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BOOK Summary of Traction: How to get customers for your startup

monfii

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This book outlines nineteen traction (understand: customer acquisition) channels. It is a book written for startups more than it is written for traditional companies. However, I found it insightful. Most people only think about Facebook ads when it comes to getting customers. There are in fact a mountain of other ways to get customers, and these ways are probably much less crowded than Facebook ads.

Find an executive summary below. I didn't summarize the nineteen traction channels. If you want to learn more, you can google them. You probably know how to get started in most of them anyway.



Chapter 1: Introduction to Traction

Traction trumps everything. Without traction, you don't have a business. Traction means that people are using/buying your product.
There are nineteen different channels through which startups can grow. Many startups tried several channels until they can find the right one.

Traction trends:
  • Most founders only consider using traction channels they already know. That means that far too many people focus on the same channels instead of focusing on the right ones. They are biased.
  • It's impossible to predict which channel will work best. You have to run tests.
Get one channel working that your competitors dismiss, and you will grow.
Here are the nineteen channels:
  • Viral marketing: encouraging your users to get other users to sign up.
  • PR: appearing in newspapers, TV, traditional media.
  • Unconventional PR: Richard Branson in his balloon, celebrity marketing, giving free goodies to your first customers, etc.
  • SEM (search engine marketing)
  • Social and display ads: ads on social media and websites.
  • Offline ads (TV, radio, billboards, newspaper, flyers, etc)
  • SEO: Search Engine Optimization: it boils down to having amazing content people find valuable.
  • Content marketing (blogs)
  • Email marketing
  • Engineering as marketing: fixing problems for yourself, then selling/giving out for free that solution to other people that have the same problem.
  • Targeting blogs: writing content in blogs where your potential customers hang out.
  • Business development: partnering with other companies.
  • Sales: building sales funnel. It all starts with getting an email.
  • Affiliate programs
  • Using existing platforms: Facebook, Twitter, Reddit, TikTok, IG, YT, the Apple App store, etc. You can not only leverage them as a marketing channel, but use them to build your product (build a WP plug in, a Chrome extension, etc).
  • Trade shows
  • Offline events: small meetups, large conferences, webinars, festivals, etc. Go there, or organize yours.
  • Speaking engagement: speaking at conferences. You only need to speak once. If you are good, other people will invite you to their event.
  • Community building: building communities around your product and services.



Chapter 2: the Bullseye Framework

The Bullseye framework helps you choose among one of these nineteen channels. The process is in five steps:
  • Brainstorm
  • Rank
  • Prioritize
  • Test
  • Focus on what works.
Brainstorm

Come up with a way to advertise for all of the nineteen channels. This step helps you beat the bias you may have for one channel or another. To do so, build a spreadsheet with nineteen columns, each with a different acquisition channel. Afterward, write in each row ideas of how to advertise using that channel specifically. Add for each acquisition channel:
  • the probability that it works
  • the expected cost
  • how many customers can you expect to acquire at that cost
  • the timeframe needed to run the test.

Rank
Get another spreadsheet and rank each of the channels in three different columns:
  • First column: the most promising right now.
  • Second column: some that are less promising
  • Third column: the ones that are the least promising
Prioritize
If you have more than three channels in the first column, then get rid of enough channels until you only have three to rest.

Test
Test to find out which channel is worth pursuing.

To know that, you should pay attention to:
  • How much it will cost to acquire customers
  • How many customers do you think are available through this channel
  • Are the customers you're getting the ones you need right now?
Focus
Find the channel that works best and use it. Keep on experimenting to find what works and what doesn't. At some point, an ideal channel will stop working as it should, and so you'll have to choose a new one suiting the situation where you are then.

Research how startups like yours usually get traction. Go talk to founders who failed (or succeeded) at what you are trying to do.




Chapter 3: Traction Thinking


All startups have a product. What differentiates successful from failing startups is the number of customers. The number one cause of startup failure in startups is a lack of customers.
This is why you should focus on getting customers as much as you focus on developing the product.
A startup with a crappy product and a lot of customers can survive and improve the product. A startup with a great product and zero customers will die.

