The Death of the Sales Funnel?: New Models for Customer Acquisition
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Hey Entrepreneurs,
Today we’re into the potential demise of the traditional sales funnel and the rise of new, more dynamic ways to win customers. By the end of this newsletter, you’ll be looking at customer acquisition in a whole new light!
The Traditional Sales Funnel: A Brief Eulogy
Before we leap into the future, let’s pour one out for our old friend, the sales funnel. You know the one:
Awareness
Interest
Consideration
Intent
Evaluation
Purchase
For decades, this linear model has been the North Star for marketers and sales teams. It’s simple, it’s intuitive, and it’s served us well. But here’s the thing: the world has changed, and our customers have changed with it.
The traditional funnel assumes a straightforward journey from awareness to purchase. But in today’s world of constant connectivity and information overload, customer journeys are anything but straightforward. They’re messy, unpredictable, and often resemble a tangled ball of yarn more than a neat funnel.
So, is the sales funnel dead? Not quite. But it’s certainly on life support, and it’s time for us to explore new models that better reflect how real people make decisions in the real world.
The Flywheel Model: Momentum is Everything
Enter the flywheel model, popularized by HubSpot’s Brian Halligan. Imagine a giant wheel that gains momentum as it spins. In this model, your business is the wheel, and your customers are the force that keeps it spinning.
The flywheel has three main stages:
Attract
Engage
Delight
But here’s the kicker: unlike the funnel, which ends at purchase, the flywheel is a continuous loop. Happy customers become promoters, feeding back into the “Attract” stage and keeping the wheel spinning faster and faster.
The Flywheel in Action: Chewy’s Customer-Centric Approach
Let’s look at how online pet retailer Chewy has embraced the flywheel model:
Attract: Chewy uses targeted ads and heartwarming content to draw in pet owners.
Engage: They offer personalized product recommendations and expert advice through their website and customer service.
Delight: This is where Chewy really shines. They go above and beyond with handwritten holiday cards and even custom pet portraits for loyal customers.
The result? Delighted customers who not only keep coming back but also enthusiastically recommend Chewy to other pet owners. It’s word-of-mouth marketing on steroids, keeping that flywheel spinning at breakneck speed.
The Multi-Touch Attribution Model: Giving Credit Where It’s Due
As we move away from linear funnels, we need new ways to measure and understand the impact of our marketing efforts. Enter the multi-touch attribution model.
This model recognizes that customers interact with your brand multiple times across various channels before making a purchase. Instead of giving all the credit to the last touchpoint (like when someone clicks on a Google ad right before buying), multi-touch attribution distributes credit across all the touchpoints in the customer journey.
Think of it like baking a cake. The last ingredient you add isn’t solely responsible for how good the cake tastes. It’s the combination of all the ingredients, mixed in the right way, that creates the perfect cake.
Types of Multi-Touch Attribution:
Linear: Every touchpoint gets equal credit. It’s like saying every ingredient in the cake is equally important.
Time Decay: More recent touchpoints get more credit. This is like saying the frosting (added last) is more important than the flour (added first).
U-Shaped: Most credit goes to the first and last touchpoints. This is like saying the quality of the flour and the skill of the final decorating are most important.
W-Shaped: Credit goes to the first, middle, and last touchpoints. This adds importance to that crucial middle step, like taking the cake out of the oven at just the right time.
Custom: You decide which touchpoints matter most based on your unique customer journey.
The Multi-Touch Mindset: Airbnb’s Holistic Approach
Airbnb has embraced this multi-touch mindset in their marketing strategy. They understand that a customer might:
See an Instagram ad (first touch)
Read a blog post about travel tips (middle touch)
Watch a YouTube video featuring an Airbnb experience (middle touch)
Finally book through a retargeted ad (last touch)
By using multi-touch attribution, Airbnb can more accurately measure the impact of each marketing channel and optimize their overall strategy. It’s like they’re perfecting their recipe, understanding how each ingredient contributes to the final delicious experience.
The Ecosystem Model: Building a Web of Value
Moving beyond individual customer journeys, forward-thinking companies are now focusing on building entire ecosystems of value. This model recognizes that customers don’t just buy products or services; they buy into ecosystems that solve multiple needs and create ongoing value.
Think of it like choosing a smartphone. You’re not just buying a device; you’re buying into an entire ecosystem of apps, accessories, and services. The more integrated you become with that ecosystem, the harder it is to leave.
