6. Start-Ups: The Traction Trap
Traction. If you’re very serious about this business that you want to start, you probably have come across this word already. As soon as you launch the business you will hopefully see some traction happening. If it is an app that you’re launching, you’ll see the downloads, if you open a restaurant then there should be some customers trying your food every now and then.
“Traction is basically quantitative evidence of customer demand.” – Naval Ravikant
The whole point of you starting your startup is that you want to see some growth in the market that you will operate in. More importantly is that you see where this growth is coming from. Traction can be discovered through 19 different channels, these customer acquisition channels are where you find your real customers. Some examples of these channels are Search Engine Optimization, Content Marketing, Email Marketing and Affiliate Programs. The full list and explanation can be found in the book “Traction, How Any Startup can achieve Explosive Customer Growth” (Weinberg, G & Mares, J.)
If you have been working on your company for a while now, you’ve probably already come with a prototype of the product or service you want to sell to your customers. Though having a product is not the key to the success of your company, it’s having customers. Hopefully, before you started designing your prototype there were some people who showed interest in what you were going to build. As soon as you launch this prototype in the hope to get more customers, often the response of the crowd is not as they promised beforehand. Why? Because you only launched your product, not your traction strategy. There is a rule in the Traction book suggesting that there is a 50/50 relation; 50 percent of your time should be devoted to developing the product, and the other 50 on traction.
There are 4 common situations where even traction can’t save your business:
- You may have built something people want, but there is just no appropriate business model to be found. It turns out people are not willing to pay, other companies see no business in buying your ad space, summed up: there is just not really a market.
- You built something that people have shown interest in, but the actual amount of customers turns out to be too little to reach profitability. This happens when you aren’t ambitious enough or maybe have picked a too narrow niche market.
- Your product is wanted, but the market is too costly to reach. Say you’re selling toothpicks and they require a direct sales force to persuade people to buy them, they would have to sell thousands per hour in order to gain profit.
- Lastly, it can be that the competition is too big on the market. Though you may try to differentiate your product from the rest, customers simply have too many brands to choose from and for a startup existing brands are hard to beat.
Sadly enough, there are so many startups failing every year even though they have a good product. If you don’t start with good traction strategy from the beginning it will be really hard to build it into your business model later on. You won’t realize the traction trap until it’s too late and you’re stuck deep down in it. Don’t let the false foresights of a successful product cloud your attention to the other business aspects, build a good distribution strategy and keep up on the traction thinking.
This post is part of the series “How To Start a Start-Up”, based on the lectures taught at Reykjavik University. For more information, visit the Startup Iceland website
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