Traction refers to the progress of a start-up company and the momentum it gains as the business grows.
The reasoning behind developing traction is to grow the business while meeting specific company goals and objectives.
For startups looking for funding, traction means having a measurable set of customers or users that serves to prove to a potential investor that your startup is “going places.”
Angel List co-founder Naval Ravikant describes market traction as “quantitative evidence of market demand.” Traction is proof that somebody wants your product, it communicates momentum in market adoption.
Market traction is an important factor that that will determine a VC or Angel’s interest in funding your company. The more market traction you can demonstrate the less risk there is in the investment.
“Investors want to see ‘hockey stick’ adoption rates which imply consistent or increasing growth rates on a percentage basis,” says Mark Peter Davis a New York-based investor with DFJ Gotham Ventures
The tricky part is actually gaining that traction and knowing when you have enough to approach potential investors.
In order to demonstrate traction to your investors, a startup will be tasked in showing that there is a demand for your product but that you can scale the product. In order to demonstrate this you need to understand what it costs to acquire a new customer and what the lifetime value of that customer is.
So, how do you get traction for your early-stage startup?
In their book, Traction: A Startup Guide to Getting Customers, Gabriel and Justin Mares highlighted nineteen marketing and distribution channels through which your startup can get traction.
- Blogs: Targeting blogs prospective customers read. Popular startups like Codecademy, Mint, and reddit all got their start by targeting blogs.
- Public Relations: Get your name out there via traditional media outlets like news outlets, newspapers, magazines, and TV
- Unconventional PR: Requires your startup to do something exceptional in order to draw media attention be it publicity stunts, or customer appreciation using hand written notes or holding contests to increase goodwill as well as generate press coverage.
- Search engine marketing (SEM): Placing advertisements on search engines like Google, Bing, DuckDuckGo etc. to reach millions of people.
- Social and display ads: Social sites like Facebook, LinkedIn Twitter, and Instagram etc. allow for targeted display ads with a wide range of call-to-actions.
- Offline ads: Displaying offline ads on TV, radio, magazines, newspapers, yellow pages, billboards, and direct mail.
- Search engine optimization: Improving your ranking in search engines in order to get more people to your site i.e Search Engine Optimization (SEO).
- Content marketing: Use content marketing whereby you write engaging content that result in hundreds of comments and shares which ultimately results in exposure and conversion of readers into customers for your brand.
- Email marketing: Use email marketing to convert prospects while retaining and monetizing existing customers.
- Viral Marketing: Employ viral marketing where you grow your customer base by encouraging your customers to refer other customers.
- Business development: Create strategic business partnerships whereby you collaborate with other businesses to reach customers in a way that benefits both parties.
- Affiliate program: Paying people or companies a certain percentage of the earnings for performing certain actions like making a sale or getting a qualified lead.
- Tradeshows: Tradeshows offer the chance for your startup to showcase its products in person to business insiders and potential clients. It’s a great opportunity to make major announcements, get new business partnerships, or create a buzz around your product.
- Offline events: Sponsoring or running offline events gives you an opportunity to meet engage with potential customers.
- Speaking engagement: Through public speaking you can increase the awareness of your startup. You can establish yourself (and your startup by extension) as the expert in a particular field.
- Community building: Building your community involves investing in connections with your users, fostering those relationships and helping them, bring more people into your company circle.
- Engineering as marketing: Allocate some of your engineering resources on building free tools that make your potential customers’ life easier. For example, Hubspot credits its early traction on tools such as website and Twitter grader.
- Sales: Generating leads, evaluating them and converting them into paying customers.
- Existing platforms: Existing platforms are Web sites, apps, or networks with huge numbers of users — sometimes in the hundreds of millions — that you can potentially leverage to get traction.