Many B2C and SaaS startups have capitalized on its predictability, but the flywheel sales approach isn’t yet a staple of the B2B sales and marketing arsenal.
But it will be soon.
The advantages are clear: You might have to make a huge push initially for seemingly small ROI, but once the flywheel model gets going, its momentum can be unstoppable.
B2B entrepreneurs can easily get caught up in the prospect of netting industry behemoths and perceive the flywheel model as too small. After all, they’re hunting whales. But going after whales means long sales cycles and huge revenue variability, and doing so successfully requires a large dose of luck, which isn’t something you should bank your company on.
B2B startups live and die on sales, so building a predictable sales process is mission-critical. Despite the revenue and branding potential, hunting whales isn’t predictable. The good news: There is a way to achieve steady, trackable growth that can explode into an industry-changing force — and it starts with a series of small experiments to search for a single replicable sale.
How B2B Startups Can Adapt the Flywheel Model
Before you can successfully apply the flywheel method to your startup, you have to scrap the idea of scoring a few deals of a lifetime and start focusing on achieving small units of growth that you can replicate. Then, you can scale up from there.
Here’s how to boil your sales process down to a science:
1. Draft several broad hypotheses about your sales model. Before you can experiment with a sales model, you need to know what you’re testing. Create a few general hypotheses on how your sales model might work, then start with the ones you can easily prove or refute.
When starting Varsity News Network, we tested dozens of sales models. We found some success with a test centered on sales reps pounding the phones. To test this, we created a funnel to measure how many calls they made each day, the number of resulting presentations, and how many of those turned into sales. The funnel worked, so we began scaling up. But we certainly didn’t stop testing.
When we tested the same variables for in-person meetings, we discovered that this approach yielded an even higher conversion rate and a more efficient sales process. I’ll bet you can guess which direction we went in.
The catch-22 of this approach is that executing a large number of small experiments can make you feel like you’re spinning your wheels on small sales when you should be moving fast to capture the big ones. But once you find the one or two models that are replicable, you can invest in replicating the model confidently and quickly to hit that hockey stick growth path.
2. Measure the cost per acquisition against the projected customer value. Before you can determine the most efficient approach, you need to ask, “How much does it cost to acquire a customer?” and “How much will that customer spend throughout his or her time with us?” If you learn that it’s costing you considerably less to acquire a customer than one will spend with you, you’re on the right track.
It took a while to test various sales approaches, but after completing this step, VNN was able to draw up a solid formula: Having X salespeople results in Y sales. That’s the gold you’re looking for, as this simple formula helped us grow from one customer to 5 percent of the total U.S. market in just four years — all by testing and gradually expanding our proven sales model.
3. Remember to isolate variables. You can thank your local scientists for this technique, which applies to your sales and marketing. To get the most accurate results possible and eliminate confounding factors, only change one variable at a time. Otherwise, you won’t be able to identify which tweaks contributed to a particular campaign’s success or failure.
Make sure to account for variations among employees, too. After we found a profitable sales approach, we tested the new sales model with one salesperson to see whether he could replicate the results. Then, after 90 days, we hired another salesperson and continued tracking each individual’s results against the same parameters. No two people are identical, and performance ranges vary.
4. Find what works, and ramp up the speed. Once you’ve tested and iterated your way to a viable growth model, invest considerably in the proven approach to see whether the results still hold true. If they do, you can confidently pour cash into that method. If they don’t, move quickly to the next experiment.
Once my company got the flywheel model moving, the momentum it created made us the fastest-growing high school athletic website company in the country and gave us confidence in our growth trajectory for the future. Your B2B startup can build the same dependable system in which every dollar invested nearly guarantees a profitable return.
Ditch the uncertainty of hunting whales, and start embracing the consistent growth of the flywheel model. You may feel like the hares in your industry are outpacing you while you experiment, but rest assured: You’re building your tortoise a rocket ship.