We present today at the DEMO Traction Enterprise event in Boston, a conference focused obsessively on growth by connecting the most promising growth startups with prospective customers, investors, and strategic partners.
This got us thinking about the meaning of traction. There’s a lot of discussion across industries regarding “growth�? vs. “traction�? and the different tactics that support each. While the term “growth�? refers to a positive rate of change that could be short-term in nature, “traction�? refers to sustained growth over time and presents a far greater challenge.
While all companies need to grow, the sense of urgency is perhaps never as great as it is for a startup. So many startups fail because they never gain traction. It’s not enough to have a cool idea, you have to have paying customers in order to remain in business.
DEMO: “Traction is what distinguishes new ideas that are resonating with customers in the marketplace.�?
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A startup begins with an idea. An opportunity is identified, and resources are assembled to capitalize on the market potential. The driving force at this early stage is to launch your product and begin to validate that you have a product-market fit.
Then the focus shifts to gaining traction. In the traction phase, the primary goal of a business is to find product-market fit with the target audience. This means demonstrating that you have a compelling value proposition that people want.
The key here is repeatability. It’s about validating the assumptions you had early on with real data (repeated sales!). The measurement of success is revenue growth. You’ve proven your product-market fit when you have established there is a sizable Total Addressable Market of customers willing to pay for your product.
Our co-founder, Gary Gigot, says, “Traction equals validation of your product-market fit as measured by customers' willingness to buy your product. To gain traction, a company must have a working go-to-market model, an accessible product packaging and pricing schema, and services that deliver the optimal customer experience.�?
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Traction is a key point in a company’s growth. Not every startup reaches this point. Those that do, move on to what most folks refer to as the Growth or Scaling phase, where the volume is turned ALL THE WAY UP. Here, a company has more capital and resources so they begin to diversify their efforts. The focus expands to building a sizable sales funnel and lead generation.
“Traction is evidence of demand, proven through momentum and progress, resulting in a repeatable and scalable business model. The key is to have a compelling solution to a real problem and to then effectively market it to your target audience,�? says Pooya Ghiaseddin, our Chief Product Officer.
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So, how can you go about gaining traction?
Build an AWESOME product. Sean Ellis has wisely said, “Half the marketing battle is the product.�? That’s really all that needs to be said about that.
Have a clearly defined mission and goal that includes specific metrics and time bounds. The hardest part in an early stage company is often staying focused and not chasing after every opportunity that presents itself – in other words, not trying to be all things for all people.
Bring on the hustle. In an early stage company, the biggest constraint isn’t actually money, it’s you and your time. Speed defines you.
Everything takes more work when you don’t have a brand presence to build from. You’re always starting at the beginning, and everything speaks. You are the brand. Some key tactics include:
- Call on your network. Ask them for advice. Ask them to buy. Ask them to refer.
- Build partnerships that can reach out to THEIR networks to expand your reach.
- Build your brand. Do what you need to do to get your name out there. Do as much as you can digitally as it’s much more efficient, but many of your early clients will come from feet-on-the-street tactics and good old fashioned networking.
- Provide value to your target audience through content marketing like blogging and downloadable resources. This pulls customers to you and develops your presence as a credible thought leader.
- Make case studies out of your early customers to demonstrate the value that your product delivers.
Measure everything. Even early on when your volume is low, you have to start tracking effectiveness of your efforts. When resources are in short supply (i.e. your time), everything you do should contribute value. Start out on the right foot when it comes to developing data-driven decision-making practices!
Have an awesome customer experience. Keep in touch with your customers. One luxury of a small, growing company is that you personally know many of your customers. Reach out to them proactively. Ask them for their feedback. Understand why they chose you and how you compare (in their minds) to other competing options. With these insights, you can continue to build and fortify your competitive advantage.
Keep innovating. Continue to develop your product and improve upon your customer experience. Demonstrate to prospective and current customers that you are fully committed to your core value proposition and mission.
“Traction is digging in, getting a grip, and moving fast. To gain traction in your market, you've got to provide an important, different solution to a painful problem,�? says our co-founder, Joe Urbany, business Professor at the University of Notre Dame.
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At Vennli, we’re relentless when it comes to the pursuit of growth – our clients’ and our own. We’re excited to continue working with organizations to grow in their existing markets or gain traction in new markets! Let’s hustle!