Someone call the 🚓, the Flywheel killed the Funnel

Happy Friday! When the SaaS community looks back on 2019, it will be remembered as the year of the flywheel, and this week we’re diving into why. We’ll share our favorite flywheel marketers in this issue, but we want to know: who do you know killing the flywheel game?

You can let us know by replying to this email, and don’t worry, zero judgement if you say yourself, you’ll just have to explain why!

⚙️ Marketers generally launch campaigns to grab as many new leads as possible. But if you’re like us, you’ll find that most of these campaigns result in temporary traffic blips, and don’t deliver what we all really want: repeatable, increasing returns. That’s why so many marketers (and even Drake) have turned away from the funnel and towards flywheel marketing, which starts with creating “value-added” content adjacent to your product to attract customers. Unlike a funnel, once a customer converts in a flywheel, momentum is kept by continuing to provide them with beneficial resources over time, increasing retention and referrals.

🧗 Creating reputable content that drives significant traffic to your business isn’t a quick process. The hard truth is that you are unlikely to see results for the first few months. But the compounding effects are worth it. If you need an example of how to get your flywheel off the ground, check out Tim Soulo’s strategy for his SEO business, Ahrefs. We also recommend signing up to Hubspot’s mailing list and taking note of how they nurture their leads—we think they are the best in business today, with hundreds of thousands of subscribers constantly engaging with their content 

🦴 Once you’re up and running, the challenge will be to continuously produce creative, engaging content that adds real value. If you don’t create high quality content, it's just not worth it—flywheel marketing needs to be an all or nothing effort. Great content can come in a number of forms, and mixing up your delivery will ensure your audience doesn’t lose interest. We are partial to the newsletter (obviously) because it's a great platform to repurpose and share blogs, infographics, and other content, acting as the backbone of your flywheel strategy.

🐱🌈 Most content you find on SaaS startups is all kittens and rainbows, and covers topics like how to grow your company, who to hire as you scale, and a strategy to eventually exit it. But what about when things aren’t going well, and your business is failing? The situation is often ignored because it just isn’t fun to think about, but if things do go south, you will want to be prepared. You can do that by putting together a “worst case” plan to anticipate how you could react to revenue dropping, a competitor undercutting your pricing, or costs shooting up. If things do start to turn sour, most turnarounds require founders to eliminate marketing channels with low ROI and double down on the winning features of your product. 

🗑️ Recurring revenue will always hold more value than non-recurring revenue streams in the minds of investors and acquirers, but that doesn’t mean you should throw these non-recurring streams in the bin. They can act as free financing, and fund sales, marketing, and other growth activities which can help grow the business as a whole. Just take a look at these publicly traded SaaS companies (including Shopify, Hubspot, and Salesforce)—21% of their revenue is non-recurring revenue, which goes to show some of the most successful software companies today are on board!

👨‍🚀 We bet you’ve heard of PayPal’s infamous referral program where customers received $10 for every new user they brought on, and new users received $10 just for registering, but not all of their marketing attempts landed. Did you know they had Scotty from Star Trek “beam” $1m to random users? Probably not, and in that case, they were quite literally giving away money! In The PayPal Wars, Former PayPal VP of Marketing Eric Jackson gives an inside look at the payment systems’ revolutionary marketing tactics and strategy, as well as their tumultuous early years of rapid growth.