Business Strategy: Transforming Funnels to Flywheels to Grow Better

Business Strategy: Transforming Funnels to Flywheels to Grow Better


– Hey, it’s Kyle from HubSpot Academy. Let’s talk about funnels. Chances are you think of your business as some kind of a funnel, with a fairly large number of people knowing about your company and a smaller number of people
engaging with your company, and an even smaller number of people actually buying from you. Visualizing your business
as a funnel is easy because any time you look
at a graph representing a conversion process, the chart itself is shaped like a funnel. But there’s one big failing in thinking of your business as a funnel. In the physical world, when you use a funnel you pour some stuff into the top and wait for it to come out of the bottom (water dripping) and then that’s the end. All movement stops until you
pour more stuff into the top. (water dripping) Furthermore, as you pour
things into a funnel, the stuff at the bottom doesn’t have much of an impact on the stuff at the top. As long as the things
lower down continue to flow and get out of the way, the stuff going into the top of the funnel won’t even
notice they’re there. But in the business world, the people coming out of the bottom of your company funnel
can have a huge impact on the people going into the top of it. If your customers love your
company and love your product, they’ll tell their friends
to come buy from you as well, which means the bottom of the funnel can feed the top of the funnel. In the physical world, that’s impossible. It’s hard to imagine how
that could ever happen. But in the business world, that’s just good business. Additionally, if the people who buy from you have a bad experience, if they’re unhappy with
the way you treated them, they’ll tell their friends about that too, which means that the people
coming out of the bottom of the funnel can prevent other people from entering the top of the funnel. Again, thinking of real
funnels in the physical world, it’s hard to imagine a
circumstance in which the stuff that’s already exited
the bottom of the funnel could somehow go back up to the top and prevent other stuff from coming in. But this is an important
fact about human nature, that every business leader
needs to understand. The attitude of people when they come out of the bottom of your funnel
directly impacts the number of people who are willing to
enter the top of the funnel. With all of that as context, it shouldn’t be a huge leap to realize that a funnel isn’t the best
metaphor for your company. A much better metaphor is the flywheel. A flywheel is a machine that
stores rotational energy. When you add energy to a flywheel, it starts to spin and if you add more
energy, it spins faster. And unlike a funnel, where the only way to
maintain a constant speed is to keep adding stuff to it, a flywheel will keep spinning unless some other force comes
along and slows it down. From a business perspective, the rotation of the flywheel represents the growth of your business and happy customers provide the energy that fuels that growth. Either because they buy from you again or because they bring new customers to you by promoting your product to
other people in their network. But if you produce unhappy customers, either by selling to people who are a bad fit for your offering or by over promising and under delivering, they’ll work against your flywheel and slow your company’s growth. Here’s Alison Elworthy, VP of
Customer Success at HubSpot, talking about what you can
do to reduce the impact of unhappy customers on
the speed of your flywheel. – So not every customer you have is gonna have a fantastic experience that’s gonna stick around forever. You’re always gonna have customers that cancel and churn and leave you, but I think that’s a great opportunity, not just to write that customer off, but make sure they have a positive experience on the way out. We talk about how your current customers are a great lever for future acquisition. Those customers that
leave you are also going to either refer or recommend your product to other people in the future. So it’s really important
for even those people who may be dissatisfied with a product or no longer or plan to cancel leave on good terms. You wanna break up and remain friends because those customers that do leave you will probably continue
to refer your product and service in the future. – Even when you’re working
with unhappy customers, you need to do all you
can to ensure they have as good of an experience as possible. Everything you do should
be done with the goal of creating customers who
will add positive energy to the flywheel and accelerate
your company’s growth. Here’s HubSpot CEO Brian
Halligian explaining this concept in more concrete terms. – When you’re a start-up and you don’t have any darn customers, marketing matters a ton
because you can’t talk to any other customers if
you’re a potential customer. There’s no word of mouth. There’s no proof whether
you’re good or bad, but as you’re growing and
you’ve got a lot of customers and you’re scaling your company up, your customers are actually
your best channel to market. It’s not your marketing. Marketing’s of course very important, but if you really wanna grow, you oughta consider moving
some of your money from sales and marketing into customer
service into your product, so you’re delighting your customers ’cause those delighted customers that your business serves
over the long haul, will really grow on the backs
of your successful customers. – That’s why the inbound
methodology is a circle. It represents the flywheel that will drive your company’s growth. By attracting customers who
have a problem you can solve, by engaging with them on their own terms, and by delighting them at every stage of their buyer’s journey, you’ll create the momentum that will drive your company’s growth. This is a huge advantage over
the typical funnel viewpoint because it means that you aren’t alone in helping your company grow. You have all of those faithful customers helping your company grow too. And that’s a much better way to grow. (light music)

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About the Author: Oren Garnes

4 Comments

  1. That is a great topic and an exciting mindset shift to conceptualize getting referrals. However how do you measure your growth with a flywheel compared to a funnel view and with the conversion rates between each step?

  2. I like this concept. But what makes this even better. Instead of throwing away the funnel. We should attach the funnel and the fly wheel together. Than is makes it even better

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