What is outbound marketing: from Funnel to Flywheel

To understand Outbound Marketing, we’ll start by looking at how it’s different from Inbound Marketing. And, we will enrich this explanation by looking at a fundamental distinguishing factor through the lens of the Sales Funnel and the Flywheel. 

A consolidated practice, based on experience of use rather than theorization, identifies Outbound Marketing starting from its difference with Inbound Marketing: a constitutive, structural difference, which finds its root in the same conditions of existence of the two methodologies (the economic and cultural context of development; the panorama of available communication technologies; the anthropological profile of consumers – better: profiles – in constant, almost unpredictable evolution).

In this article, we will not shirk from the historical descriptions and we will start from the fundamental difference between these two types of marketing, but we will enrich the explanation through another fundamental distinction, the one between Sales Funnel and Flywheel

 

Inbound Marketing vs. Outbound Marketing: Permission vs. Interruption  

When we talk about Outbound Marketing, we’re referring to marketing actions that a company uses to start a conversation with an audience. In the best-case scenario, messages are created that “interrupt” the listener. This could include traditional forms of marketing and advertising such as television commercials, radio advertisements, printed advertisements (newspaper ads, magazine ads, flyers, brochures, catalogs, etc.), but also cold calls and emails, some of which may be perceived as spam.

Outbound is, therefore, first and foremost, a form of interruption marketing. Seth Godin describes it as the mode of interruption that has characterized the way companies typically communicate with potential customers. In such a scenario, the company did not ask the recipient to grant their permission to communicate, they just did it. In return, the audience didn’t necessarily volunteer their attention. Such communication claims the right to be seen and heard in that particular place and at that particular time. In the early 2000s outbound was basically done in the form of telemarketing, cold-calling, email marketing, spamming by way of trade shows, seminars, and lists of names to contact by phone or email. For companies with a substantial available budget, the communication plan could also include paid advertising campaigns in newspapers and magazines, billboards, radio, and television ads. 

 

Digital transformation: how consumer status changes

Digital transformation has changed many aspects of how companies and customers interact, over a very short period of time. The consumer—busy, bored, and maybe even irritated by the lack of recognition of this new status by organizations—is no longer easily interrupted. Today’s consumer is at ease in engaging in bidirectional purchasing processes and is able to select the messages that are of interest and useful to him (and ignore the rest). He or she has claimed the right to decide, respond, and participate, and dedicates more time to online search to access what he needs, actively frequents social networks, easily juggles complex systems of reviews, and follows increasingly personalized paths, moving between virtual and physical places to get to the end of the buyer’s journey through decisions that are entirely his own, whether instinctive or thoughtful. 

The advent of digitization has enabled and boosted the development of inbound marketing as we know it.  Inbound, unlike Outbound, is, mainly, permission marketing because it reinterprets, in terms of privilege, what until then companies had conceived as a right: the privilege of consumer attention, to be earned by offering content created from real needs, expectations, and even urgencies from declared or even latent desires (learn more about the transition from Interruption to Permission Marketing in this post). 

 

The advent of Inbound: redesigning the communication strategy 

Later, outbound marketing, based on interruption, began to show enormous signs of suffering. An unequivocal indicator of this decline can be seen in the rise of tools invented to block messages created by the very techniques listed above. One such tool was the ad blocker (the source code for Adblock, the first blocking extension, was written by developer Henrik Aasted Sørensen in 2002). It was a no-holds-barred struggle between brands who continued to believe, often in total good faith, that they could have unlimited access to consumers’ attention, and the consumers themselves, who were experiencing the freedom to renegotiate, moment by moment, their role within the buying journey.

Soon, Outbound, with its blurred tools and logic, would be replaced within the “toolbox” available to marketing and sales departments. New marketing automation platforms, such as Hubspot, mastered concepts, languages, and tools that were already fully Inbound. The communication strategy had to be redesigned, keeping in mind digital skills and the new awareness of increasingly attentive and selective customers

 

From funnel to flywheel: how the sales process changes

From that moment of dramatic transition, it became necessary to continuously update the systems for forecasting consumer behavior and the interpretative schemes used to set up marketing actions. 

To be able to record the evolution of a world transformed by new communication technologies, one interconnected and populated by customers committed to pursuing increasingly multi-faceted purchasing programs, it was necessary to support and exploit digital communication. It is in this moment that the sales funnel, even if adapted to the new virtual context, begins to show itself as not very flexible and even inadequate for relating with customers and seeing the patterns hidden in their passages on the web. 

 

The sales funnel

The sales funnel (also known as the revenue funnel or sales process) is a process with a dual purpose. It refers to:

  1. The purchasing process through which companies guide their customers;
  2. The process through which a company identifies and qualifies customers according to the sale of its products and services.

