Winning Growth Strategy 2024: Goodbye to the Funnel & Embrace Flywheel

Growth Strategies for 2024

As an experienced sales professional and entrepreneur, I have deep knowledge of funnels and have relied on them throughout my 20+ year career in sales and marketing. Funnels have been instrumental in converting leads into customers.

However, in recent years, it seems that the funnel's relevance has slowly diminished, creating an opportunity for a new strategy to emerge and take its place.

I wasn't surprised when HubSpot announced they were retiring the funnel in favor of adopting the flywheel as their core model. Though initially hesitant to replace the trusted funnel, the flywheel’s momentum-building capabilities proved far too compelling to ignore.

Though the thought of adopting something new to replace the trusted funnel was not very comforting, I decided to follow the bandwagon and started learning about the flywheel.

Turns out, they’re pretty amazing.

Trusted Funnel Framework

The funnel is as classic as a tool can get in marketing. It's like the little black dress of marketing strategies. This iconic analogy represents the stages a prospective customer goes through on their buyer journey.

These stages are usually broken down into:

• Awareness
• Consideration
• Conversion

Some even add loyalty and advocacy at the bottom of this funnel. Others go as far as saying "Rinse and repeat." It's like adding a little twist to a classic recipe.

At the top of the funnel, the gates are wide open. Many people can become aware of your product, but not all will become interested. It's like window shopping on a busy street.

As the leads pass through the different stages, the funnel starts to narrow down. It's like going from a busy highway to a narrow country road. Only a small percentage of the initial prospects will take the desired action, usually making a purchase. So businesses put a great deal of effort into filling the funnel with more leads. It's like trying to catch as many fish as possible in a net.

Now, here's the interesting part. In today's world, trust in traditional sources has eroded. We're living in an era where word-of-mouth from trusted peers wields greater clout than ever. It's like getting a restaurant recommendation from your foodie friend who knows all the best spots in town.

And here's where the funnel falls short. It fails to capture momentum. Funnels lose all the energy you put into them once you reach the bottom. It's like pouring water into a leaky bucket. But fear not, there's a better tool in town - the flywheel.

The flywheel is like a superhero ready to save the day. Invented by James Watt over 200 years ago (yes, the guy with his name on every lightbulb), it's a wheel that efficiently stores and releases energy. It's like a trusty sidekick that never lets you down.

Just like an engine needs a flywheel to store energy, marketers need a marketing flywheel to harness the power of loyal customers. It's similar to the funnel in that it represents the customer journey in three main stages.

Hubspot calls these stages the Attract, Engage, and Delight stages. It's like the three acts of a blockbuster movie.

At the center of the flywheel is your customer base, the heart and soul of your business. The rotation of the flywheel represents the growth of your business. And guess what? Happy customers are the energy that fuels that growth. It's like having a perpetual motion machine that keeps on spinning.

But here's the catch - friction. Friction is the enemy of the flywheel. Friction points are like little speed bumps that slow down the momentum. They're the processes that cause inconvenience and put a damper on the customer experience. It's like hitting a pothole on a smooth road.

So, while the funnel approach focuses on widening the top, the flywheel approach emphasizes delighting your customers. It's like putting a cherry on top of a delicious sundae.

In the world of marketing, a flywheel and a funnel are like two different mindsets. With a funnel, customers are seen as an output, lost energy. But with a flywheel, customers are the most important input, the key to driving growth strategy. They're the secret weapon of the marketing team. It's like having a secret ingredient that makes your dish extraordinary.

So, instead of starting from scratch every quarter like a never-ending cycle, the flywheel recognizes the assets you already have. It's like having a treasure chest full of valuable resources that keep the growth strategy moving.

While the funnel focuses on creating awareness, the flywheel emphasizes delight. It's like shifting the spotlight from the entrance to the grand finale.

When it comes to putting the flywheel into action, it's all about attracting, engaging, and delighting your customers. It's like a dance where you lead, and they follow.

For the attract stage, you can use traditional means like word of mouth, events, and paid ads. You can also leverage review sites and customer testimonials. It's like putting your best foot forward and showing off your moves.

In the engagement stage, it's all about creating meaningful relationships with your clients. You need to understand their motivations, needs, and pain points. It's like having a heart-to-heart conversation on the dance floor.

And finally, in the delight stage, it's about bringing joy to your customers along their journey. It's about giving them an experience they'll want to share with others. It's like being the life of the party and making everyone want to join in.

