I first heard of the concept of a “flywheel” proposed as a replacement to the concept of a “funnel” in direct marketing. At first, it sounded like a simple relabeling to me: like an intern’s idea meant to shake up the notion of the funnel model but devoid of any truly differentiating substance.
What is the funnel model?
In the traditional business model of the funnel, prospects enter at the top of the funnel, the widest point. In the topmost part, a company must cast a wide net to attract the maximum number of prospects. The funnel then siphons the customers down by attracting them until they are engaged, then converting them into actual customers.
For years, I subscribed to this model. My own agency built direct response funnels every day, and I knew every one of them would fail if we didn’t consider the customer’s needs, pain-points and desires. I had been in the marketing space for thirteen years and I knew the funnel model predated the internet. From print ads to direct mail postcards to infomercials, every business used funnels, and I considered the model to hinge entirely upon the customer.
What is the flywheel model?
Critics of the funnel business model claimed that it was fundamentally flawed because it failed to center the customer. Enter the flywheel model. It isn’t just a replacement of the funnel, but a powerful new model with much greater significance and much more potential to impact the bottom line.
In the flywheel model, the customer is placed as the center of a cycle of three categories, each reflecting what phase of interaction the customer has reached: the company attracts the potential customer until they are successfully engaged and converted into a proven customer. At this point, the company’s mission shifts to continually delighting what is ideally a repeat customer, brand loyalist and reference point for drawing in new customers.
The reason the flywheel isn’t on the tip of every entrepreneur’s tongue is that it’s a rarefied condition. Only a few companies have made a perfect flywheel—but they’re some of the biggest, most disruptive companies ever.
Facebook. Google. Uber. Amazon. How did they manage to dominate? Because of the flywheel.
Why do some companies grow exponentially?
For those of us who can recall our geometry, you’ll remember the two forms of growth—linear growth and exponential growth. Linear growth follows a straight-line path, growing steadily over time. 1, 2, 3, 4, 5, and so on. By contrast, exponential growth starts out looking almost flat, but then takes off like a rocket, far outpacing any linear growth line. 1, 3, 9, 27, 81, and so on.
The sad fact is that linear growth businesses are difficult to maintain and almost always fail. By contrast, exponential growth businesses are nearly impossible to kill.
So how does a business grow exponentially? With a flywheel.
How does the flywheel work?
To understand the flywheel, ask yourself this question: What happens to a business when more customers arrive? Does the business get better or worse?
A business with no flywheel gets worse the more customers they onboard. Think of a consultant who can only take on so many clients. Once she reaches capacity, each new client she takes on will worsen the results for the other clients, because her time is stretched too thin. Think of the service business that hits capacity. They can hire more people, but that makes the business more complex and creates more potential points of failure.
So, here is the game-changing difference: a business with a flywheel gets better the more customers enter. Businesses that utilize this model enjoy exponential growth, like a snowball rolling faster and faster downhill the more snow mass it picks up.
What are some pre-Internet examples of flywheels?
•The Telephone. What if only one person ever had a telephone? It would be useless. That person would have no one to call. But the more people adopted the telephone, the more useful the network became.
•The Yellow Pages. Similarly, the more businesses agreed to be listed in the Yellow Pages, the more useful it became, resulting in more people buying the book, resulting in more businesses opting in and buying ads.
What are some Internet-age examples of flywheels?
•Amazon. The more people shopped on Amazon, the more sellers joined the ecosystem, increasing the selection and price competitiveness, attracting even more customers.
•Facebook. The more people joined the network, the greater the pressure for their peers to join the network and join the party, resulting in an even more thriving network to attract even more users (and more ad revenue).
•Uber. The more customers used Uber, the more drivers joined the network, making it more reliable and attracting more customers.
•Venmo. The more people adopted Venmo, the more useful it became as a peer-to-peer payment system because you could reliably expect that their friends would have it.
How can you start implementing flywheels in your business?
The simplest way to start implementing flywheel principles in your business is to create a community.
This could be a private Facebook group, a WhatsApp group, a Telegram group, a Discord forum—any place for your users and customers to congregate around your brand. There, they can answer each others’ questions, have discussions, and add value to the community as well as each other.
See why this puts you within spitting distance of a flywheel? The more people you add to the community, the more valuable it gets. By fostering such a community, you can unearth flywheel potential you never knew existed. The community could spin off to a whole different wing of your business.
You can have a profitable business without a flywheel. But if you want exponential growth and immortality, a flywheel is the way to get it.