Traction

TRACTION: HOW ANY STARTUP CAN ACHIEVE EXPLOSIVE CUSTOMER GROWTH

Book Summary:

Traction in business means GROWTH.  And, growth should be considered with just as much energy and passion as the development of your product or service.  This book helps layout a foundation for getting traction in your business and helping you avoid the two critical mistakes most founders make.  First, not having a concrete traction goal to move the needle and second, thinking that just because a traction strategy worked before or for someone else, it will work for you and your startup.

Favorite Quote:

“The number one reason we pass on entrepreneurs we’d otherwise like to back is they’re focusing on product to the exclusion of everything else.  Many entrepreneurs who build great products simply don’t have a good distribution strategy.  Even worse, is when they insist that they don’t need one, or call their no distribution strategy a “viral marketing strategy.” ~ Marc Andreessen

BOOK NOTES & MEMORABLE QUOTES

Preface:  Traction Trumps Everything

Traction is a sign that something is working.  Traction is powerful and frankly, traction trumps everything else.

Two common mistakes founders make:

  1. Failing to have a concrete traction goal to move the needle.
  2. Thinking that just because one traction goal worked at a previous company, its the best traction channel for this company.

The framework that this book shares is called the BULLSEYE, a simple three step process for getting traction.  It works for all startups, big or small, consumer or enterprise focused.

Chapter 1: Traction Channels

“Traction is basically quantitative evidence of customer demand.” ~ Naval Ravikant

p.1

“A startup is designed to grow fast.  Being newly founded does not in itself make a company a startup.  Nor is it necessary for a startup to work on technology, or take venture funding, or have some sort of “exit”.  The only essential thing is GROWTH. Everything else we associate with startups follows from growth.”

p. 2

Two big themes were uncovered through the research with over 40 founders:

  1. Founders only consider traction channels that they have success with in the past.
  2. Second, its very hard to predict which channel will work!  You have to test a lot to find one that works.

Chapter 2: Traction Thinking

The 50 Percent Rule

Traction and Product are of EQUAL importance.  Ideally you should spend 50 percent of your time on each.  Testing traction at the same time as your product helps you 1) build the RIGHT product, 2) experiment and test traction differences before you launch.

“The number one reason we pass on entrepreneurs we’d otherwise like to back is they’re focusing on product to the exclusion of everything else.  Many entrepreneurs who build great products simply don’t have a good distribution strategy.  Even worse, is when they insist that they don’t need one, or call their no distribution strategy a “viral marketing strategy.” ~ Marc Andreessen

p. 8

Moving the Needle

You need to set traction goals.  Enough to actually help you achieve your GROWTH and REVENUE goals.

In the early stages of your business when you’re still working on Product/Market Fit, your traction goals will not likely be scalable.  In other words, you will do WHATEVER you have to do to get in front of customers.   But, through the next evolutionary steps, you will have to migrate to scalable growth channels.

How Much Traction is Enough For Investors

How much do you need?  The definition keeps changing.  But, when it comes to investors and investments, remember, TRACTION trumps everything else.

“The better your perspective investors understand what you’re doing, the less traction they will need to see before they invest because they are more likely to extrapolate your little traction and believe it could grow into something big.”

p. 15

To Pivot or Not to Pivot

The author suggests that founders give up on things too easily and quickly.  And, he also suggests that entrepreneurs should consider every startup a 10 year project.  And, to make sure that they are entirely passionate about it before they dive in.

Before you pivot:

  1. Is there evidence of real product engagement if only even a few dedicated customers.
  2. Perhaps you’re too early to the market?  If so, how much too early?  Will the customers become ready soon?

Targets

  1. Put half your efforts into traction.
  2. Set your growth goals!
  3. Learn what growth numbers investors respect (optional if seeking investment).
  4. Find your bright spots.  Customers who are truly engaged.

Chapter 3: Bullseye

The bullseye model is used to figure out which of all the growth strategies will work for your business.