But remember, friction is the enemy. So, it's important to identify and eliminate any friction points that slow down the flywheel. It's like oiling the gears to keep the machine running smoothly.

So, say goodbye to the traditional funnel

What is Marketing Flywheel?

A mechanical flywheel that efficiently stores energy and can be used to boost a machine’s momentum. Invented by none other than James Watt (yep, the guy whose name is plastered on every lightbulb) over 200 years ago, a flywheel is a wheel or disc on an axis that's incredibly energy-efficient. The amount of energy it stores depends on how fast you spin it, how much friction there is, and the composition of the wheel itself - how big it is and how much it weighs. Flywheels are the go-to in cars, trains, and power plants.

Just like an engine needs a flywheel to store energy, marketers need a marketing flywheel to harness the power of loyal customers. The flywheel is similar to the funnel in that it represents the customer journey in three main stages.

Hubspot coins the flywheel stages as:

• Attract
• Engage
• Delight

At the center of the wheel is the customer base. The rotation of the wheel is the growth of your business. Happy customers are the energy that fuels growth strategy.

This marketing flywheel is inspired by Amazon’s flywheel business model, also known as Bezos’ Virtuous Cycle

In a flywheel, growth, and customers take center stage, driving every other process. It's all about the customer experience, as loyal customers provide the fuel for growth. They stay in the loop, never losing their energy.

But what slows down a flywheel? Friction. Friction points are like speed bumps that inconvenience customers and put a damper on their experience.

The linear approach to measuring growth is a major weakness. Funnels only focus on acquiring customers without considering how they can contribute to your growth strategy. And all the momentum you've built in acquiring those customers? It's gone. Every day, every month, every quarter, you have to start anew.

This isn't just inefficient, it's a significant problem. Ignoring how customers can help you grow is risky in today's world.

Word of mouth has always been crucial in marketing, but given the current state of the world, trust is at an all-time low. It's harder to get visibility on Google and Facebook, and prospects are doing more independent research than ever before. With word of mouth being so important, losing the momentum you've generated in acquiring a new customer can hinder your growth strategy.

Unlike funnels that lose momentum at the bottom, the flywheel leverages its momentum to keep spinning. And because it preserves momentum so effectively, any additional energy you add to spin it faster increases its overall capacity.

A flywheel and a funnel are two mindsets:

Customers as an Output vs Input

In the world of funnels, customers are treated like lost energy, simply passing through and being filtered out. Only a select few make it out successfully, and they are not considered when it comes to acquiring new customers. The responsibility of handling customer interactions after they make a purchase falls on the Customer Success and Support teams, not the Marketing team.

However, in the flywheel model, customers take the spotlight as the most vital input. They possess stored energy that propels growth strategy forward. They are the secret weapon of the Marketing team, fueling awareness of beloved brands and driving engagement and delight throughout the entire cycle.

End-Point vs Ongoing

With a funnel process, at the end of each quarter, a marketing team feels like they're starting from square one. It's like hitting the reset button every time, with no momentum to carry forward into the next quarter. In other words, the success of driving new business last quarter doesn't give them a head start in reaching this quarter's lead goals.

On the other hand, with the flywheel, marketers understand that they already have valuable assets at their disposal. From inbound marketing and SEO to social media engagement and loyal customers, these are like stored energy that keeps the momentum of growth going. They are the secret sauce that fuels success.

Awareness vs Delight

With a funnel, marketers are all about widening that funnel. They pour in tons of investment to make sure more and more people are aware of their product and become customers.

But with a flywheel, the focus shifts to the delight stage. According to Halligan, this is where you'll get the biggest bang for your buck. Delighting customers means providing top-notch customer support, quality policy, ads that bring a smile to their faces, and all the things that make them happy.

And you know what delight does? It brings customers back for more, making them not only repeat buyers but also brand advocates who can't stop talking about your awesome brand.

Flywheel In Action

The flywheel concept represents a circular process where customers play a crucial role in driving growth. Hubspot, as a company, has made significant investments in customer marketing, advocacy, and creating a delightful onboarding experience for new customers. They have also focused on developing an integration ecosystem that adds value to their customers' use of their software suite.

