Traction - A Startup Guide to Getting Customers by Gabriel Weinberg & Justin Mares

These are my personal notes that I have taken reading Traction: A Startup Guide to Getting Customers by Gabriel Weinberg and Justin Mares. This isn’t meant to be a Cliff Notes version or a substitute for reading the book, so please support the authors and buy a copy of the book.

Additional notes I’ve taken while reading other books can be found here.

Traction Channels

Traction is basically quantitative evidence of customer demand. So if you’re in enterprise software, [initial traction] may be two or three early customers who are paying a bit; if you’re in consumer software the bar might be as high as hundreds of thousands of users.

-Naval Ravikant

The Nineteen Traction Channels

  1. Viral Marketing
  2. Public Relations
  3. Unconventional PR
  4. Search Engine Marketing
  5. Social and Display Ads
  6. Offline Ads
  7. Search Engine Optimization
  8. Content Marketing
  9. Email Marketing
  10. Engineering as Marketing
  11. Targeting Blogs
  12. Business Development
  13. Sales
  14. Affiliate Programs
  15. Existing Platforms
  16. Trade Shows
  17. Offline Events
  18. Speaking Engagements
  19. Community Building

The Bullseye Framework

[You] probably won’t have a bunch of equally good distribution strategies… It is very likely that oen channel is optimal… Poor distribution - not product - is the number one cause of failure. If you can get even a single distribution channel to work, you have great business… So it’s worth thinking really hard about finding the single best distribution channel.

-Peter Thiel

Don’t dismiss any traction channel based on your existing biases.

  1. What is the probability that the channel could work (1-5)?
  2. What is the expected cost to acquire a customer through this channel?
  3. How many customers are available through this channel? How many can you expect to acquire at that cost (before saturation)?
  4. Are the customers in this channel the ones you want right now?
  5. What is the time frame needed?

Traction Thinking

The number one reason that we pass on entrepreneurs we’d otherwise like to back is their focusing on product to the exclusion of everything else.

-Marc Andreessen

The 50% Rule: spend 50% of your time on product and 50% on traction.

Dropbox: While developing their product, they tested SEM, which was ineffective for their LTV. They then tested viral marketing and built their referral program into the product.

Parallel product and traction development means testing different traction channels before you launch anything. When the product is ready, you can then scale rapidly.

At Marketo, not only did we have SEO in place before product development, we also had a blog. We talked about the problems we aimed to solve… Instead of beta testing a product, we beta tested an idea.

-Phil Fernandez, Founder & CEO of Marketo

Focus on traction channels that can move the needle for your company (e.g. are measurable and significant).

The most common unscalable thing founders have to do at the start is to recruit users manually. Nearly all startups have to. You can’t just wait for users to come to you. You have to go out and get them

-Paul Graham

Traction Testing

Over time, all marketing strategies result in shitty click-through rates.

-Andrew Chen

All marketing channels become saturated over time. As an example, banner ads would receive click throughs of over 75% when they first debuted.

Determining the success of a customer acquisition idea is dependent on an effective tracking and reporting system, so don’t start testing until your tracking/reporting system has been implemented.

-Sean Ellis

Making A/B testing a habit (even if you just run one test per week) will improve your efficiency in a traction channel by 2-3x.

Always be asking

  1. How many customers do you think a traction channel could deliver?
  2. How many new customers do you need to move the needle?

Critical Path

You should always have a traction goal you’re working towards.

At DuckDuckGo, the current goal is one percent of the general search market.

Critical Path: The path to reaching your traction goal with the fewest number of steps.

It helps to literally draw this path out, enumerating the intermediate steps (milestones) to get you to your traction goal.

The Critical Path can help make product decisions. DuckDuckGo users were constantly requesting features like images and auto-suggest, however the DuckDuckGo team didn’t believe these were absolutely necessary milestones in their Critical Path to reach their traction goal.

Everything you do should be assessed against your Critical Path. Every activity is either on the path or not. If it isn’t on your Critical Path, don’t do it.

I’ll bet you a lot of your competition will refuse to even try these channels. And if that’s true, that’s even more reason to go try those channels! It can almost be a competitive advantage (at least a temporary one) if you can acquire customers in channels that others cannot, or refuse to try. That’s more interesting than duking it out with AdWords competitors in positions 1-3.

-Jason Cohen

Viral Marketing

The different forms of virality

Shortening your viral cycle time dramatically increases the rate of which you go viral and thus, is one of the first things you should focus on improving if using this channel. To shorten it, create urgency or incentivize users to move through viral loops.

What is your goal?