“If you can get even a SINGLE channel to work, you have a great business.  If you try for several but don’t nail one, you’re finished.  So, it’s worth thinking really hard about finding the single best distribution channel.” ~ Peter Thiel

p. 19

The Outer Ring:  What’s Possible

In this step, you list every channel that is possible!  Don’t worry at this point what is going to work or not, just list all the viable channel solutions.

The Middle Ring:  Whats PROBABLE

Run tests!  Test all the possible ones to see which ones appear to work the best.

  1. How much will it cost to acquire customers in this channel?
  2. How many customers are available through this channel?
  3. Are the customers you’re getting through this channel the RIGHT customers?

The Inner Right:  What’s Working

Focus on the very few channels that are working.  One of the most common ways to mess this step up is to get RID of the channels that are NOT working.

Note:  Often you will find that channels interconnect.  For instance, SEO depends on PR to work.  But, SEO is the dominant strategy.

Why Use Bullseye?

It forces you to take all the channels seriously and methodically hone in on what works.   You don’t know what will work until you test.

Comparison to Lean

Bullseye works hand in hand with LEAN.

The Lean framework deals a LOT with the Problem, Solution and MVP “Build, Measure, Learn Loop”.  But, the LEAN framework doesn’t focus on GROWTH.

Traction, on the other hand, focuses on GROWTH and how to test those hypotheses.

Chapter 4: Traction Testing

Continuous testing is the only strategy that will help you find the best growth channels.

Middle Ring Tests

Three questions you should ask when testing:

  1. How MUCH does it cost to acquire each customer through this channel?
  2. How MANY customers are available through this channel strategy?
  3. Are the CUSTOMERS you are getting through this channel the ones you want?

Inner Ring Tests

These tests do two things, 1) Optimize chosen strategies & Uncover better strategies.  This will be a never ending process because eventually all channels will lose their efficacy.

Online Tools

Organizing and executing tests should be done with some structure.  Tools can be as simple as Google Sheets or as complex as a growth analytics tool.  You need a way to measure and determine the success of each to be effective.

Targets

  1. Look for customers where others are NOT
  2. Constantly optimize!  Channels will loose their efficacy.
  3. Keep it numerical!  Quantify as much as you can.

Chapter 5: Critical Path

Always have an explicit traction goal that you’re working towards.  As they say, “Traction Trumps Everything.”

“The importance of choosing the right traction channel cannot be overstated.  Are you going for growth or profitability, or something in between?  If you need to raise money in X months, what traction do you need to show to do so?  These are the types of questions that help you determine the right traction goal.”

p. 36

Defining your Critical Path

This is one of the areas that founders usually make mistakes.  Spending too much time focusing on things that are off the critical path to features, goals, hires, etc.

Overcoming Traction Biases

Use the bullseye model to avoid making bias mistakes and missing a growth channel that might be great for your business and ones you otherwise might pass on.

Chapter 6: Targeting Blogs

Big idea:  Not all growth channels are infinitely scalable.  Some have limits and thats okay, but you should understand the limits of each.  Targeting blogs are a good example of a first traction channel but one that doesn’t scale.  This channel simply targets blogs that prospective customers (your customer segment) read and publishing articles of interest there.

Chapter 7: Publicity

This is Public Relations which represents all a companies public messaging.

“Most sites make their money from advertisements, so they want to drive as many page views as possible.  If you have a fascinating story with broad appeal, media outlets now want to hear from you because you will drive visits and make them more money.”

p. 49

The best way to get traction early on?  Start small and work your way up the PR food chain.

Chapter 8: Unconventional PR

There are two categories of unconventional public relation types of activities.  1) Publicity stunts, outlandish activities designed to get press attention and viral sharing and 2) Customer Appreciation, smaller scalable actions.

Chapter 9: Search Engine Marketing (SEM)

This is placing advertisements on search engines like Google where marketers spend over $100M per day.  You buy ads for key word searches.  This is a must read chapter for everyone using Google Adwords.

Some Key Terms To Remember:

  • CTR – Click Through Rate or the % of ad impressions that result in clicks to your site.
  • CPC – Cost per Click or the amount it costs to buy a click on the advertisement.
  • CPA – Cost per Acquisition is the measure of how much it costs to acquire a customer, not just a click.

