Funnels, flywheels and the rest – oh dear!
Do you remember those times at school when you literally weren’t paying attention for 47 minutes, and then out of the blue the teacher said: ‘If you don’t hear anything else today, make sure you listen to this. This is the really important bit.’?
Well, this is something similar.
If you’ve been trying to understand the meaning and function of RevOps, pay attention now. Why? Because if you’re not doing the following, then you’re not doing RevOps.
Traditional marketing funnels and flywheels are insufficient
Understanding the customer journey through visual representation is a great idea, but the problem is that many of these visualisations are, in a sense, inadequate.
The traditional sales funnel, which many companies use, narrows down the pool of potential customers from prospects, leads, marketing-qualified leads (MQLs) and finally sales-qualified leads (SQLs). Then the funnel stops.
Instead of a funnel, HubSpot uses a flywheel, which depicts the phases of Strangers, Prospects, Customers and Promoters in that order. The flywheel illustrates Attract, Engage and Delight (attracting customers, engaging customers and delighting customers, which drives revenue growth).
Some have attempted to update the funnel into a vertical butterfly shape, where the upper part remains the same as the original funnel, but the lower part, where it begins to widen again, now includes customer retention and subsequently Upsell/Cross-sell/Expand.
The problem with both funnels, and even the flywheel, is that they are methodologies. Converting these funnels into a data model in CRM is much more of a science than an art.
Why is this the case? Because you need to start thinking about metrics in a way that makes them useful for driving business, so you can determine whether your GTM (Go-To-Market) strategy is working, and so you can make adjustments. The solution for mapping the customer journey is a scientific model in the shape of a horizontal bowtie-shaped funnel (BowTie Funnel).
BowTie Funnel
Key features
- Maps the entire customer journey from A to Z
- Impact must be achieved at every point in the funnel.
- You will spend more time on the customer success side (CS = Customer Service) of the funnel than on the potential customer side (marketing and sales funnel).
- Use customer-focused language, not sales-focused (i.e. avoid: closed/won, signed contract, negotiate).
In action
From left to right, the horizontal funnel with a full bow tie begins with awareness, moves into education and ends with selection, before the marketing and sales part of the funnel narrows.
As soon as the funnel begins to widen again (towards the CS=Customer Success side), Onboarding follows, then Achieving Impact (the final result has been achieved) and finally Recurring Impact, where retention/renewal, upselling or cross-selling takes place. When Recurring Impact is achieved, it signifies customer satisfaction. This means they want more from you and your product/service.
The customer journey is not linear
Because models usually identify or name each stage only once, it can be tempting to view the journey through this funnel as linear, where one stage on the left-hand side of the bowtie diagram flows seamlessly into the next.
No, not even once.
The reality is that a potential customer often moves back and forth between awareness, education and selection for an indefinite period before (perhaps) passing through the narrow part of the funnel.
The story on the right-hand side of the funnel is no different. The counter-argument is that, after a deal is closed, there may actually be greater non-linear movement than before. The path to repeat business is not without its complications, but if you manage to get there, it is well worth it.
Right side of the BowTie funnel = important
Although all stages of this model are vital, due to the shift from ownership models to subscription and consumption models, the last two stages—achieving impact and repeat impact—have become the areas requiring the most focus and attention.
Building blocks of the BowTie funnel: Metrics
Volume Metrics
If a scientific approach is correctly applied to the horizontal Bowtie Funnel, a company can begin to establish tracking measures and achieve impacts. These are essential for success. One such tracking metric is volume measurement, i.e. the number of potential customers, deals or accounts you have at the start of each stage. These volume metrics can then be applied to each of the six stages of the Bowtie Funnel.