If your goal is grow the number of users as quickly as possible, trimming the signup process seems like a no brainer to increase conversions. If your goal is grow paying customers, it may make sense to require a credit card when users first sign up.

Public Relations (PR)

For printed papers (like the New York Times), they are doing you a favor by publishing an article about you. There’s a finite number of spots in the paper and many other people/things they could write about.

However, online is different - an unlimited number of articles can be published. Every article they publish is a chance for more traffic (which means more money in their pockets). When Business Insider writes about you, you are actually doing them a favor.

It’s better to start smaller when targeting big media outlets. For them, the direct approach is rarely the best approach. Instead, you approach obliquely. So, 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 the New York Times to email you or do a story about you based on the information [they’ve seen] on the news radar.

-Ryan Holiday

Follow influencers in your industry and reach out to the blogs they often link to. These blogs are likely the starting points for much of the news that filters up to the larger outlets.

Blogs have an enormous influence over other blogs, making it possible to turn a post on a site with only a little traffic into posts on much bigger sites, if the latter happens to read the former. Blogs compete to get stories first, newspapers compete to ‘confirm’ it, and then pundits complete for airtime to opine on it. The smaller sites legitimize the newsworthiness of the story for the sites with bigger audiences.

-Ryan Holiday

What gets a reporters attention? Milestones: raising money, launching a new product, breaking a usage barrier, a PR stunt, big partnership or a special industry report.

Bundle smaller announcements together into one announcement whenever possible (e.g. breaking a usage barrier is plus releasing a new version).

Create an angle that makes your story compelling and makes people react emotionally. Crafting a narrative (e.g. how you doubled your user base through x, y, z) and presenting it well will increase your chances of getting a story.

If it’s not interesting enough to elicit an emotion, it’s not an interesting enough story. You want readers to do something after reading your piece, not just feel satisfied.

Amplifying

Email blogs that covered the story (as well as ones that didn’t) and offer an interview that adds to the original story. “How we did this” follow ups are popular.

Search Engine Marketing (SEM)

SEM is a great way to get customer data in a controlled, predictable manner. Even if you don’t expect it to be profitable, you can get a good baseline of metrics: conversation rate of your landing page, how well email captures are working.

Having these baseline metrics is critical for your strategy moving forward and determining what you need to work on.

How Archives.com used AdWords

The Archives.come team used AdWords to drive traffic to landing pages before they made a big investment in building a product. Each landing page was written to test interest in a specific product approach

Social & Display Ads

Noah Kagan directly approached bloggers whose readers he thought would enjoy Mint and offered to pay $500 to put a banner ad on their site. Email subject: “Can I send you $500?”

Social ads are better for demand generation - users who may not have any intention of purchasing now. They may not even be familiar with the company or its products.

Users visit social media sites for entertainment and interaction, not to see ads. AN effective social ad strategy takes advantages of this without being intrusive or spammy. Instead of directing users to a landing page, have your ad explain why you have developed a particular product, explain your broader mission, or have some other purpose than completing a sale.

Search Engine Optimization (SEO)

Just because there isn’t a lot of search demand, doesn’t mean there isn’t a large opportunity. There aren’t a lot of people searching for “alternatives to Taxi cabs that I can hire via my phone”

Content Marketing

Unbounce made hiring a full time blogger their first hire.

By the time we (Unbounce) launched in the summer of 2010, we were doing 20,000 unique visitors per month to the blog… It was up and running for almost a year before we launched.

-Rick Perreault, founder of Unbounce

Email Marketing

User activation is often overlooked. If a user doesn’t get the value of your product, how can you expect them to pay for it or recommend it to others?

Engineering as Marketing

HubSpot’s Marketing Grader gives a custom report of how well you’re doing with your online marketing (social media mentions, blog post shares, basic SEO). HubSpot uses it to qualify potential prospects.

Think of these tools as marketing assets with ongoing returns, rather than ads that give a one time boost.

At HubSpot, we really believe in marketing channels that have high leverage (i.e. write it or build it once - and get value forever).

-Dharmesh Shah, co-founder of HubSpot

We contrast that to buying an ad which does not scale as well. When you advertise, the money you’re spending is what drives how much attention you get. Want more clicks? Spend more money.”

-Dharmesh Shah, co-founder of HubSpot

RJ Metrics created querymongo.com, a tool that translates SQL queries to MongoDB syntax, to help developers or PM’s who are more familiar with SQL. Anyone doing data analysis is a potential customer for their main product.

Look for high ROI on engineering time: if a few days of engineering time can drive hundreds of leads, that’s an investment they (RJ Metrics) make whenever they can.

