditch your funnel and get with the flywheel programme:

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But...the flywheel is idealistic

Aira’s Head of Operations, Matthew Kay, first wrote about the flywheel model in late 2018, not long after HubSpot launched it. And while Matthew said it’s hard to argue with the flywheel as a replacement for the funnel, he also said that he wasn't 100% sold on the new model. 

“...this is because the flywheel is a very idealistic concept. In a perfect world, all of our leads would transmit into paying customers, who would then turn into promoters and advocates of our businesses. As we all know, this isn’t realistic.”

But rather than saying we should stick with the traditional funnel, Matthew suggested an adapted flywheel.

Aira’s adapted flywheel 

And this is what he came up with:

In Aira’s view this flywheel design shows a more realistic flow of marketing, sales and customer service teams working together. Matthew explained:

“Marketing attracts users in, helps to convert them into leads, where sales picks up and attempts to close them into customers and your customer service turns some of those customers into promoters who in turn create new leads for your business.” 

Yes HubSpot’s flywheel looks great! But we think this adapted model is a little less idealistic and more representative of what successful business looks like today. 

How to figure out your own flywheel

If you think the flywheel model could be right for your business, here are some steps you can follow to create your own, based on Brian Halligan’s keynote speech at INBOUND2018:

  1. Identify the core metrics that your business tracks
  2. Identify your activity by the stages of the inbound methodology (attract, engage, delight) 
  3. Refocus your efforts on word of mouth and delighting customers
  4. Reveal areas of friction and hand-offs between your teams that could negatively affect customer experience 
  5. Reduce friction to serve customers better by any or all of the following methods:
  • Reorganising your business
  • Introducing shared goals
  • Automating processes and communications 

This technique should help you see where your efforts are inefficient, ineffective, counter-productive, or just not aligned with delighting your customers. 

If you want to try this you can find more details, instructions and worksheets in this deck that HubSpot have helpfully created (it’s set as view only so just make a copy and off you go). 

If you do try and build your own flywheel please let us know how you get on, and whether you have any issues! Likewise if you disagree with this post and still think the traditional funnel is better. It’s worked for 120 years right? You can find us over on Twitter or you can reach us right here if you’d like to chat. 

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