Key Components of the Ecosystem Model:
Core Offering: Your primary product or service
Complementary Products: Additional offerings that enhance the core
Partner Network: Third-party integrations and collaborations
Community: User groups, forums, and knowledge-sharing platforms
Data Flywheel: Continuous improvement driven by user data
Ecosystem in Action: Notion’s Collaborative Workspace
Notion, the all-in-one workspace tool, has masterfully built an ecosystem:
Core Offering: Flexible workspace for notes, docs, and projects
Complementary Products: Templates, AI integrations, mobile apps
Partner Network: Integrations with tools like Slack, Google Drive, Figma
Community: Active user groups, template sharing, ambassador program
Data Flywheel: User behavior informs new features and improvements
By creating this ecosystem, Notion doesn’t just acquire customers; they create loyal users who are deeply integrated into the Notion way of working. It’s like Notion has become the operating system for their users’ work lives.
The Network Effects Model: Growth Through Connections
In the digital age, the value of a product or service often increases as more people use it. This is the essence of the network effects model. Instead of focusing solely on acquiring individual customers, this model aims to create a network where each new user adds value for existing users.
It’s like throwing a party. The first few guests might feel awkward, but as more people arrive, the party becomes more fun for everyone. Eventually, people start inviting their friends because they don’t want them to miss out on the great time they’re having.
Types of Network Effects:
Direct: More users = more value (e.g., social media platforms)
Indirect: More users of one product increase the value of a complementary product (e.g., more iPhone users = more valuable App Store)
Two-Sided: Platforms connecting two distinct user groups (e.g., Uber connecting riders and drivers)
Data: More users generate more data, improving the product for all (e.g., navigation apps)
Network Effects in Practice: Figma’s Collaborative Design Platform
Figma, the collaborative design tool, has leveraged network effects to drive explosive growth:
Direct: More designers on Figma = more collaboration opportunities
Indirect: More Figma users = more plugins and integrations developed
Two-Sided: Connecting designers with clients and stakeholders
Data: User behavior informs UI improvements and new features
By focusing on building a network rather than just acquiring individual users, Figma has created a self-reinforcing growth engine. It’s like they’ve started a design revolution, and every new user adds fuel to the fire.
The Jobs-to-Be-Done Framework: Understanding Customer Motivations
As we move beyond linear funnels, it’s crucial to understand the deeper motivations driving customer behavior. The Jobs-to-Be-Done (JTBD) framework, popularized by Clayton Christensen, provides a powerful lens for this understanding.
The core idea is simple: customers don’t buy products or services; they “hire” them to get a job done. It’s like when you “hire” a milkshake to keep you entertained during a long commute, rather than just to satisfy hunger.
By focusing on the job rather than the customer demographics or product features, we can uncover new opportunities for innovation and acquisition.
Key Elements of JTBD:
Functional Job: The practical task the customer needs to accomplish
Emotional Job: How the customer wants to feel or avoid feeling
Social Job: How the customer wants to be perceived by others
JTBD in Action: Peloton’s Fitness Revolution
Peloton didn’t just sell exercise bikes; they understood the jobs their customers were trying to get done:
Functional Job: Get a high-quality workout at home
Emotional Job: Feel motivated and accomplished
Social Job: Be part of a fitness community
By addressing all these jobs, Peloton created a compelling value proposition that went far beyond just selling exercise equipment. They’re not just selling a bike; they’re selling a ticket to a fitter, more connected you.
The Momentum Marketing Model: Building Unstoppable Velocity
Now, let’s introduce a new framework that combines elements of the models we’ve discussed: the Momentum Marketing Model. This model focuses on creating and sustaining marketing momentum through a series of interconnected flywheels.
Think of it like a perpetual motion machine for your marketing efforts. Each part of the machine feeds into the others, creating a self-sustaining system of growth.
The Five Flywheels of Momentum Marketing:
Content Flywheel: Create valuable content → Attract audience → Generate insights → Improve content
Community Flywheel: Engage users → Foster connections → Encourage contributions → Grow community
Product Flywheel: Gather feedback → Improve product → Increase satisfaction → Generate more feedback
Data Flywheel: Collect user data → Derive insights → Personalize experiences → Encourage more usage
Advocacy Flywheel: Delight customers → Turn them into advocates → Attract new users → Create more potential advocates
The key to this model is that each flywheel feeds into the others, creating a self-reinforcing system of growth.
Momentum Marketing in Practice: Duolingo’s Language Learning Empire
Duolingo has masterfully implemented the Momentum Marketing Model:
Content Flywheel: Continuously improving language courses based on user data
Community Flywheel: Forums, leaderboards, and in-app social features
Product Flywheel: Gamification elements that evolve based on user engagement
Data Flywheel: Personalized learning paths and difficulty adjustments
Advocacy Flywheel: Streak sharing, friend invites, and social media integrations
By focusing on building momentum across all these areas, Duolingo has created a customer acquisition engine that’s incredibly hard for competitors to replicate. It’s like they’ve created a language learning party that everyone wants to be part of!