However, it's important to acknowledge that friction can have a detrimental effect on the flywheel. To address this, Hubspot has strategically targeted its key friction points through various investments. This includes offering great free software as an entry point, providing channels for immediate connection, implementing a sales process that caters to prospects' needs, and offering a comprehensive range of customer education resources.

Actions marketers can take at each of the three stages.

Attract

This is where customers are drawn to your brand. This happens by creating engaging and useful content for the right people. Some practical example actions include:

• Traditional means (word of mouth, events, paid ads)
• Review Sites
• Customer testimonials
• Inbound marketing, with a focus on creating content that will interest your ideal customer profile (ICP), rather than broad clickbaity content

Engage

Engagement happens by creating meaningful relationships with clients. Businesses need to understand clients, their motivations, needs, and pain points. When companies truly empathize with clients, they can provide customers with solutions that satisfy them.

Some examples include:

• Blog with helpful how-to resources
• Social Media polls and sharing articles your customers could benefit from reading
• Podcasts
• Interactive content
• Chat Boxes, text message follow-up, call center, etc.

Delight

Delight is bringing joy to your customers along their journey. It involves giving them an impactful experience that they will want to promote your brand. They will be the customer advocates who bring more into the flywheel. Examples include

• Return Policies
• Free shipping and other shipping options
• Reward programs
• Regular check-ins
• High-quality customer support
• Recognizing and featuring their successes – showcasing them to the rest of the world

Negative Force to the Flywheel: Friction

Through all these stages, it is important to identify friction. Friction is what makes the customer momentum slow down. This can be misalignment between departments, hiccups in the pipeline, or whatever is killing your customers’ joy. Make sure all silos are on the same page with how customers will be supported, reduce handoffs, and take action to reduce customer churn. Above all else, make sure you’re actively listening for customer feedback so that you can identify friction wherever it may be.

Why the Flywheel Framework Matters

You’re thinking, we just debating jargon for the sake of it!

No -- when you think of your business as a flywheel instead of a funnel, you make different decisions. Using Your Flywheel as a Growth Tool

Three factors that dictate how much momentum your flywheel contains:

• How fast you spin it
• How much friction there is
• How it’s composed -- how big it is and how much it weighs

The best teams will have strategies for all three.

Let’s start with how fast you spin it. The speed of your flywheel is increased by applying more force in the areas where it can have the biggest impact. In a funnel model, all force is applied to attract and acquire customers. In a flywheel model, you also apply force to delight those customers and make them successful.

Since you’re applying all sorts of force all around your flywheel, ensure that none of your investments oppose each other. A lack of alignment between sales and customer success, for instance, can create unhappy customers and slow your flywheel when they churn.

Classic sales and marketing misalignment is another area where the flywheel can slow. Alignment is crucial.

You can reduce friction by finding the inefficiencies where your customers are losing momentum, and making them better.

Improving conversion rates, delighting customers at scale, and addressing issues that cause you to churn customers increase the speed of your flywheel.

The other crucial area to consider when thinking about friction is how your teams are organized. Silos, handoffs, and specialization all create friction.

As you successfully increase speed and decrease friction, you will create more delighted customers.

More delighted customers mean a “heavier” wheel and one that produces more energy when spun. Said another way, your flywheel produces more growth as your customer count increases. If you can add “density” to those customers, by getting them to adopt more of your products or be more “sticky,” even more momentum and growth can be achieved.

Applying Funnel In Your Business

In his keynote at INBOUND 2018, Halligan explained the flywheel, and why it’s a powerful new growth model. In his keynote, he assigned the following “homework” to attendees:

• Identify the core flywheel metrics your company tracks
• Identify your company’s forces by flywheel stage
• Re-draw those forces to maximize delight and word-of-mouth
• Identify points of friction between your customers and your employees, and points of handoff between internal teams, that affect customer experience
• Re-align those points of friction to better serve the customer through automation, shared goals, or a reorganization

To help you build your flywheel and turn it into a growth tool for your business, here is a completed sample homework for HubSpot’s flywheel and provided as a guide for you to do the same.

Change can be difficult when overhauling a tool so integral to a marketing team. If your business is B2C, the train is about to leave the station. You’ve got to get 90% of the friction out of your model. If you’re B2B, the train is parked in the station, but it’s leaving soon.

Funnels have served their purposes for a long time. The time has come for businesses to ditch Funnel and adopt the Flywheel To Grow Better.

