From the Funnel to the Flywheel
Another great article to read… Jim Collins’ “Good to Great” (source: Jim Collins - Articles - Good to Great)
In this article, Jim talks about what underpins the transition of good companies to great companies… and it doesn’t matter what industry you’re talking about… markets, submarkets, sub-submarkets… all the way down.
He starts out with a very provocative statement: “I want to give you a lobotomy about change. I want you to forget everything you’ve ever learned about what it takes to create great results. I want you to realize that nearly all operating prescriptions for creating large-scale corporate change are nothing but myths.”
It’s actually very straight-forward. Hard work and lots of “not so costly” mistakes will get you the change you need to go from good to great. What do I mean by that? If you take into account everything Jim is talking about… all the myths as he puts it, you will rarely make a costly mistake, one that will set you back months, years, maybe even tank your company permanently.
Change is not some pie-in-the-sky program, touting a burning platform that gets people behind it. You can’t buy your way into meaningful, appropriate change, certainly not by incentivizing your workers or buying out other companies. Although developing the most disruptive technology in your market is great, it doesn’t produce sustained growth. And finally, Big Change doesn’t have to be gut-wrenchingly painful, either.
And one of the biggest changes I see in the business world today is a change in business models: the Business Flywheel replacing or, at least, competing favorably with the Business Funnel.
I’ve had folks tell me the flywheel is no different than the funnel. It’s just a matter of semantics. Well, I’m here to tell you, from first-hand experience, the differences between the business flywheel and business funnel are not semantic.
They are fundamentally different ways of growing a business. The funnel approach focuses on driving leads through a linear path from awareness to purchase, often resulting in a drop-off at each stage. In contrast, the flywheel approach emphasizes creating momentum through continuous customer engagement and satisfaction, leading to sustainable growth and ongoing referrals.
But guess what? It takes a lot of time and effort to get the flywheel moving, walking beside strangers, converting them into prospects, then customers, and finally promoters.
Some good companies aren’t willing to invest in the change, though. Why? The answer is very simple: The known or unknown.
Known #1: “if it isn’t broke, don’t fix it. The business funnel has served us well for decades and we’re not about to change that now.” Unknown #1: I guess if you see your company and yourself as a commodity, then the business funnel works. But are you a commodity? I don’t know but probably not, especially if you have something unique to your market segment.
Known #2: “We have a huge market share already.” Really? Are you considering new and growing markets where you’re not the biggest fish? You’ll need to adjust to being the “new guy” in that market. Unknown #2: It is very difficult to forecast risks in new and growing markets. You’re so busy trying to widen your funnel and pushing deals through the pipeline, by the time you see a problem, it’s too late. Like I said earlier, that’s one very good reason to consider the flywheel approach that leads to sustainable growth and ongoing referrals.
Known #3: “We landed big deals before. We can do it again.” Unknown #3: Again… really? A sales funnel is a linear process meant to guide potential customers through the buying journey, converting interest into action. However, there are times when the funnel itself is the barrier, causing businesses to miss significant sales opportunities. Here’s a look at some common issues and how to address them:
Overly Complex Stages: If your funnel has too many steps, customers may become overwhelmed or lose interest. Make the journey easier – guiding strangers into prospects with easy-to-understand steps tailored to their experience.
Lack of Personalization: A one-size-fits-all approach can alienate potential buyers. Use customer data to personalize interactions and tailor the sales journey to meet individual needs and preferences. Walk beside your customers throughout the process.
Inadequate Follow-Up: Prospective customers often need multiple touchpoints before making a decision. Ensure that your follow-up process is robust, timely, and adds value, rather than just being a repetitive pitch. Multiple touch points with your customers gets harder and harder as they’re pushed down the funnel.
Misaligned Marketing and Sales Teams: When marketing and sales teams operate in silos, opportunities can slip through the cracks. Encourage collaboration and seamless communication between these teams to ensure a cohesive strategy. It manifests into synergy: focused energy on getting the flywheel moving is far easier than squeezing customers into a funnel.
Ignoring Feedback: Customer feedback is invaluable in identifying pain points and areas for improvement. Regularly solicit and act upon feedback to refine your funnel and better meet customer expectations. The feedback loop on the flywheel is a natural flow around the circle. The funnel requires more energy to get buyers to provide meaningful feedback (getting them back to the top of the funnel), maybe even more energy than getting them through the funnel itself.
Bottom line: The buying process is no longer linear. It isn’t a “one-stop shop” in the marketplace anymore. Buyers have so many options and they are savvier about who to buy from… because of the Internet. The “working” business funnel no longer works. It’s time to seriously consider a business flywheel, one that focuses on the customer experience, one that optimizes your marketing and sales energy to keep the Flywheel moving…
And, oh by the way, when one flywheel gets too big, you transfer some of the work/energy to another flywheel and so on. The flywheel model is nearly infinite in scalability. Not so much the funnel.
I’ll have more to say about this in future blogs so stay tuned. Love to hear what you think.
Image Credit: By Andy Dingley (scanner) — Scan from Hawkins (b.1833), Nehemiah (1904 edition of 1897 book. Originally published in 1897, later expanded to cover internal combustion engines.) New Catechism of the Steam Engine, New York City: Theo Audel, Public Domain https://commons.wikimedia.org/w/index.php?curid=7106954