Targeted Blogs

How to find blogs

Make embeddable badges as easy as copying + pasting. This also gives SEO boosts from the backlinks.

Mint created content partnerships with larger sites like The Motley Fool where each site would contribute content to the other.

Business Development

Business Development is like sales with one key distinction - it’s focused on exchanging value through partnership. You’re partnering to reach customers in a way that benefits both parties.

What do you want your fundraising deck to look like?

-Chris Fralic, First Round Capital

Use this question to think about milestones to reach and then work backwards to think about partnerships or distribution agreements to reach that goal.

Business Development can also be used to outflank a competitor. If you go and impress the top 50 people in your space, it make sit harder for a competitor to get a deal done because you’re seen as a category leader.

Creating a list of business development targets

People tend to get caught up on the names… Rather than saying ‘I want to go after XYZ brand.’ say ‘we want to go after Internet retailers that are between50 and 250 on the IR [Internet Retailer] 500 - because that puts them in this kind of revenue range - and have a director of ecommmerce.

-Chris Fralic, First Round Capital

Approach potential partners with a value-focused proposition that outlines why they should work with you.

What do you have that they (big companies) need? You’re more focused than they are. You have an idea and you’re solving a problem. You’ve developed content or technology and you have a focus. That is very difficult to do at a big corporation.

-Chris Fralic, First Round Capital

Business Development 2.0

Business Development has historically been a high-touch process that includes a lot of personal interaction.

Low-touch BD utilizes tools like API’s, feeds, crawling technology, and embed codes to reach new distribution channels and grow your influence.

Just building a great API does not mean people will come and use it. Landing your first few partners through traditional means ensures something is gettign value from working with you.

Sales

SPIN (Situation, Problem, Implication, Need-payoff) is a natural progression

  1. Situation: How many employees to you have? How is your organization structured?
  2. Problem: Are you happy with your current solution? What problems do you face with it?
  3. Implication: Does thsi problem hurt your productivity? How many people does this issue impact, and in what ways?
  4. Need-payoff: How do you feel this solution would help you? What type of impact would this have on you if we were to implement this over the next X time frame?

PNAME

  1. Process: How does the company buy solutions like yours?
  2. Need: How badly does this company need a solution like yours?
  3. Authority: What individuals have the authority to make the purchase happen?
  4. Money: Do they have the funds to buy what you’re selling? How much does not solving the problem cost them?
  5. Estimated Timing: What are the budget and decision timelines for the purchase?

The Sales Funnel

Use other traction channels to make people aware of your product.

I’m in favor of gaining traction through some kind of marketing channel first, then using sales as a conversion tool to close [those leads] into business. It’s very, very expensive to use cold calling, and really not that effective by comparison with using marketing to get some kind of qualified prospect and then using sales to close that prospect.

-David Skok, Matrix Partners

Closing leads: lay out exactly what you’re going to do for the customer, set up a timetable for it, and then get them to commit to that.

No matter how good your sales team is, the customer is the one who decides to buy your product. It’s crucial to keep the customer in mind as you design your sales funnel.

You want to recognize that your prospect has a series of issues and questions they will want resolved before they make a buying decision.

-David Skok, Matrix Partners

Affiliate Programs

Amazon’s affiliate program pays between 4-8.5% of each sales depending how many items an affiliate sells each month.

Types of affiliate programs

Existing affiliate networks make it easier to recruit affiliates because there are so many already signed up.

The first place to look for potential affiliates is your own customer base. They are easy to recruit and work with because they are already familiar with and (hopefully) like your brand.

If you’re going to use content creators (bloggers, social media influencers, email list curators, etc.): help them where you can by writing guest posts, providing free access to your product, etc.

Start with a simple approach. This simplest approaches are to pay a flat free for a conversion or pay a percentage of the conversion that occurs.

If you were to compare affiliate marketing and PPC, the advertiser assumes the risk in PPC… With affiliate marketing, you get to define what the transaction or conversion is, and you have the tools to mitigate low quality.

-Kris Jones, founder of Pepperjam

Existing Platforms

Filling gaps

Other Platforms

Craigslist customers who used AirBNB found it was a much simpler and safer solution, so AirBNB build “Post to Craigslist” feature that would allow you to list your bed on Craigslist.

PayPal purchased goods off eBay and required sellers accept payment through PayPal. It worked so well that PayPal proved more popular than the payment system eBay was trying to implement.

Build Early

Evernote has made it a priority to be on every new and existing platform.

We really killed ourselves in the first couple of years to always be in all of the App Store launches on day one. Whenever a new device or platform would come out, we would work day and night for months before that to make sure Evernote was there.

