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Funnel v Flywheel: technologists flick the marketing and sales funnel for customer model

By Paul McIntyre - Executive Editor

27 January 2020 6min read

HubSpot's co-founder and CEO Brian Halligan: "The funnel just doesn't understand us like it used to. It gives us credit for the marketing channel, credit for our sales channel but it gives no credit for our most important channel, our customer channel."

By Paul McIntyre - Executive Editor

27 January 2020 6min read

The CEO and co-founder of the $7bn Salesforce and Adobe rival HubSpot, Brian Halligan, declared in Harvard Business Review in 2018 he was done with the marketing and sales funnel, like Amazon and a bunch of tech-skewing customer experience evangelists. But Halligan's fervour for a derivative of Amazon’s Flywheel is a whole different story, he tells Mi3.  

“We're trying to help our customers not shoot themselves in the foot like they do with Adobe, like they do with Salesforce and so-on."

- Brian Halligan, CEO, HubSpot

The Flywheel

One version of the "flywheel" taking on the sales and marketing funnel

Come fly with me

Brian Halligan doesn’t hate sales and marketing funnels – they’re just not so useful anymore as traditional marketing, sales, customer service and customer experience functions increasingly blur for organisations.

HubSpot has emerged as a rival to Adobe, Salesforce and Oracle for small and medium sized companies although Australian tech giants like Atlassian use the platform instead of the traditional enterprise-scale options. 

And since 2018, HubSpot’s Halligan has been leading a charge for the flywheel to usurp the funnel - because high-growth companies are focused on easy, useful customer experience to keep and find new customers. The argument is that the old funnel model led by marketing to feed sales and customer  conversions is anachronistic when the momentum today is with “experience disruptors”. Alongside Atlassian, Halligan cites Carvana, the app-led used car dealer start-up that is challenging traditional dealers by taking the hassle out of buying a second hand car.       

“I don’t think the flywheel is the best thing since sliced bread, I just think it’s a better metaphor to force you to think about your business in a new way,” he told Mi3. “We spend so much time worrying about turning prospects and visitors into leads and customers, maybe we should be spending an equal amount of time turning customers into happy customers and started thinking about that.

"I don't think the flywheel is the best thing since sliced bread - just a better metaphor to force you to think about your business in a new way."

- Brian Halligan, HubSpot

Funnel vision

“One of my favourite business school professors used to say, ‘if you want to build a great company, your product has got to be ten times better than the competition,’” he says. “Today, that advice feels out of date. If you want to build a great company in 2018, your customer experience has to be ten times lighter than the competition. It used to be what you sell that really matters, now it’s how you sell that really matters.”

Halligan continues: “To eradicate friction, we have to turn some assumptions on their heads; human touches entail friction. In a 'lighter experience' market, 80 per cent of your customer touches need to be self-service, and only 20 per cent full service with humans. Atlassian is a great example. They focus less on generating leads and more on generating active users.

The traditional funnel, suggests Halligan, just doesn't understand us like it used to. It gives us credit for the marketing channel, credit for our sales channel but it gives no credit for our most important channel, our customer channel.”

It all makes sense but the reality is that many companies are struggling with both their technology and platform deployments as well as the organisational structures to deliver on this customer experience reinvention. For large companies, it has been particularly troubling. It’s why there is rising frustrations with the marketing and customer cloud products that Salesforce, Adobe and Oracle are delivering and on that front, Halligan is not backward in coming forward. 

“We’re trying to help our customers not shoot themselves in the foot like the do with Adobe, they do with Saleforce and so on,” he says.

If you have a lot of developers and you have a lot of money, you should buy one of those things. Actually, they’re really powerful - you can do a tonne with Adobe and you can do a tonne with Salesforce. They're awesome but you need a lot of money, developers and a lot of time.”

Interestingly, as Adobe and Salesforce forge closer links with the big communications holding companies, HubSpot has seen parallel developments with smaller, independent agencies that are also reinventing themselves from perhaps a web developer to a marketing solutions agency for SMEs.

Halligan says agencies – he calls them partners – account for 40 per cent of HubSpot’s revenues.  

"Companies that are succeeding aren't great at marketing. They're great at customer experience. They all have great products but they have even better customer experiences."

- Brian Halligan, HubSpot

Reordering the wheel, rather than reinventing

“There’s a new species of disruptor that’s emerged in the economy called ‘experience disruptors,’” Halligan suggests. “They all have great products but they have even better customer experiences. Companies that are succeeding are the ones that aren’t great at marketing. They’re great at experience. A lot of people are talking about this.”

“They don’t have the best products in the world. They don’t really do TV advertising or traditional marketing. They create killer end-to-end experience. It’s combining sales, marketing and services and creating a revenue operations group to support a great end-to-end customer experience.”

The mantra is part tech salesman, part real - and it’s why the booming customer experience platforms are making gains all the way from the top of big companies through to the SME sector. 

The flywheel, which Amazon adapted from Jim Collins’ 2001 business bestseller, Good to Great, sees the likes of Halligan and HubSpot developing their own iterations. Rather than solely using marketing tactics to push prospects through a process of awareness, interest and a sale, the flywheel reorders the business priority to “attract, engage and delight customers as the primary driver for future business growth.”

The funnel remains functional for measuring how new business is generated while the flywheel shows how customers experience the company. It’s the latter that Halligan says is now the critical differentiator. 

And no surprises that he thinks technology is critical to deliver better customer experience. Less humans, more “low friction” self-service is the mantra.

Let’s go. What do you think?

By Paul McIntyre - Executive Editor

27 January 2020 6min read

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