#011: The Sales FlyWheel: How it Leads to Exponential Scale And Competitive Advantage

#011: How The Sales Flywheel Leads to Scale & Competitive Advantage

Read time - 3.5 min

Today I’m going discuss the sales flywheel and how it helps drive sustainable sales growth and customer experience for your startup.

The primary reason our framework has successfully scaled many sales orgs from founder led to full out salesforce, is because our processes are rooted in the underlying concepts of the flywheel.

To the contrary, I’ve seen many processes that will work with early stage founder sales, but will not scale.

In order for you to get your first couple of customers I’d advise you to do things that do not scale, in conjunction with things that do.

The latter is what we’ll discuss today.

Your goal is to build processes that are repeatable and predictable.

The flywheel concept was coined by Jim Collins in his book, “Good to Great,” and was loved, and often shared by Jeff Bezos in his annual letter to shareholders.

The idea of the flywheel describes the cycle of growth and customer-centric innovation within a business / sales model. It refers to the interconnected system of activities and services that reinforce each other, leading to exponential scale and competitive advantage.

Let’s take a look!

- The more sellers that come onto the platform, the bigger the selection.

- The bigger the selection, the better the experience.

- The better the experience, the more traffic it drives.

- The more traffic, the lower the cost structure.

- The lower the cost structure, the lower the price of goods.

How this applies to building out a sales process is very much applicable.

- The better the processes, the better the training.

- The better the training, the faster the ramp up.

- The faster the ramp, the higher the ROI is on a salesperson.

- The higher the ROI on a SP, the lower the CAC.

- The stronger your SP are, the stronger the talent you attract is.

The number one reason sales reps fail is due to poor training. If you bring on a rep with no processes in place and expect them to “figure it out,” it will rarely, if ever happen. They’ll eventually burn out and leave. The antidote here is having effective processes in place. When a rep is trained correctly on the right processes, their confidence will develop organically and that confidence is conveyed to the prospect as competence, and that is what closes deals.

Also when the right training protocols are in place, they will ramp up fast - the faster the ramp, the higher the ROI is on that rep. One of the best ways to determine the appropriate ROI multiple for your sales reps is by using a commonly used metric to evaluate sales performance: the Sales-to-Cost Ratio (SCR).

The Sales-to-Cost Ratio compares the revenue generated by a salesperson to the cost associated with acquiring and maintaining customers. A higher SCR indicates a more efficient sales rep, meaning they generate more revenue relative to the costs incurred. This is why having processes and training dialed in is so imperative.

Lastly, highly trained reps become A players, and A players hang out and know other A players, so the talent you can tap into becomes much stronger, which correspond to higher ROI, and lower customer acquisition cost (CAC).

Key Takeaways

Using the flywheel method to develop your playbook will lead to:

• Faster ramp

• Higher ROI

• Lower CAC

• Stronger talent

That’s it for today folks.

See you all next week!

Darren

P.S. If you're interested in building out your sales flywheel book a call here.