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 anytime 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, and then that's the end. All movement stops until you pour more stuff into the. 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 going to have a fantastic experience, is going to stick around forever. You're always going to have customers that cancel, intern 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 the product or are no longer or plan to cancel, leave on good terms. You want to 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 Halligan explaining this concept in more concrete terms.

When you're a startup 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 is, of course, very important, but if you really want to grow, you ought to consider moving some of your money from sales and marketing into customer service into your products. So you're delighting your customers because those delight a customers that your business over the long haul will grow, 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.