-Phil Libin, CEO of Evernote

Being first can open you up to the opportunity to benefit from the early marketing and promotion about the platform itself.

Ever year there’s a new platform, new device, new something, and as somebody who’s starting a company you should consider if there’s something really cool you can do on an upcoming platform.

-Alex Pachikov, co-founder of Evernote

Evernote was one of the first apps available for Android, which led them to be featured in the Android store for six weeks when it was far less crowded than it is now. This led to hundreds of thousands of new users, all because they were early and focused their engineering efforts on being on the platform.

Evernote has had flops with Nokia, Windows and Blackberry which haven’t moved the needle.

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… Betting on new platforms means you’ll likely fail if the platform fails, but it also dramatically lowers the distribution risks described above.

-Chris Dixon

Multiple App Strategy

Since getting promoted in App Stores has been Evernote’s most effective growth tactic, this strategy enables Evernote to get featured and ranked in categories where Evernote’s main app does not appear (e.g. Evernote for food notes, Evernote Hello for remembering people).

You have to think ahead. What tyes of things would Apple or Google really like?

-Alex Pachikov, co-founder of Evernote

This is what led to apps like Evernote Peek - an app to turn your media into study materials when using the iPad smart cover. Apple ended up showcasing it in a commercial.

Tradeshows

The best way to determine if an event is worthwhile is to attend the event as a guest the year before. How crowded was it? How high was the quality of attendees? Would you go again?

Set your goals for attending trade shows - e.g. gettign press, raising money, landing major customers, etc.

Schedule meetings before you attend the event. - “At [Trade Show X]: Can we chat for five minutes?”

Media members attend trade shows specifically to see what’s going on in an industry - give them something to write about.

Schedule a dinner and invite other people.

Smart Bear Software would send out discount cards for their software to all attendees before the actual conference. The recipients had to come to their booth to redeem the discounts.

One thing was clear: it pays to have an outbound strategy. Only 28% of our conversations were walk-ups. This means that employing an outbound strategy allowed us to extract between 3 and 4 times as much value from the show as we would have had otherwise.

-RJ Metrics

Offline Events

  1. We created a Twitter visualizer and negotiated with teh festival [SXSW] to put flat panel screens in the hallways… We paid $11k for this and set up the TV’s ourselves
  1. We crated an event specific feature where you could text ‘join sxsw’ to 40404. Then you would show up on the screens. And, if you weren’t already a Twitter user, you’d automatically be following a half-dozen or so “ambassadors” who were Twitter users also at SXSW.

-Ev Williams, Twitter co-founder

Twitter jumped from 20,000 tweets per day to 60,000+ by the end of the conference.

Small meetup groups can be more effective than you think. Seth Godin used meetups when launching his book “Linchpin” and reached 10,000 people through these events.

Yelp would throw parties for Yelp Elites to RSVP first and given free food/swag and treated like VIP’s.

Speaking Engagements

Teaching is what content marketing is all about: webinars, blog posts, and the like. I look at [these] things as the future of good marketing. The opportunity to teach and be in front of a room for 45 minutes introducing your company and your story to potential customers is time well spent.

-Dan Martell, founder of Clarity

Event organizers need to fill time at their events. If you have a good idea for a talk and see an event that aligns with an area of your expertise, simply pitch your talk to the event organizers.

Conference organizers will want to see that you are a decent speaker. Start by speaking for free at co-working spaces, non-profits and smaller conferences or events.

When you start a talk, the audience is usually thinking about two questions.

  1. Why are you important enough to be the one giving a talk?
  2. What value can you offer me?

Answer these two questions immediately.

All successful talks tell a story - otherwise, the audience loses interest.

Rand Fishkin (Moz) tweets his slides before every presentation, which lets his followers find out what he’ll be talking about.

Dan Martell asks for the audience’s divided attention. He wants the audience to tweet and share good content from his presentation as he gives it. His Twitter handle is on every slide. He asks people to Tweet at him if something he said resonates him (so he can figure out which content his audience enjoyed most).

Dan also gives the audience a call to action at the end of the presentation (e.g. sign up for a mail list, check out a link with the slides). This helps him figure out if the audience found the information engaging enough to act on.

Community Building

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

Alexis Ohanian would personally mail individual reddit users, thanking them for writing and sending shirts, stickers, etc. He even coordinated an open bar for redditors to connect and drink on reddit’s dime.

Ensure Quality: Stack Overflow had strict guidelines from the start so that only practical, answerable questions would be allowed.

"Traction: A Startup Guide to Getting Customers" by Gabriel Weinberg & Justin Mares