HubSpot CEO Brian Halligan at #InBound18: From Funnel to Flywheel

Thursday, September 13, 2018
Jenni Stablein

Ah, the age-old marketing funnel. A “theatrical customer journey” everyone in sales and marketing thought would last the test of time.

Yet, a funnel being full of retention– did it ever really make sense to act as a sales diagram focused on extracting maximum revenue?

In his keynote presentation, CEO and founder of HubSpot, Brian Halligan, discusses swapping the dated funnel for the modern flywheel.

Fundamentally, the paradigm of a marketing funnel means user interest dwindles as the funnel shrinks. Yes, you’re still extracting customer action, but it’s selective.

So why has the funnel been used for so long?

According to Halligan, the funnel– a linear approach– worked well back in the day (he mentions the 1990s) when sales reps had a lot more information than their customers. Salespeople built trust with their customers by leveraging this ‘information gap’.

What’s changed?

The current age of consumerism means customers have access to an insane amount of information about products. The linear approach is no longer required for customer conversion but rather a device, which allows for cyclical, continuous growth.

Enter, Jeff Bezo’s flywheel.

Halligan took inspiration from the Amazon founder and CEO’s updated funnel approach: the flywheel.

A zero retention concept, the flywheel allows for Amazon to keep turning and growing.

The idea is simple and an excellent method for inbound marketing, Halligan explains, “the way we grow is to increase selection. The better the selection we have, the better the customer experience. The better the customer experience, the more traffic and word of mouth we have. The more traffic and word of mouth, the more sellers we get.”

The Amazon flywheel takes into consideration the need for a company to be continually improving, rather than thinking of a singular user experience.

Which leads to an important point made by Halligan.

The difference between a funnel and a flywheel is as simple as the difference between product and experience.

Promote customer experience over a product, and you’re moving in the right direction.

Halligan mentions some advice he received years prior from his university professor. She believed that to grow a successful company, your product must be 10x better than the competition and you will succeed.

The HubSpot CEO acknowledges the advice as a dated concept. Today, companies should be looking at it from a fresh perspective– if your customer experience is 10x lighter than the competition, you will succeed.

It is the difference between a better product era and a better experience era.

With a funnel, there’s retention. And with retention, there is friction. So how to eliminate friction?

Jon Dick, Vice President of Marketing at HubSpot, admits he wasn’t comfortable with the whole flywheel concept right out of the gates but quickly realized the potential by way of examining simple physics.

“Funnels lose the energy you put into them once you reach the bottom, but flywheels are remarkable at storing and releasing energy.”

He adds, “funnels produce customers, but don’t consider how those customers can help you grow. And all the momentum you built acquiring that customer? Gone. Each month, and each quarter, we have to start new.”

There’s no room for friction with flywheels. As Dick points out, friction literally kills flywheels. And as Halligan bluntly states, B2B is all about “low friction play”.

So what do you do? Invest in those points of friction.

For HubSpot, that means free CRM software among many other features likes “channels that help people connect now instead of later, a sales process that solves for prospects, and a broad range of customer education.”

High friction companies offer full service, 9-5 access, and purchase first products. Low friction companies provide self-service, 24x7 access, and “try first” products.

So the HubSpot flywheel looks like this. 

Attract: invest in free content

Engage (convert): Offer free versions so users can experience the product before purchasing and seamlessly upgrading.

Delight: Help users succeed through a mix of guided and self-service education (ex. user guides, knowledge-based documentation)

Halligan claims the biggest return on investment is “delight”.

He uses his son’s interest in Patagonia as an example.

In everything the sustainable outdoor clothing company does­– from marketing and advertising to their return policy– they successfully turn customers into a walking talking Patagonia flywheel.

Maximize delight; build customers, and those customers will feed growth.

Perhaps the strongest message from Halligan’s presentation is that as a company, in the current age of consumerism, to be influenced by others is actually a great thing.

But if you’re searching for hot tips, here are Halligan’s top three for the future of all headquarters out there in the world:

  1. Today, 80% of touches with customers and prospects happen with employees and humans. Employees mean friction. Friction is the enemy. In the future, 80% of customer interactions need to be self-device and 20% humans.
  2. Today, 80% of IT resources are invested in making those front-line employees more efficient. In the future, 80% of IT investment should go into making your customers more efficient.
  3. When you grow as a business, you add humans. Humans become specialized, and it’s easy to hand off customers between specialists. This creates friction, which (as we should all know by now) is the enemy. So, in the future, 80% should be automation and your employees will only deal with exceptions.

To adjust and grow to a shifting consumer age, companies have to deal with their employees differently. And while Halligan loves to speak about “the future”, it seems like for HubSpot­– the future is now.

To watch Brian Halligan and Dharmesh Shah's full presentation at INBOUND 2018 click here