*This article was updated on February 27, 2020 based on new research conducted by the TrustRadius team*
If you’ve been in marketing for a while, you know funnels inside and out. Funnels are the mechanisms that convert leads into customers.
Over the past few years, the relevancy of the funnel has slowly died out, leaving room for a new, digitally-informed strategy to take its place.
Enter the flywheel.
If you have never heard of the marketing flywheel before, keep reading. Here we discuss:
The Marketing Funnel (and why it may no longer be relevant)
The Marketing Flywheel (and what it promises for the future)
The Differences Between the Two Models
Flywheels in Action
How to Shift to the Flywheel
Your Old Pal: The Marketing Funnel
The funnel is as classic as a tool can get in marketing. This ubiquitous analogy represents the stages a prospective customer goes through on their buyer journey. The stages are usually broken down into:
Some add loyalty and advocacy at the bottom of this funnel. Others add a note like “rinse and repeat.”
The top of the funnel is wide. Many people can become aware of your product, but not all will become interested. The funnel gets narrower as the leads pass through the different stages. Only a small percentage of the initial prospects will actually take the desired action, usually a purchase.
With this in mind, businesses have put a great deal of effort into filling the funnel with more leads. This process of “widening the funnel” finds more potential customers, eventually leading to more sales.
Image via setteradvertising.com
The funnel is helpful in visualizing the customer journey in specific steps. Within each stage, the company can assign specific actions. The awareness stage may contain actions like leads visiting the website, filling out a form, watching tutorial videos or reading the blog. In the next stage, they might take a stab at a free trial. After their trial, they might become paying customers.
Because the specific actions are listed, marketers can see where people stop on their journey. They can calculate the number of leads that enter the top of their funnel, the percent of leads that make it to the next stage, and so on to purchase. Then marketers can decide how many more new leads need to be added to the top of the funnel in order to meet their goals at the bottom of the funnel, based on typical conversion rates. If the dropoff at stages in the middle seems high, they can also decide to make improvements to middle-of-the-funnel content.
For example, this could be testing new sales enablement materials, or hosting a how-to webinar. But the basic idea of the funnel is that you’ll get a lot of people interested at a high level, fewer will be interested in your product specifically, and even fewer will actually buy it. With funnel-vision, the way to get a few more people to buy your product is to get many more people into your funnel at the awareness stage, knowing that they won’t all be a fit in the end.
Recently, there has been a debate about whether the funnel is an adequate display of the customer journey in a changing marketplace. Does it really represent how buyers make decisions, or even how they consume marketing content? Is the funnel helping marketers think strategically and realistically about how to grow their businesses? The idea of the flywheel is an alternative to the funnel designed to address these doubts.
What is a Marketing Flywheel?
At the B2B Marketing Lab’s Grow with Inbound 2019 event, CEO Bob Dearsley chatted with HubSpot’s CEO and co-founder, Brian Halligan about replacing the old Marketing Funnel with the flywheel model. In the interview, Halligan discusses how startups he refers to as “experience disruptors” have infiltrated the marketplace by creating a “new experience” for their customers. The Marketing Flywheel is a tool to help businesses do just that.
As a marketer, you might have escaped physics class in college so you might not know what a flywheel is.
A mechanical flywheel is a heavy type of wheel that efficiently stores energy and can be used to increase a machine’s momentum. Flywheels are used in trains, buses, and cars. Flywheels create continuous power in engines. Power, momentum, force, friction, stored energy; these are the words associated with a flywheel.
Much like an engine needs a flywheel to store energy, marketers need a marketing flywheel to garner 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:
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 fuel the growth.
This marketing flywheel is inspired by Amazon’s flywheel business model, also known as Bezos’ Virtuous Cycle.
image via tmcdigitalmedia.com
In a flywheel, growth and customers are the center of every other process. Everything literally revolves around customer experience. Loyal customers are the energy that fuels all growth. Customers never fall out of the loop. They are not lost energy.
What makes a flywheel slow down? Friction. Friction points are processes that cause the customer inconvenience and put a damper on their experience.
As a result of that keynote presentation, marketers are now debating whether the funnel is truly antiquated or if the flywheel is just a marketing ploy. Some marketers think that there is room for both the funnel and the flywheel.
We will continue discussing why Hubspot has decided to “retire” their funnel and what the fundamental differences are between the funnel and the flywheel. After reading, you can decide if the funnel is outdated or if you want to stay the course of traditional marketing.