What is traction thinking, and how does it work?

Concept

Traction refers to the initial progress of a start-up and its momentum building as it grows. When you have “traction”, you have a clear indicator that your product or service is viable, you’ve achieved some level of product/market fit, you’re getting attention from your target customers, and you’re growing your business.

Ash Maurya argued the term ‘traction’ in the book ‘ Scaling lean’, that traction is the rate at which a business model captures value from its users (or rate of growing sales). Traction also reveals the rate you create customers and sales. There are many indicators that your start-up is gaining traction, including profitability, consistent growth of sales and customers, daily active users, monthly active users, monthly sign-ups, or a decrease in churn rate.

Background

Entrepreneurs and start-ups use the term ‘traction’ to refer to the progress and success of the business. Ash Maurya argued the ‘traction’ in the book ‘Scaling lean’ of 2016 and introduced ways start-ups make traction under two conditions: (1) monetizable value is when created value is equal to or bigger than the price, and (2) monetisation equation is when captured value is equal to or bigger than the value cost. Another book arguing the traction is ‘Traction channels’ by Weinberg and Mares 2015, identifying nineteen channels for start-ups to gain traction.

How does it work?

The book ‘Traction channels’ of 2015 by Weinberg and Mares identified the traction requirements, traction phases, and channels to gain traction, as per the following details (Weinberg and Mares, 2015)¹:

Traction requirements

Building something people want is required for traction, but it isn’t enough. You will also need a viable business model, a customer segment sufficient to reach profitability, successful customer acquisition, and a workable blue-ocean strategy. Ash Maurya identified traction as the following two conditions that must be met (Ash, 2016)²:

One- Monetizable value: created value (UVP) should be greater than captured value (or price).
Two- Monetization equation: captured value is greater or equals the value cost (value delivery).

Phases of traction

Phase 1- (product development): is about developing a solution that customers want. This process involves observing people, identifying problems, crafting a solution and prototype, experimenting, and implementing.
Phase 2- (market development): is about communicating and marketing products people want, achieving the product-market fit, and customers sticking around. Market development is getting enough customers to sell and grow.
Phase 3- (growth development): is about scaling a business. Growth is when a business model dominates the market and profits. Here, the focus is on increasing earnings, scaling-up marketing channels, and creating a sustainable business.

Traction Channels

Publicity: is the art of getting your name out there via traditional media outlets like newspapers, magazines, and TV.
Unconventional PR: involves doing something exceptional, like publicity stunts, to draw media attention.
Search engine marketing: this allows companies to advertise to consumers searching on Google and other search engines.
Social and display ads on popular sites: like Reddit, YouTube, Facebook, Twitter, and other known niche sites can be an effective way to reach new customers.
Offline ads: include TV spots, radio commercials, billboards, infomercials, newspaper and magazine ads, as well as flyers and other local advertisements.
Search engine optimisation: this is ensuring your website shows up for key search results.
Content marketing: including social media accounts and posts, blogs, emails, books, websites, and so on. Many start-ups have blogs. However, most don’t use their blogs to get traction.
Email marketing: is one of the best ways to convert prospects while retaining and monetising existing customers.
Apps: Engineering as marketing, using engineering resources to develop customers, is a significantly underutilised way to get traction. Successful companies have built microsites, developed widgets, and created free tools that drive thousands of leads monthly.
Viral marketing: is growing your customer base by encouraging your customers to refer other customers.
Business development: creating strategic relationships that benefit your start-up and partners.
Sales: exchanging products for dollars.
Affiliate programs: companies like HostGator, GoDaddy, and Sprout Social have robust affiliate programs that have allowed them to reach hundreds of thousands of customers cost-effectively.
Existing platforms: focusing on existing platforms means focusing your growth efforts on a mega platform like Facebook, Twitter, or the App Store and getting some of their hundreds of millions of users to use your product.
Trade shows: are a chance for companies in specific industries to show off their latest products
Offline events: from small meetups to large conferences—can be a primary way to get traction.
Speaking engagements: e.g., Eric Ries, author of the bestselling book ‘The Lean Start-up’, told us how he used speaking engagements to hit the bestseller list within a week of his book launching.
Community building companies: like Wikipedia and Stack Exchange, have grown by forming passionate communities around their products.

This post is sourced from my new book- Your Guide To Reach Innovation.
For more information about the book: https://growenterprise.co.uk/your-guide-to-reach-innovation/
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Final note: the book- Your Guide To Reach Innovation, is an actionable guide to innovation from beginning to end. Enjoy reading the book, and I look forward to your reviews.

Author: Munther Al Dawood

www.growenterprise.co.uk

maldawood@growenterprise.co.uk

References:

Weinberg, G., and Mares, J., 2015. Traction, Penguin, New York.
Maurya, Ash, 2012. Running lean, 2^nd edition, O’Reilly, USA.