Helpful links to the homework templates:

• Google Slides -- you won’t be able to edit this file directly, so make a copy for an editable version
• PowerPoint

Assignment 1: Measuring the Flywheel

The first task is understanding the status quo of your flywheel.

At each stage depicted below -- attract, engage, and delight

Here’s how we think about each stage:

Attract: Attracting is about using your expertise to create content and conversations that start meaningful relationships with the right people.

Engage: Engaging is about building lasting relationships with people by providing insights and solutions that align with their roadblocks and goals.

Delight: Delighting is about providing an outstanding experience that adds real value, empowers people to reach their goals, and becomes promoters of your company.

To determine the health of our flywheel, ask yourselves two questions:

• What investments are we making at each stage of the flywheel?
• How are we measuring the success or failure of those investments?

Part 1: Mapping your go-to-market strategy

In this step, identify the core activity or program your company has invested in to uphold each of your Attract, Engage, and Delight commitments. Fill out each activity corresponding to its flywheel stage.

You may find that one flywheel isn’t enough to encompass all your company does. That’s perfectly okay -- there are probably multiple flywheels spinning in parallel. The purpose of this exercise is to distill the core parts of your business, so focus on the most important activity at each stage.

Part 2: Measuring success

In this step, identify the most important metric for each activity. Make a note of conversion rates between each stage here as well -- this measures the friction in your flywheel.

Then, record (either month-over-month or year-over-year) how much you added or lost in that bucket, and your total number.

Attract: Our topline metric here is monthly website traffic. We measure how much traffic we gain month-over-month.

Engage: HubSpot’s flywheel moves visitors through the “Engage” stage in two steps.

Delight: Track the number of customers who are promoters -- that is, how many customers say they would recommend.

Assignment 2: Maximizing Delight

When you’re just starting to grow a business, most of your resources will be focused on the attract and engage parts of your flywheel. Rightly so -- it takes a lot of investment to build enough momentum to get your flywheel spinning. But once it is, consider whether your resources could be better spent focusing on delighting customers.

That’s because once your flywheel is spinning, momentum comes from retaining customers and transforming them into promoters who will advocate for your brand and even bring you new business.

In this assignment, examine the “forces” -- activities and programs -- that currently move your customers through your flywheel, and consider whether they are designed to serve your process or your customers’ needs. Then, list out what changes you’d need to make to those forces in 2020 to help maximize delight.

Assignment 3: Reducing Friction

There are many ways to reduce friction in your flywheel.

One way is to smooth out common friction points, like your conversion rates between different phases, how many customers become successful, and how many churns. It’s not too difficult to identify this type of weakness, because you’re dealing with metrics that are largely isolated from one another.

It’s harder to see the forest for the trees and examine how the overall structure of your company might be contributing to drag and friction. So for this assignment, we’re going to focus on one of the thornier sources of friction at your company: Your organizational chart. Siloed work and poor handoff between teams are some of the biggest areas of friction in most flywheels.

You can break this down into four steps:

• Where are your points of friction?
• What can be automated?
• What can be addressed through shared goals?
• What can be addressed through team reorganization?

We’ll go step by step here.

Step 1: Identify friction

Where is there drag in your organization?

Externally, think about the complaints you hear from customers and prospects -- where do they have difficulty interacting with your company?

Internally, consider which metrics you struggle to move despite repeated efforts, processes that take longer than they should, and sources of common problems.

Step 2: Automate repeatable tasks

Consider the activities your customers and prospects want to do but are complex for humans to execute. In addition, look for the repetitive, mechanical tasks that fall on your team’s plates -- can you free up their time for work that’s more valuable for your customers? Also, consider which parts of your go-to-market currently rely purely on your employees to function but could be supplemented by automation.

Step 3: Reset goals to bridge teams

Often, friction exists because two teams are moving in opposite directions. For example, marketing is traditionally focused on an overall lead generation number -- but optimizing for lead quantity doesn’t always lead to good-fit customers.

Some of your biggest friction points can be smoothed by re-setting goals or introducing processes that re-orient teams in the same direction.

Step 4: Restructure teams

Within every organization, some problems can’t be fixed by automation or goal realignment. In those cases, a reorganization may be necessary.

Here are some key questions to consider when assessing your organization:

- Are employees with similar roles scattered across different departments?

- Are your teams too specialized, potentially hindering collaboration?

- If your company has identified a systemic blind spot, do you have a dedicated team in place to address and resolve it?