The sales funnel is divided into several steps, which differ according to the relevant sales model. In one of its more extensive definitions, the funnel has up to seven stages:

  • Awareness. Prospects become aware that a solution exists.
  • Interest. Prospects show interest in a product and take action to find out more about it.
  • Evaluation. Prospects (or, in B2B, prospect companies) examine competitors’ solutions as they move toward a final purchase decision.
  • Decision. The stage where a final decision is reached and pricing negotiation begins.
  • Purchase. The person (or company) purchases a good or service.
  • Re-evaluation. When a contract comes to an end or when a product has been consumed, the individual or B2B customer will re-evaluate the product or service to decide whether or not to renew the purchase or the contract. 
  • Repurchase. The customer purchases a product or service again.

 

The Flywheel

Companies have long structured their business strategies around the sales funnel, a valuable tool with great operational value. However, the funnel is proving to be less effective in correctly interpreting today’s reality, online and offline. Today’s customer referrals and word-of-mouth have a huge influence on the buying process and expose some limits to the traditional funnel: customers are still conceived as an afterthought (something to think about later, after the transaction has taken place) and not as a driving force that must be fed in the first place and constantly maintained. The funnel produces customers but does not consider how these customers can actively help the business grow, even from the very first steps of the process. This is where the Flywheel comes into play.

Denoted by its shape, the Funnel implies a gradual and linear selection: from the more or less anonymous multitude identified by marketing actions to more defined groups on which to activate sales actions to a final consumer who represents a sort of black box to be targeted with messages built on buyer personas. Unlike the funnel, the Flywheel does not end with the sale (or with the repetition of the last steps of the sales process) but “stores and releases energyin a continuous cycle. The reference here is notable: perfected for the mining sector by the Scottish scientist and inventor James Watt, the flywheel was, first of all, a wheel, but incredibly energy efficient: the amount of energy, or momentum, stored depended on the speed with which the flywheel spun, the amount of friction it encountered, and its size. In its apparent simplicity, when placed on an axis, it was able to give a huge boost to the second phase of the industrial revolution. 

 

Flywheel: a circular metaphor that brings the customer back to the center 

The model introduced by Hubspot depends on the areas with the greatest impact, such as the customer service team, which in turn transmits energy to the rest of the system and the surrounding environment. Customers are an integral part of the process and serve as the pivot around which the outside areas —sales, service, and marketing— rotate.

Applying a certain strength to the flywheel means investing in a particular step of the process. Eliminating any possible friction in the company’s strategy means taking an honest look at the structure of the teams involved and the way they work. 

  • Are all teams aligned or do they operate in silos? 
  • Is the price of the product or service easy to communicate and understand or is it made opaque by a series of confusing fees?
  • Can potential customers connect with the brand when and where they want or are they forced to follow a single path without any possibility of a detour?    

The Flywheel has been designed in a circular way to answer these kinds of questions: it attracts, engages, and links the success of the product (and the brand) to the experience of customers, who receive information and attention throughout the process. Delight, the third action in the Flywheel, means just that: creating a business that always puts customers first, aligning all teams around their needs, to build an extraordinary experience during the process.

  1. Attract: gain your target’s attention with useful content; remove barriers as visitors become aware of the corporate values embedded in products and services.
  2. Engage: don’t just close a deal, build relationships. Allow customers to reach you at the time and through the channels they prefer. 
  3. Delight: tie success to customer satisfaction. Distribute resources more efficiently throughout the entire Customer Experience.

 

Meet customers: Flywheel’s customer-centric logic

For a long time, the funnel was a good representation of the way buyers got to know a company’s products, i.e. through push modes of content distribution that were typical of outbound marketing. Marketing materials reached the often unsolicited target and these were eventually deepened in communication with sellers. This is not how customers today arrive at their purchasing decisions. More than ever before, conversations take place in different and often distant places, between several people, at the same time. 

Consumers ask for suggestions on the web, look for mentions of the brand on social media, read other people’s reviews on specialized sites, and they get information on online platforms and websites. The traditional, linear funnel is unable to capitalize on the customer’s experience, nor can it identify the touchpoints where the process slows down because it encounters resistance that complicates the relationship with the brand or muddies its conversations. The flywheel is the model that fluidly combines all the elements of the process in an effective customer-centric logic: removing friction from internal processes means evolving to finally meet people, with their particular experiences and their specific ways of interacting with products and services. 

In conclusion, the Flywheel could only be born in Inbound marketing, which is much more flexible and open to suggestions from consumers than Outbound marketing. The latter, on the other hand, is loosening certain rigidities in order to move in the direction of more qualified relationships and personalized contents.