8 stages of volume metrics
Essentially, this involves volume measurement, which consists of counting the number of people who have gone through the process of performing a specific action to move from one stage of the funnel to the next. For example, the action of joining a project is what triggers the move from the education stage to the selection stage. In total, there are eight volume metrics:
- Identified (VM1)
- Prospect (VM2)
- Engagement (VM3)
- Priority (VM4)
- Commitments (VM5)
- Ready (VM6)
- Recurring impact (VM7)
- Max Impact (VM8)
This type of tracking is both old and new. Companies have long tracked potential customers, deals and accounts through the marketing and sales side of the funnel; what companies traditionally do not do, however, is extend this type of tracking to the CS (Customer Success) side of the funnel, which is the most important part!
Whilst volume metrics have their own value, they are also beneficial because their use creates the opportunity to implement further tracking measures.
Conversion Metrics
Whilst volume metrics indicate status and timing, conversion metrics show how effectively you are demonstrating the value of your product. This is achieved by measuring the rate at which prospects, opportunities or accounts move from one stage to the next.
7 Conversion Metrics
- Prospect to MQL rate (CR1)
- MQL to SQL (CR2)
- Show-rate, hand-off (CR3)
- Win rate (CR4)
- Client churn rate during onboarding = Churn (CR5)
- Lack of impact leading to churn (CR6)
- Upsell during usage over the contract term (CR7)
Each of these lies between two volume metrics. For example, between volume metric 1 (VM1) and volume metric 2 (VM2) lies conversion rate 1 (CR1), which shows the conversion rate between these two volume metrics.
This demonstrates the value of a common language. If it were to become widespread, all RevOps professionals would know that the term ‘CR1’ refers to the success rate or ratio at which someone moves from merely visiting a website (Identified) to having a genuine interest in a product or service (Interested).
The most common conversion metrics
LTO (Lead to Opportunity)
- The two stages of the BowTie funnel (awareness, education)
- Three volume metrics (Identified/VM1, Interested/VM2, Engaged/VM3).
- Two conversion rates (CR1, CR2).
OTC (Opportunity to Close)
- One stage of the BowTie funnel (selection)
- Two volume metrics (Priority/VM4, Submitted/VM5)
- Two conversion rates (CR3, CR4)
Churn
- Two stages of the BowTie funnel (Onboard, Achieve Impact)
- Two volume metrics (Ready/VM6, Recurring Impact/VM7)
- Two conversion rates (CR5, CR6)
Major benefits
The potential benefits of all this are enormous. When your volume metrics are within the CRM system and you track conversion rates after customer acquisition (commitment), you can start addressing customer churn. This setup provides a single source of truth (i.e. the person running the predictive models, the RevOps professional!).
As this person monitors both the LTO rate and the customer churn rate, there is no need to consult the marketing automation platform or the finance department for this information. The result? A more comprehensive view of the situation.
Time Metrics
The final building block in the funnel is the time metric, which measures how long it takes to move from one stage to the next and shows how quickly you are helping customers move through the sales process.
7 Time Metrics
- Time taken to achieve engagement (Δt1)
- Duration of the prospecting campaign (Δt2)
- Time taken to arrange a meeting and convert it into a qualified opportunity (Δt3)
- Sales cycle (Δt4)
- Customer “lifetime” (Δt5)
- Time until the client achieves the desired impact (Δt6)
- Time taken to achieve account penetration (Δt7)
These exist within volume metric tiers, with a single time metric situated between two volume metric tiers. This specific metric allows you to measure the length of the sales cycle, the time to sales (how long it takes to close a deal) and the contract duration.
THIS is RevOps
These three metrics (volume, conversion, time) collectively increase the maturity level of your Revenue Operations and help determine the correct allocation of resources. The main goal of RevOps experts is to focus on influencing all three of them, as this is how you know whether you are making an impact.
This is Revenue Operations. If you don’t have these, then either you aren’t doing RevOps, or you aren’t doing it properly.
If you would like to discuss the situation in your company and arrange a RevOps consultation, please do not hesitate to contact us.
If you’d like to learn more about Revenue Operations, you’re welcome to attend our RevOpsCon conference – the first conference on Revenue Operations in the Czech Republic. More information: www.revopscon.cz
Have a nice day,
Daniel Musil
Article loosely translated from the original here: https://blog.revpartners.io/en/revops-articles/bowtie-funnel