If you want your new venture to attract investors and software developers, you will need to prove to both of those audiences that you have “traction” with customers.
Reid Hoffman, founder of LinkedIn, suggests that the most important asset of a company is its distribution channel. A company without one has zero value.
“The question comes down to … not to think of it just as a question of ‘Oh, I have a better product, and with a better product, my thing will work, as opposed to other things.’ Because unless your product is like 100x better, usually your average consumer … they use what they encounter. If other[s] are much more successful at distribution and they have much better viral spread, they have better index and SEO…it doesn’t matter if your product is 10x better, the folks don’t encounter it.”
A new book by Gabriel Weinberg, CEO and Founder of search engine DuckDuckGo, and Justin Mares, Director of Revenue at Exceptional Software, provides a blueprint to help any startup create and maintain traction.
The book is titled Traction: A Startup Guide to Getting Customers. I recommend that any founder of a new company read this book. I encourage any marketing lead in a startup to investigate the Traction blueprint and evaluate the resources provided by the authors.
Traction: The Only Thing That Matters
The authors propose that the only thing that matters to an early stage venture is growth and that growth requires customer traction. The type of traction can vary between startups depending upon their category, their business model, and the nature of the sales transaction.
“I rarely see startups fail and crater because they didn’t have a good idea or weren’t able to execute on that idea and build a decent product. Where I see 90% of startups fail is because they can’t reach their customers.” – Rand Fishkin, Founder Moz SEO
Startups that base their business model on advertising revenue need lots of people to signup; freemium business models also need volume but need a segment of their signups who will purchase the premium service; B2B and SaaS often focus on getting traction with clients who pay for their polished service or product.
The Bullseye Framework
In the early chapters of the book, the authors identify 19 different traction channels a startup can access to achieve customer traction.
An early stage startup cannot investigate each of the channels to see which of them bears fruit. Instead, Weinberg and Mares propose that early stage companies follow their “Bullseye Framework” — a systematic, five-step protocol to achieve traction:
- Brainstorm step: Identify reasonable ways in which you would use each of the traction channels.
- Rank step: This step allows you to triage the traction channels.
- Prioritize step: Identify the order of the traction channels to be tested.
- Test step: At this point, you apply your thinking to the high priority channels to see which ones take.
- Focus step: If one of the tested traction channels takes, then apply your resources to start building your customer base.
The authors provide the real life case of Noah Kagan at Mint and how he used the Bullseye Framework to achieve customer traction.
A New Way of Thinking
The world has changed:
- We are swimming in data and we can access it real time.
- Open source, APIs, and abundant could-based computing resources allow us to develop web and mobile applications quickly.
- Large-scale marketing platforms such as Google Search, Twitter, and Facebook mean that we can reach customers more quickly than we could ever before.
These forces have changed the venture investment environment and product development cycle. As a result, we have to change our approach to thinking about product and market development. Companies need to be more nimble and able to respond to (and incorporate) client feedback as they develop their products.
The authors advocate that companies need to change their ways.
The 50% Rule
One change is the “50% Rule” in which Weinberg and Mares suggest that you “spend 50% of your time on product and 50% on traction”.
Coordinating these two activities and making them parallel allows the startup to validate and refine his product while gathering customers. You build better products that your customers want and will pay for and you validate the channels that will deliver the initial traction you need to get the company off the ground.
Testing Your Traction
Weinberg and Mares suggest that you should initially focus on testing the traction channels — and not fine-tune them. You should determine as quickly as possible whether the channel can generate traction and not spend time fine-tuning it with tools like A/B testing.
Leave these until later when you know that this is the channel you want to invest in.
Eventually a channel will mature and marginal value from one particular channel will decline over time. Before that point you should be ready to focus on another channel as a source for customers.
This is when you resurrect the Bullseye Framework and determine your next move.
The balance of the book is dedicated to reviewing each of the 19 channels.
Weinberg and Mares provide practical advice, drawn from interviews from different startups, on how to use each channel.
The authors do an excellent job, for example, of explaining the mechanics behind viral marketing and how a small startup can leverage public relations.
They discuss how to use search engine marketing to determine whether certain keywords will attract and convert customers.
And they answer an important question for many new startups: Should a new startup, such as Uber, expect results from traditional search when it is often creating its own disruptive category and trying to create demand for its services?
The authors turn to Rand Fishkin, founder of Moz SEO, for insights:
“The problem with Uber is that there’s not a lot of search demand for it. I mean nobody searches for ‘alternatives to taxi cabs that I can hire via my phone.’
What works is finding the topics and the people that will be customers and building content to attract them, rather than finding the keywords that work in Google.”
In other words, the team at Uber should have a blog and cover topics that appeal to their target market — mostly urban dwellers looking for an inexpensive and convenient way to travel in the city.
Content Marketing and Your Blog
The authors contend that content marketing and your blog is one of the most important traction techniques available for many small companies.
Yes, it is painful to write blogs and the results take time. But, over time, customer engagement is higher and, as Weinberg and Mares point out, a blog can positively impact at least eight of the other traction channels — SEO, PR, email marketing, targeting other blogs, community building, offline events, existing platforms, and business development.
Eventually, your blog can become your largest source of growing your client base.
A Must Read for Every Startup
Every startup founder should read this book.
Having a great idea is important. Building a product that solves a problem is important is essential. But gaining customer traction is critical to your success.
In fact, when done well, it can lead not only to building a customer following, it can help you create an even more compelling product.
This article is part of my Digital Marketing guide.