Traction: A Startup Guide to Getting Customers

traction

Traction: A Startup Guide to Getting Customers

by Gabriel Weinberg and Justin Mares

“Almost every failed startup has a product. What failed startups don’t have are enough customers.”

“Traction is a sign that something is working. If you charge for your product, it means customers are buying. If your product is free, it’s a growing user base.” Gabriel Weinberg and Justin Mares draw from their own startup experience as well as interviews with some 40 other founders and marketing experts. The book starts with five foundation chapters followed by chapters explaining each of the 19 traction channels.

PayPay founder Peter Thiel says, “It is very likely that one channel is optimal. Most businesses actually get zero distribution channels to work. Poor distribution—not product—is the number one cause of failure.”

The authors advise “building product and testing traction channels—in parallel… First, it helps you build better product because you can incorporate knowledge from your traction efforts… The second benefit… is that you get to experiment and test different traction channels before you launch anything. This means when your product is ready, you can grow rapidly.”

“The way you get your traction will change. After your growth curve flattens, what worked before usually will not get you to the next level. On the flip side, traction channels that seemed like long shots before might be worth reconsidering during your next iteration.”

The Law of Shitty Click-Throughs is a term coined by Andrew Chen. “What this means is that over time, all marketing channels become saturated. As more companies discover an effective strategy, it becomes crowded and expensive or ignored by consumers, thus becoming much less effective. When banner ads first debuted, they were receiving click-through rates over 75%! Once they became commonplace, click-through rates plummeted.”

A recurring theme is testing “to stay ahead of competitors pursuing the same channels.” The authors point out the distinction between testing and optimizing. “With limited resources, it’s almost impossible to optimize multiple strategies at once. Running ten social ads and testing everything about them (ad copy, landing pages, etc.) is a full-time endeavor. That is optimization, not testing.

Here are the 19 traction channels:

Viral Marketing — “As great as your product may be, true viral growth is unlikely. However, this channel is so powerful that it may still be worthwhile creating referral programs where your users can refer others to your product. When these viral loops work, customers sign up in great numbers at very low acquisition cost.”

Public Relations — Ryan Holiday, author of Trust Me, I’m Lying, says: “It’s better to start smaller when targeting big media outlets… You find the blogs that TechCrunch reads and gets [story] ideas from. Chances are it will be easier to get that blog’s attention. You pitch there, which leads to The New York Times to email you or do a story about you based on the information they’ve seen on the news radar.”

Unconventional PR — “Rather than issue a standard press release [Grasshopper.com] decided to send chocolate-covered grasshoppers to 5,000 influential people. With each package they included a link to a short video about how entrepreneurs can change the world. After launching the campaign, they received coverage from major news outlets such as Fox News and were the subject of tweets by Guy Kawasaki and Kevin Rose, entrepreneurs with millions of combined Twitter followers.” Their YouTube video was viewed over 200,000 times.

Search Engine Marketing (SEM) — Tests will not only reveal which keywords perform best, they will give you an indication of customer acquisition cost. “For example, if your product costs $10, and it costs you $40 to acquire a customer with paid search, SEM probably won’t be a viable traction channel.”

Social and Display Ads — “Think of the difference between search and social ads in terms of demand harvesting and demand generation… People who search for ‘grey Nike shows’ likely want to buy shoes right now… This is demand harvesting.” Social ads are generating interest from new customers. However, the authors recommend that you “only employ social advertising dollars when you’ve understood that a fire is starting around your message and you want to put more oil on it… Startups do the opposite of this all the time where they waste tens of thousands of dollars trying to push a message that nobody cares about.”

Offline Ads — “Even today, advertisers spend more on offline ads [than] they do online.” This chapter deals with traditional media such magazine advertising, direct mail, radio and television, and outdoor. “We have some personal experience with billboard advertising. Gabriel strategically placed a billboard in the startup-heavy SoMa district of San Francisco to call out the differences between the privacy options with Google and DuckDuckGo, the privacy-focused search engine he founded. A startup search engine calling out a big guy in their backyard—that is the kind of strong message that can get you some traction. In this case, DuckDuckGo didn’t just capture the attention of the people who drive by the billboard. They also got press coverage from Wired, USA Today, Business Insider, and several other blogs and media outlets. That month, DuckDuckGo’s user base doubled!”

Search Engine Optimization (SEO) — “Only about ten percent of clicks occur beyond the first ten links… In other words, your ability to rank on the first page should be a deciding factor in… whether to pursue a particular SEO strategy at all.” The book discusses fat-head and long-tail SEO techniques. Measure your conversion rates; “there is no point wasting time on terms that don’t yield traction. A common example is for ecommerce stores that rank well for terms with ‘free’ in them—usually those visitors won’t pay.”

Content Marketing — Rick Perrault, founder and CEO of Unbounce says, “Our blog is our primary source of customer acquisition… Something we wrote in January 2010 still drives customers today. Whereas if I had spent money on advertising in January, that’s it… If you invest in content, it gets picked up by Google. People find it, they share it, and it refers customers almost indefinitely.” Unbounce discovered that “infographics are shared about twenty times more often than a typical blog post and have a higher likelihood of getting picked up by other online publications.”