SEM Strategy

“The basic SEM process is to find high-potential keywords, group them into ad groups, and then test different ad copy and landing pages within each ad group.”

p. 68

Chapter 10: Social & Display Ads

Two of the most popular advertising formats.  Display ads are the advertisements you see all over the web when you’re browsing and Social ads are similar ads found when on social sites.  Google Ads is by far and away the most popular place to create and run display advertisements.  And Facebook is by far and away the most popular place to create and run social advertisements.  However, with the social media landscape changing all the time, it is wise to include other platforms in your experiments.

Chapter 11: Offline Ads

Offline advertising include great platforms like TV, radio, magazines, newspapers, yellow pages, billboards and direct mail.  In the digital age, it is easy to write some of these older platforms off, but as we see with some new brands, they use these channels very effectively.

Chapter 12: Search Engine Optimization (SEO)

Because most internet users turn to search engines for answers when it comes time to decide on and purchase a new product, SEO or search engine optimization can be a very powerful tool. SEO is sometimes misunderstood as a “free” growth channel when it actually takes a lot of time and money to successfully deploy.

“At its base, SEO is starting with a content strategy and finding a way to attract relevant visitors through search engines. You have to intelligently design this kind of content and make sure search engines can find and rank that content.”

p. 92

Chapter 13: Content Marketing

Content marketing is writing content that is engaging, interesting and entertaining with the purpose of building brand loyalty and eventually turning these folks into customers. This strategy can be deployed long before you ever have a product or years after you’ve launched. This chapter discussed two case studies; Unbounce and OkCupid. Both of these companies used content marketing as a successful traction “growth” channel at different times in the evolution of their companies.

“If we had not started blogging at the beginning the way we did, Unbounce would not be here today … Our content still drives customers.”

p. 103

Chapter 14: Email Marketing

I’m guessing you have many examples of email marketing in your email inbox right now, from coupons to referrals, sales pitches and more. Email marketing is a highly personal channel but in order to do this you must have access to and permission to use customers email addresses. This works best when its personalized to the customer and something specific that they have done, purchased or expressed interest in.

If you’re running a real business, email is still the most effective way to universally reach people who have expressed in your product, service or site.”

p. 109-110

Chapter 15: Viral Marketing

Viral marketing is the process of getting your either your existing customers or users to refer others to your product. This is most commonly done through video sharing, articles, social media or other. This chapter discussed the tactics and the way to measure efficacy of these channels.

Chapter 16: Engineering as Marketing

You can leverage your engineering capabilities to create tools, products, downloads etc that use you can use to get in front of customers.

Chapter 17: Business Development (BD)

“This is very much like sales with one key distinction: its primarily focused on exchanging value through partnerships, whereas sales primarily focuses on exchanging dollars for a product. With business development, you’re partnering to reach customers in a way that benefits both parties.”

p.137

Chapter 18: Sales

Sales is exactly what you would think of. Its the direct action of generating leads from perspective customers, qualifying them, and then (hopefully) converting them into customers.

Chapter 19: Affiliate Programs

Any program that pays people or companies for performing certain actions like making a sale or getting a qualified lead. Its a pay to perform marketing and sales service that leverages someone outside your organization to help drive various steps in the sales process.

Chapter 20: Existing Platforms

You can leverage some very popular existing platforms like the Apple and Android (Google) app stores, browser extensions on Chrome or Mozilla, social platforms like Facebook, Instagram or TikTok and others.

Chapter 21: Trade Shows

Trade shows are somewhat expensive solutions for growth but they also offer exclusive access to industry insiders and prospects. Also, they are design to create the sales and marketing interactions.

Chapter 22: Offline Events

Hosting events purely online is a convenient and low cost way to reach a broad audience.

Chapter 23: Speaking Engagements

This is a low cost, relatively easy to access channel that can give you access to a large number of potential customers at once.

Chapter 24: Community Building

“Community building involves investing in the connections among your customers, fostering those relationships and helping them bring more people into your startup’s circle.”

p. 198

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