Businesses have to realise one thing: times have changed, and business models are constantly evolving. Sticking to outdated ways, ignoring important shifts that have happened in the industry, is an almost surefire path to failure.
Marketers, especially, must adopt modern strategies to outperform with the competition. In this article, we consider the Flywheel approach and here’s what you need to know right now about this new model.
The Traditional Sales Funnel
Many businesses still subscribe to the good old sales funnel, which consists of two components: marketing and sales. First, marketing targets prospective leads who have the potential to become paying customers. Lead generation and finding new customers is the goal of a traditional marketing setup.
Once the leads go through the marketing funnel, a portion of the prospective leads get in touch with the business to know more, and that’s where the sales team comes in. The goal of a traditional sales setup is to convert leads into full-fledged customers.
With the traditional sales setup, customers are shuffled across three stages: from marketing to sales to customer support. Throughout this funnel approach, the focus is on acquiring new one-time customers.
The problem with this, however, is that there’s no emphasis on viewing customers as a means to grow. The output of a funnel is the customer and that’s where the process would end. Until now.
Meet the Flywheel Strategy
The flywheel approach is a new way to think about running your business, which puts your customers at the centre. With this approach, customers are not treated as an outcome of the process. Rather, they are an input for marketing, sales, and customer service.
The flywheel is a circular process rather than a one-directional approach. All the energy used to bring in customers is utilised to grow the business further, as opposed to letting all the effort in acquiring new customers go to waste by starting all over, as with the traditional sales funnel approach.
How the Flywheel Works – and Why You Need it Right Now
The flywheel approach is a unified way of representing the various forces that affect the growth of a business. This approach also lets you, the business owner, to measure the momentum that your products are building and the friction or drag that slows it down. It allows you to clearly see the growth drivers of your business as well as areas of opportunity for improvement.
This relatively new, digitally driven discovery process is a different, non-traditional way of learning about products. With the advent of social networks and crowd wisdom, a new approach is needed. And that is where the flywheel comes in.
Why is this important? More than half of today’s purchase decision-making process happens without any contact between the buyer and the business. Buyers use their network to make decisions. They do a lot of research to learn about your business before meeting any of your touchpoints, and before your sales team has an opportunity to draw them in.
How the Flywheel Can Boost E-Commerce Revenues
The flywheel’s effectiveness in helping your business grow, whether it be an e-commerce retail operation or any other business, depends on three major aspects:
#1 How fast you spin the flywheel
The speed of the flywheel depends on how much force you apply to the most impact-creating areas. In a traditional funnel model, the majority of the force is applied in attracting prospective customers and then converting leads into sales.
In a flywheel framework, the force is applied all throughout. Not only to acquire customers, but also to delight them once they’re on-board. The emphasis of giving the customer the “wow” factor is on the sales, marketing, and customer service teams. It is not the job of one team or the other. Everyone takes responsibility.
As a result, the business gets more customers on board. These customers feel impressed with the customer-centric approach and the level of service offered throughout their interaction with the business.
Consequently, they end up spreading the word about the business and the business pulls in even more customers. Your website traffic will jump when your flywheel spins fast.
#2 How much friction you can minimise
Friction slows down your flywheel, and you don’t want that. This can happen because there may be a disconnect between sales and customer service or between marketing and sales. If the conversion rates start to drop or if the customer does not spread goodwill about the business through word-of-mouth, then friction slows down the flywheel.
If customers aren’t delighted by your product or service, then you have to figure out why that is the case. You can minimise the friction in your flywheel by ensuring that your customer walks away extremely happy every time he/she interacts with your business.
For e-commerce retailers, flywheel frictions can be minimised by concentrating on the quality of customer support offered. Sometimes, customers add products to their carts only to abandon them in the final stages.
Cart abandonment is a sign of friction. This means the customer did not feel convinced enough to make a transaction. Value-added services like fast and free shipping can be offered to avoid cart abandonment.
Minimising friction in your flywheel leads to more conversions, and eventually, more sales.
#3 How big is your flywheel
Size matters! Once your flywheel is spinning a hundred miles-per-hour with minimal friction, it’s time to grow it in size. As more and more customers are delighted, they refer other people from their network to your business.
Growing the size of your flywheel means offering a wider range of products, and eventually distributing fixed costs as your scale gets bigger. More positive reviews lead to more traffic to your website. More traffic means greater sales.
Your flywheel starts getting heavier. It has more energy and spins faster like a well-oiled machine. Ultimately, your business grows via more clicks, more reviews, more sales, and more displays on organic searches.
You know that your flywheel is working well, when you notice your average cost of sale going down and your sales numbers rising significantly over time. How fast these metrics change depends on how fast the flywheel spins and how effectively you can minimise friction.
The traditional sales funnel approach might have worked for you in the past; it may even still be effective for you now. But if you want to outmaneuver the competition, you must learn to adapt to the market’s changes. Let’s have a chat about we can help you transition into the flywheel model and transform your business.