Most startups think they only need to build something people want. It's not enough as you need to make money from that. Sometimes, there is no market for your product, the market is too small, too hard to reach, or too competitive market.

The product trap: fallacy expressed when a startup thinks the product alone will attract customers and fail to build traction as they build their product.

This justifies the 50% rule: spend 50% of the time on getting traction, and 50% on product development. Get them to feed each other (adapt the product according to market feedback).

If you first focus on the product then only traction, you may need to go through yet another cycle of product development.
Working on a product is done in three phases:
  • Phase 1: make something people want.
  • Phase 2: market something people want.
  • Phase 3: scale your business.

In the Phase 1, you should work 50% of the time on your product, and 50% of the time on getting traction. You will most likely NOT get traction in a scalable way.

As Paul Graham explains: "in the beginning, you are forced to do things that don't scale and recruit your users manually: calls, send emails, do speaking engagement, write guest posts..."
Startups that take off, take off because founders make them take off.

Must-do of Phase 1: get the first few customers.

Phase 2 is reached when you reach market fit. Your product works and your customers like it. You can then position yourself in the market and boost your marketing. Must-do of Phase 2: getting enough customers so you can be cash-flow positive.

Phase 3 is when you have an established business model, a significant position in the market, and a focus on scaling and dominating. Must-do of Phase 3: increase your earning, scale your marketing, build real sustainability.

Traction channels will evolve along the different phases. Growth is like an exponential curve. The beginning is slow, but as time goes and traction channels open, the number of users explode, then the channel becomes saturated, and you need to find a new channel to unlock.

The needed traction to get financed depends on your market and the competitiveness. Furthermore, you should talk to investors that understand what you are doing, so they'll be more lenient if you don't have too much traction.

A startup can be awesome if you believe in it. If not, it can get old pretty quickly.

Adopters VS outlines: The first like your product, the second like you as a person. Both of these people will be your first customers.

How to choose whether to give up or not?
Find bright spots (people that really engage with your product) and find out why they like your product. See if you can expand them. If you can't, it's time to pivot. Also, find out if you are too early or not, and if yes, why you would be.



Chapter 4: Traction Testing


Step 1: test channels in your inner circle.
Step 2: when you find one, tweak it until you find something that works.

The law of crappy click-through rate: at some point, any channel will be oversaturated. To combat that, you should be continually experimenting with testing different marketing channels and strategies, find one that works before it becomes saturated, then hop onto the next one.

Focusing on one channel and optimizing takes time and resources. You should only do it AFTER you tested and got confirmation there was potential.

You optimize a marketing channel by running split tests. Making split test a habit will improve your efficiency in a traction channel by 2-3x.

Embrace online tools to understand the efficiency of your ad strategy.

As you are running with your three different channels, you should add the numbers in a spreadsheet to compare.

Metrics to keep in mind:
  • Cost per customer acquisition
  • The lifetime value of a customer
  • Cost per click
  • Buy/click ratio



Chapter 5: Critical Path: Deciding What To Work On: The One Thing


What you choose to do should directly be related to getting traction.

You should always have a traction goal to work towards. It can be 1000 free users, 100 paying users, or 10% more users.

The critical path is the path that defines reaching traction goals with the fewest and minimum steps. Work on the first step and nothing else until you reach it. Btw, your original plan to get traction will likely end up wrong.

Define the critical path of your company as much as you define the critical path of your employees.

Three reasons why founders ignore some potential traction channels:
  1. They are out of their field of vision.
  2. They refuse to consider some channels they see negatively, like sales or affiliate marketing.
  3. Bias against schlep (annoying things that seem to be time-consuming).
Which traction channels are you currently bias for or against? Make sure you take each channel seriously.

When you consider weird or untried channels, you often end up competition-free and can grow quickly.
 

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Raja

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thanks mate for sharing
 

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