The Ecosystem Expansion Model: Growing Through Strategic Additions
Building on the ecosystem concept we discussed earlier, the Ecosystem Expansion Model focuses on strategic growth through carefully chosen additions to your product or service ecosystem.
It’s like playing a game of Monopoly. You start with a single property, but over time, you strategically acquire complementary properties to create a more valuable set.
Stages of Ecosystem Expansion:
Core Optimization: Perfecting your primary offering
Adjacent Expansion: Adding closely related products or services
Vertical Integration: Expanding up or down your supply chain
Horizontal Diversification: Entering new, related markets
Platform Creation: Transforming your ecosystem into a platform for others to build upon
Ecosystem Maestro: Shopify’s E-Commerce Empire
Shopify has masterfully executed the Ecosystem Expansion Model:
Started with a core e-commerce platform
Expanded into adjacent areas like payment processing and shipping
Vertically integrated by creating their own fulfillment network
Horizontally diversified into areas like small business loans
Transformed into a platform with their app store and partner program
By strategically expanding their ecosystem, Shopify has created multiple acquisition channels and increased the lifetime value of their customers. It’s like they’ve built an entire city for e-commerce businesses, where everything a merchant needs is just a click away.
The Collaborative Acquisition Model: Co-Creating with Customers
In an age of unprecedented connectivity, the line between company and customer is blurring. The Collaborative Acquisition Model recognizes customers as active participants in the value creation process, not just passive consumers.
It’s like turning your business into a community theater production, where the audience doesn’t just watch the show, but helps write the script, design the costumes, and even act in some scenes.
Elements of Collaborative Acquisition:
Co-Creation: Involving customers in product development
User-Generated Content: Leveraging customer creativity for marketing
Peer-to-Peer Support: Facilitating customer-to-customer help
Crowdsourced Innovation: Tapping into collective customer intelligence
Ambassador Programs: Empowering super-users as brand representatives
Collaboration Champion: Lego’s Customer-Driven Innovation
Lego has embraced collaborative acquisition to fuel growth and innovation:
Lego Ideas platform allows fans to submit and vote on new set designs
Encourages users to share their creations on social media
Robust online community where users help each other with building techniques
Crowdsources new product ideas through challenges and competitions
Lego Ambassador Network connects the company with adult fans worldwide
By turning customers into collaborators, Lego has created a self-sustaining ecosystem of innovation and advocacy. It’s like they’ve turned their entire customer base into a massive R&D department and marketing team rolled into one.
Putting It All Together: The Adaptive Acquisition Framework
As we’ve seen, the death of the traditional sales funnel has given rise to a multitude of new models and approaches. But here’s the thing: there’s no one-size-fits-all solution. The key is to adapt and combine these models based on your unique business, market, and customer base.
That’s why I’m proposing a new meta-framework: The Adaptive Acquisition Framework. This framework doesn’t prescribe a specific model but instead provides a structure for continuously evolving your acquisition strategy.
Think of it like being a chef in a busy restaurant. You have a repertoire of recipes (acquisition models), but you need to adapt your menu based on the seasons, customer preferences, and available ingredients. The Adaptive Acquisition Framework is your guide to creating a ever-changing, always-delicious menu of customer acquisition strategies.
The Five Stages of Adaptive Acquisition:
Observe: Continuously monitor customer behavior, market trends, and competitive landscape. It’s like keeping your ear to the ground and your eyes on the horizon.
Analyze: Use data and insights to understand what’s working, what’s not, and why. This is your time to put on your detective hat and solve the mystery of customer acquisition.
Strategize: Based on your observations and analysis, develop a multi-faceted acquisition strategy that combines elements from various models. It’s like creating a unique recipe that blends flavors from different cuisines.
Execute: Implement your strategy across channels, touchpoints, and customer segments. This is where the rubber meets the road — or in our chef analogy, where the pan meets the flame.
Iterate: Regularly review results, gather feedback, and refine your approach. Remember, in today’s fast-paced business world, your acquisition strategy should be written in pencil, not carved in stone.
The Future of Customer Acquisition: Embracing Complexity and Humanity
As we wrap up this deep dive into the evolving world of customer acquisition, one thing is clear: the future belongs to those who can embrace complexity while never losing sight of the human element.
The death of the traditional sales funnel doesn’t mean customer acquisition has become harder. It’s just become more… human. And isn’t that a good thing? After all, we’re not in the business of acquiring customers; we’re in the business of building relationships, solving problems, and creating value.
So, here’s to the death of the sales funnel and the birth of a new era in customer acquisition. An era where we don’t just acquire customers, we build communities. Where we don’t just sell products, we solve problems. Where we don’t just close deals, we open relationships.
The funnel is dead. Long live the future of customer acquisition!
Scott