The Battle of Growth Models: The Funnel, The Hourglass and The Flywheel

Unpacking the pros, cons and when to apply each to your product or business’s growth strategy.

In our hyper-digital world, marketing tactics constantly clash in a battle for the hearts and wallets of consumers. Startups are perplexed about how to win customers. They not only contend with the costs of deploying the wrong growth model but also with the mighty tides of attrition. Take what happened to Quibi in 2020.

Quibi, the cautionary tale for subscription based startups

• Startup: Quibi
• Funding: $1.75 billion
• Pricing Model: Subscription?

Context: Quibi was a subscription based streaming platform that launched in April 2020. Just six months after its launch, Quibi announced that it was shutting down due to its inability to attract and retain a sufficient subscriber base.

Determining the right growth method will impact a business’s ability to achieve and sustain long-term growth. While we may all be familiar with the funnel, hourglass, and flywheel by now, and the marketing blogs have declared favorites, there is rarely thought given to the use cases that may require a business to apply one over another at a given point in their lifecycle.

Let’s examine these three models and unpack when to apply each.

I. Marketing Funnel — an oldie but goodie

The trusty marketing funnel is a battle-tested linear model that establishes the key stages businesses need to guide customers from awareness to conversion. Since funnels focus on moving prospective customers as fast as possible to the point of purchase, it optimizes for the following performance indicators:

1. Reach: Increasing the target audience size at the top
2. Sales Productivity:? Maximizing prospect interactions while minimizing time and effort spent on interacting?
3. Sales Velocity: Shortening the time to close a deal
4. Point of Sale Marketing: Increasing the amount of purchases or deal size at the checkout or contracting stage

Pros: Simple, linear representation of the buyer journey, making it easy to understand.

Cons: Focuses on early conversion stages, neglecting post-conversion activities. Ignores non-linear consumer behavior.

When to Use: For quick conversions, rapid lead generation, one-time purchase models, short sales cycles.

II. The Hourglass — my personal favorite

Comment asking me why, and I’ll share.

The Hourglass is a siamese funnel that goes beyond the point of purchase and moves customers through stages like onboarding, product activation, engagement, and loyalty. It emphasizes increasing product usage and building lasting relationships. The Hourglass model prioritizes the performance of:

1. Lifecycle Marketing: Automating customized communications to drive product comprehension and deliver ongoing value
2. Early Product Activation: Increasing how quickly customers set up and utilize the product or service after purchase
3. Lifetime Value: Increasing the amount of revenue a customer will generate through referrals and upsells throughout their lifespan as a customer

Pros: Emphasizes product adoption and engagement, with clear lifecycle stages. Boosts customer comprehension, satisfaction, referrals, and lifetime value.

Cons: Measuring effectiveness can be complex. Requires ongoing content creation and effort.

When to Use: Longer product adoption cycles, automating a lifecycle strategy, maximizing customer lifetime value, and word-of-mouth marketing.

III. The Flywheel — the unicorn on the block

The Flywheel is a dynamic approach that prioritizes creating a self-sustaining growth engine by delivering an exceptional customer experience at every touchpoint in the buying process. Long before a customer purchases, the Flywheel model creates opportunities to provide value and share the brand — engagement loops along the way. This model prioritizes the following performance indicators:

1. Velocity and Productivity: Increasing Marketing and Sales ability to attract customers
2. Friction: Reducing points of friction across the full customer experience
3. Engagement Loops: Increasing engagement opportunities to accelerate referral and network growth

As this model is the least visually intuitive, a real-world example of the Flywheel in action is Airbnb. By encouraging users to both host and travel, they create a cycle where hosts become guests and vice versa, driving ongoing usage and expansion.

Pros: Prioritizes customer satisfaction, feedback, and referral marketing from the outset. Enhances customer lifetime value.

Cons: Tracking and measuring effectiveness can be intricate. Demands ongoing product iteration and resources.

When to Use: For network-based businesses, to go viral, for agile growth, and when maximizing customer lifetime value is crucial.

Choosing between the Funnel, Hourglass, and Flywheel depends on your business goals, industry, and customer base. Be sure to consider your business’s specific needs and don’t hesitate to adapt your growth strategy to use a combination of these models as your business needs evolve.

Leave a comment letting me know which growth model you’re using for your business today. What works about it? What doesn’t work?

The opinions shared in this article are solely my own and are not endorsed by or affiliated with any particular organization.