Why B2B Tech Companies Need To Think Flywheel, Not Lead Funnel

For years, Inbound Marketers (me included) talked about the marketing funnel as the best way to visualize how lead generation worked. It is really simple:

1. You generate helpful, buyer persona-specific content that attracts strangers to your website.
2. They convert into leads by filling out a form in exchange for downloading an eBook or guide (Top-of-the-Funnel, or TOFU), registering for a webinar (Middle-of-the-Funnel, or MOFU), or booking a consultation or demo (Bottom-of-the-Funnel, or BOFU).
3. Your job as a marketer was to nurture them down the funnel and eventually hand them over to sales.
4. Sales then closes them into customers.

This allowed us to create a predictable and growing pipeline of leads over time. Marketing almost became a simple math problem. If you needed 10 new customers, you knew you had to have 20 demos scheduled (at a 50% closing rate), which meant you needed 85 Marketing Qualified Leads (at a 12% lead conversion rate). Assuming a 1% conversion rate, you needed to drive just over 4,200 visitors to your website.

Having Funnel-Vision Will Stunt Your Growth Potential

While this was really helpful for a while, several problems emerged that are typical with physical funnels as well. Imagine pouring water through a funnel into a glass. You notice several things happening: a) You can't pour too fast or you will make a mess. b) As long as you keep pouring, water will continue to go into the glass. And c) There is no physical way for the water to cycle back up.

Translating this to our metaphorical funnel, you are facing the following challenges:

Your marketing funnel requires constant effort, because you need to keep filling at the top. Meaning, you need to constantly drive more traffic to your website to generate more leads. While good content marketing will generate traffic and leads for a long time, it could be much more efficient.

This is not scalable. While marketing workflows are helpful for dealing with a large volume of leads, they are often not created to build long-lasting relationships — resulting in the vast majority of leads dropping off along the way.

It is also very inefficient. While you can nurture your leads through the funnel, once your leads reach the bottom, they have no cyclical influence on accelerating the feeding on the top.

Which brings me to the last, but maybe most important reason. It is ignoring your most valuable lead generation assets: your customers. They can have a huge impact on your business. A mere 5% in customer retention can lead to 25-95% increase in profits!

You Need A Flywheel!

What is the Flywheel? Glad you asked.

Generally, a flywheel is a machine that stores rotational energy.

In a growth context, the Flywheel is a business growth strategy that redefines customers as the accelerators of growth, rather than as the output of lead generation efforts. As a result, a company emphasizes nurturing long-term relationship building and customer delight rather than linear, short-term sales.

There are three ways to grow your business. You can increase the:

1. Number of your customers (customer acquisition),
2. Average transaction size of your existing customers (cross- and up-sell), or
3. Frequency of their purchases.

While the marketing funnel only focuses on the first, the flywheel fuels all three areas.

Essentially, when you add force to a Flywheel, it spins faster. This symbolizes the growth of your company with the customer at the center of the flywheel. Positive forces could be a positive onboarding experience after purchasing, a quick issue resolution by your customer service team, or a helpful and responsive sales person.

A flywheel can also be slowed down. This is called friction and it happens when a prospect or customer has negative experiences with your company. This can be anything from a frustrating web experience, to a sub-par product, to a pushy sales person.

Once you stop looking at business growth from only a lead generation point of view and start looking at all the points of force and friction along your customer journeys, you will be able to exactly pinpoint your biggest growth opportunities and inhibitors.