Email marketing — “Timing is especially relevant to get higher open rates… This is another variable you should test yourself, as its efficacy varies depending on the product… Copywriting is an art on its own… An email campaign can easily go from a waste of time to wildly profitable just by tweaking a few words and headlines… A particularly effective email marketing technique is to set up a series of automated emails (often called lifecycle or drip sequences).”

Engineering as Marketing — “Your team’s engineering skills can get your startup traction directly by building tools and resources that reach more people. We call this traction channel engineering as marketing. You make useful tools like calculators, widgets, and educational micro-sites to get your company in front of potential customers. These tools generate leads and expand your customer base.” HubSpot founder Dharmesh Shah says, “We think of each piece of content (blog article, app, video, whatever) as a marketing asset. This asset creates a return—often indefinitely… With advertising (outbound marketing), the traffic you get generally stops when you stop paying. With inbound marketing, even after you stop producing new content, the old content can still drive ongoing visitors and leads.”

Targeting Blogs — Money management site Mint offered its users I want Mint badges which they could embed “on their personal blogs, Facebook, or other websites. Users that drove signups through these badges were rewarded with VIP access.”

Business Development — “Understanding a partner’s goals is key to creating a mutually beneficial relationship… Not every partnership will end up working. Thus, it makes sense to build a pipeline of deal… The simpler you can make it to work together (and the fewer lawyers that need to get involved), the easier partnering will be.”

Sales — “Getting the right first enterprise customer is crucial, as it will inform many decisions about the importance of different features. Forming this strong relationship is also crucial because you want to use your first few customers as references and case studies to give your startup some measure of credibility when you start designing your sales funnel.”

Affiliate Programs — “The first place to look for potential affiliates is your own customer base.”

Existing Platforms — “YouTube got its initial traction by filling gaps in the MySpace platform… MySpace didn’t have a native video hosting solution. YouTube provided one that was simple… Step one is to figure out where your potential customers are hanging out online.” Chris Dixon, partner as Andreesen Horowitz, says, “Some of the most successful startups grew by making bets on emerging platforms that were not yet saturated and where barriers to discovery were low.”

Tradeshows — Jason Cohen, founder of WPEngine, points out that trade shows are “a rare chance to get face time” with the press, bloggers, existing customers, potential customers, your vendors, your competition, and potential partners. “Mark Suster, partner at Upfront Ventures, suggests hosting dinners during trade shows. “If you invite 3-4 customers and 3-4 prospects to a dinner with 2-3 employees and some other interesting guests you’ll be doing well. Potential customers always prefer to talk to existing reference customers than to talk to just your sales reps.”

Offline Events — Events can take a variety of formats. “Salesforce’s Dreamforce conference has over 100,000 attendees!” In contrast, Rob Walling keeps Microconf small “so that attendees have a chance to meet everyone else at the event and the speakers could get to know the attendees.”

Speaking Engagements — I disagree with the authors on this topic: “This channel works well whenever there are a group of people in a room that—if you pitch them right—would move the needle for your business. This happens to occur more with enterprise and B2B businesses because they’re often at expensive conferences.” Thinking of a conference presentation as a sales pitch can leave a negative impression. Depending on the type of conference and the audience profile, attendees are paying to learn about trends, new technology standards, best practices through case studies, etc. Speakers gain credibility by demonstrating thought leadership and expertise in their field. While there are events where a pitch is appropriate, such as a venture capital pitch fest, buyers generally aren’t paying conference registration fees to hear sales pitches which they can hear for free on the exhibit floor or at their office.

Community Building — “People want to feel like they’re part of something bigger than themselves: that’s why you need to have a mission if you want to build an awesome community. A powerful mission gives you community a shared sense of purpose and motivates them to contribute… Communities are excellent for recruiting and hiring. Everyone working at [coauthor Gabriel Weinberg’s startup] DuckDuckGo was a member of the DuckDuckGo community first. He calls this inbound hiring because everyone comes in from the community. People that come from your community already buy into your mission.”

Some of these traction channels can work together. Dan Martell, founder of Clarity, leverages social media during his speaking engagements. “He includes his Twitter handle on every slide and asks people to tweet at him if they really identified with something he said. This way, he can find out the content his audience enjoyed the most, while also growing his reach.”

To reiterate the main theme of this book, Moz founder Rand Fishkin says, “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.”

Rob Walling of HitTail offers this marketing advice for startups: try more things and fail faster. “The tried and true approaches like Facebook and AdWords are so crowded now… Early on when you’re trying to get those first 1,000 customers, you have to do things that don’t scale. You have to take more risks.”

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Weinberg, Gabriel, and Justin Mares. Traction: A Startup Guide to Getting Customers. S-curves Publishing, 2014. Buy from Amazon.com

 

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