Offers, discounts, and advertisements eat into your project's profit margin! So, what's the solution?

Don't believe those who say that advertisements are the most important thing in a business; marketing is truly important.

The Flywheel Theory is a simple concept that outperforms the Funnel Theory.

In a previous report, it was explained how factories and companies addressed the 9.5% drop in consumer goods sales in the Saudi market. This report was from December 2018. The purpose here is not to discuss the reasons behind the decline, but rather what companies did to compensate for it.

To cover that decline and make up for the lost market share, factories and companies increased their focus on advertisements and discounts. But the question is, what happens after that? Are offers and discounts the solution? Is advertising the solution?

Today, I will talk about the Flywheel Theory, a simple concept that outperforms the Funnel Theory. In short, many businesses try to compensate for the sales decline by increasing advertising and discounts, but this leads to a depletion of profitability and the creation of a customer base that only looks for such discounts.

The Funnel Theory suggests that during marketing activities, customers show interest in products or services, but fewer actually make a purchase, and an even smaller number become loyal customers. Once this process ends, the business must repeat it by investing in new marketing efforts.

However, marketing again will require additional financial resources. The problem is that many companies consult marketing firms, which are incentivized to run more advertising campaigns. But the Flywheel Theory, if translated correctly, suggests something different.

It states that the customer should be the focal point. The faster the wheel turns, the better. But how does it turn faster?

The wheel moves faster through three main sequential factors: Marketing, Sales, and After-Sales Service. The wheel turns in this way to ensure the customer remains at the center and is less likely to leave. On the contrary, the customer helps turn the wheel more efficiently.

To maintain the customer and ensure they help in turning the wheel, the theory suggests:

1. Attracting the customer through marketing.
2. Engaging with the customer through sales processes.
3. Satisfying and delighting the customer through after-sales service.