Startups live and die by growth. Growth is comprised of many factors, which can be boiled down to: acquiring new users who find value in your product, and making sure they stick around actively lovin’ it (perhaps, this explains McDonald’s jingle). Once a company is finished the first few iterations of their product and has found initial product-market fit, whereby their product is serving a market that has a need for it, the next step is doubling down on acquisition. Which brings us to the need to find your traction channel.
Much has been written on the topic of traction, in fact, Gabriel Weinberg has written an awesome book on it called ‘Traction’ that outlines the 19 different channels that you can try, as well as, how to find the one channel that will lead to explosive growth for your company. This book is great for outlining the different methods available ranging from publicity stunts, to search engine marketing, and even engineering as marketing. It also covers how you can go about using a bullseye based approach to test the channels available through investing small amounts of money into a few channels to see which brings the best results and focus on the one that works best. This is important since high growth companies get 70%+ of their early acquisition from one channel. However, testing these channels is a lengthy process and you’re probably wondering how you can narrow down which three to six to test first as suggested by the Bullseye Framework. After all, time is money, and time is limited when you’re burning cash.
The first and easiest way to get through this is to think about model-channel fit. Most startups have some general idea of how they plan to monetize their user base, whether that is through a subscription offering, perpetual license, advertisements, large B2B sales, or something else. Each of these models slants towards a specific channel which can significantly help narrow down how you plan to prioritize them. For example, if your product is a food delivery app, perhaps you want to bake viral marketing into your product by telling your users to refer friends for free credits to use at restaurants. On the other end of the spectrum – if you are selling an enterprise level communications platform, logically it would make sense to develop a content marketing plan that can collect email leads. This could be funnelled to your sales team to work on converting those leads into customers. This also comes down to the metrics around your business model that your team should be thinking about. If your product is inherently going to have a low ARPU and LTV, and make up the bulk of their revenue by having tons of customers – you should focus on channels that help you scale with keeping your CAC low. Comparatively, if your product is going to scale by having few customers, but by charging those customers large contracts, you can afford to invest in channels that may have higher CACs, such as enterprise sales.
But this isn’t all – you also have to keep in mind the competitive environment and the market-model fit. Are you competing in a hyper competitive space, but instead of targeting the mass market, are going after a niche segment that is less price sensitive and willing to pay more for a higher end product? Think back to your original positioning map, and factor in where you are playing and what customers you want to buy your product. What business model are you using and what type of customers are you going after in the market? This should be tied back to the channel that you use. For example, looking back at the food delivery app example, if you are competing in a very competitive market and plan to monetize via advertisements rather than charging food vendors to carve out competition, perhaps you won’t be able to compete on viral referral marketing since your ARPU will be lower. Instead you can gain a large number of users by focusing on app store optimization and geo-based Snapchat filter takeovers in regions where your ideal customers are highly concentrated (e.g. colleges). To top that off, if you can find out what channel is underutilized in your industry, and execute on it creatively, you may even be able to scale by standing out.
I hope I made it clear that when it comes down to finding the traction channels to test to help you scale in the early days, it is imperative to think about your business model as well as the market you go after.Enjoyed the post? Share it with others!