Recently, I reread an article by Brian Halligan, Replacing The Sales Funnel With The Sales Flywheel. It appeared in HBR in November, 2018, I keep coming back to it–something about it is disturbing to me. I’ve finally been able to put together some thoughts about it.
Part of my discomfort in saying anything, is that I respect Brian and Hubspot so much. Part of it is, technically, there is nothing wrong in what Brian says (though the physicist in me quibbles), but is this really helpful? Are we better served by changing our model, or are we better off fixing the fundamentals underlying the models we use?
Let me dive in, with the disclaimer, much of what Brian addresses is B2C, though at the end of the article he bridges B2B. I will focus on B2B.
Brian addresses four key issues:
- Displacing the funnel model with the flywheel model.
- Delighted customers are the biggest drivers of growth.
- Commissions (how that applies, I don’t know, but it is an interesting discussion).
- Friction-eliminating friction in the customer experience.
Let me dive into these:
Replace the Funnel With A Flywheel: Brian goes through a nice discussion about the physics behind the flywheel and how he and Hubspot find it a more useful metaphor than the funnel.
There are a lot of points one can quibble with, but they are primarily nuances. There one area I will quibble with:
It is the notion, “the more force you apply in more place, the faster it spins.” From a physics point of view it’s a little difficult to understand, basically the flywheel acts on energy applied through a shaft. But sticking with the metaphor, assuming it is true, it is also true that you can apply force in one area and keep the flywheel spinning forever. For example, as long as you keep filling the flywheel with leads, it will spin forever. There is nothing in this metaphor that discusses the need to do something with those leads. His flywheel analogy will always work if all you do is provide leads, but never do anything with them—and we know that doesn’t produce revenue.
But my main issue is, why is this new model helpful? Does it enable us to address the fundamental underlying issues more effectively, or is it just providing a new set of terminology that we can all adapt, yet still not address the underlying issues.
It has become very fashionable to invent new terms to address concepts. We see it all the time, a guru wants to distinguish what the sell by creating a new term, stating it’s the key to success. We have all sorts of sales methodologies, each slightly nuanced, but that do fundamentally the same things. But we are told each is better than the other and provides the magic and secret to success. So we use the words solutions, customer focused, consultative, MEDDIC, insight, challenger, etc.
We have those arguments with the pipeline, the funnel, and now the flywheel. They are different words representing the same concepts, and each camp argues why theirs is the best, and what’s wrong with the other.
They tend not to focus on the fundamentals underlying these issues and the fact that we have to execute the fundamentals all the time. Stated differently, you have to do the work. As sales people and organizations we have to do the whole job. We have to attract and engage prospects/customers, we have to help them buy, we have to support them and assure they create value, we have to grow our share of customer and territory.
Regardless what you call it, if you don’t constantly identify and qualify new opportunities, if you don’t do something with those, moving them through their buying process–efficiently and effectively, if you don’t do this through high impact, value driven engagement with each interaction, the outcomes and results won’t be created.
Yet too many people focus more on the new metaphor and not on the constant underlying principles that are required to make any of these work.
We are failing in the execution of these–the data on sales performance slaps us in the face every day. Changing what we call the things we must do without changing what we do and our effectiveness in execution is meaningless
Call it whatever you want, I’m arguing that we call the pipeline, funnel, flywheel, “Sam,” (those of you who read my posts know how much I admire Dr. Suess’s Green Eggs and Ham). Even if I convince you to call it Sam, the most important thing is the fundamentals which underlie this. Everything else is wasted discussion.
Delighted Customers Are The Biggest Drivers To Growth: Well, Duugghhh…… I suspect Brian has always known this (while I haven’t met Brian, I’ve spoken to many at Hubspot and know that’s fundamental to them). All the data shows, and it’s shown that for decades, that it’s cheaper to grow a current customer than to acquire a new one, retention is critical in XaaS revenue models (like Hubspot), we know the impact of unhappy customers on our new customer acquisition.
I do respect Brian’s discussion of moving beyond lip service to execution. Where too many fail, is in the belief that having “Our goal is to delight customers” in their mission statement and on their website is sufficient. As Brian points out, the key issue is making it happen in everything we do and in every interaction that we have with customers–from our very first contact (digital or otherwise) through their whole life cycle.
Commissions: As part of his delighted customers discussion, Brian talks about discovering the need to change how sales people are measured and compensated. Hubspot discovered the importance of “liability,” in commissions–that is, if a customer discontinues something a sales person has sold and been paid on, the sales person has to pay back the commissions. This is not a new concept, I discovered that in my very first month on commission—in the early 80’s. I took over a territory from a sales person, the customer discontinued something the sales person had sold them. In our company, it was the person who managed the territory who had the liability, so I was immediately $10K in the hole. Fortunately, I was able to recover very quickly.
But the real issue is not liability, but that we do need to change our commission models to better serve what we are trying to achieve, and how we best serve our customers. Most of our current compensation plans fail to do this, we are driven by old models that should have been changed years ago. I’m seeing interesting new models. One client is compensating their sales people on value realized by the customer–as measured by changes in net income. One client, one of the top performing sales organizations I know, has completely eliminated commissions, looking at other incentives to drive the behaviors, collaboration, and customer engagement models they need.
Friction: This is a bit where I will get a little nerdy in the discussion. Brian argues for the elimination of friction. I get what he means, we want to make the customer experience in buying and being a customer effortless.
But, I’ve been rethinking this a little. I think friction–at least the right kind of friction is very important.
Here’s the nerdy part. Every physicist knows that without friction, a mechanism will never stop or change direction. So without friction, what we do will continue forever. That means we could do the wrong thing and be going in absolutely in the wrong direction. In a frictionless world, change is impossible, everything continues as it always has.
It turns out friction is useful, both in physics and as a metaphor for our customer experiences. It’s how we learn, it’s how we and our customers change, it’s how we innovate, it’s how we improve.
The problem with friction is less that we have friction, but we don’t use that friction as a way of learning and changing. And we don’t help the customer understand that friction to help them learn and change.
Instead of using friction to our shared advantage in learning and changing, we ignore it. As a result, friction increases, and the energy required to overcome it becomes greater and greater. At some point, friction becomes so great it causes the mechanism (in physics) and our customers/our companies to fail.
Conclusion: I have great respect for Brian. I suspect my critique is more related to the limitations of publishing an article within HBR and not the substance of what we both believe. I suspect we may be in wild agreement.
While he may want to call the funnel a Flywheel and I want to call it Sam, the fundamentals are constant and it’s the sharp execution of the fundamentals that make a difference.