Traction: How Any Startup Can Achieve Explosive Customer Growth

by Gabriel Weinberg

Personalize your email marketing messages. Email marketing is a personal traction channel. Messages come into your inbox along with email from your friends and family. Build an email list of prospective customers whether you end up focusing on this traction channel or not. You can utilize email marketing at any step of your relationship with a customer, including customer acquisition, activation, retention, and revenue generation. Set up a series of automated emails. Often called life cycle or drip sequences, this technique works best when the series of emails adapts to how people have interacted with your product. Use online tools to test and optimize email campaigns. These tools have built-in templates and A/B testing ability and will track open and click rates.

“going viral” means that every user you acquire brings in at least one other user.

A viral loop in its most basic form is a three-step process: A customer is exposed to your product or service. That customers tells a set of potential customers about your product or service. These potential customers are exposed to your product or service, and some portion become customers themselves.

The two key factors that drive viral growth are the viral coefficient and the viral cycle time. The viral coefficient, or K, is the number of additional customers you can get for each customer you bring in. The viral coefficient formula is: K = i * conversion percentage where K is the viral coefficient, i is the number of invites sent per user, and conversion percentage is the percentage of customers who sign up after receiving an invitation. For example, if your customers send out an average of three invites and two of those people usually convert to new customers, your viral coefficient would be: K = 3 * (2/3) = 2

Any viral coefficient above 1 will result in exponential growth, meaning that each new user brings in more than one additional user, creating true exponential growth. Any viral coefficient over 0.5 helps your efforts to grow considerably.

the conversion steps for a standard Web application often involve clicking on a link and filling out a form to create an account. In that case, you could break the conversion percentage into two percentages. K = i * conversion percentage = i * click-through percentage * signup percentage

Even expert teams will take one or two engineers working two to three months, minimum, to implement and optimize a new viral channel to the point where it’s growing quickly without any ad spend. Once it gets going, though, it becomes easier to incrementally improve and grow the product. You need a strong strategy, and need to spend considerable time and resources to get something going. As you come up with your initial strategy for viral loops, create a simple dashboard of what needs to go up to be viral. Understand how new users end up helping you acquire more new users and do a lot of A/B tests (several per week) to try and improve the metrics.

Here are some of the more common items to test and optimize: Button vs. text links Location of your call to actions Size, color, and contrast of your action buttons Page speed Adding images Headlines Site copy Testimonials Signs of social proof (such as pictures of happy customers, case studies, press mentions, and statistics about product usage) Number of form fields Allowing users to test the product before signing up Ease of signup (Facebook Connect, Twitter login, etc.) Length of the signup process (the shorter you can make the process, the higher your conversion percentage will be)

Andrew mentioned that he sees companies making the same mistakes: Products that aren’t inherently viral trying to add a bunch of viral features Bad products that aren’t adding value trying to go viral Not doing enough A/B tests to really find improvements (assume one to three out of every ten will yield positive results) Not understanding how users are currently communicating/sharing, and bolting on “best practice” strategies (Just add Facebook “like” buttons!) Not getting coaching/guidance from people who’ve already done it Thinking about virality as a tactic rather than a deep part of a product strategy As he told us, the best way to figure out the right kind of loop to build is simple: copy those who have done it before.

Build a viral loop into the product. There are several types of viral loops, including word of mouth, inherent, collaborative, communicative, incentives, embedded, and social. Startups can combine and change types over time, but generally these loops need to be built into the product to work successfully. Shorten viral cycle time. The shorter this time, the more loops will occur and the faster you will grow. Look for viral pockets. You might already be viral in a subgroup of your customers. Find that subgroup and focus on it. More than in any other channel, test, test, test. Successful viral strategy involves constant testing, measurement, and trying new things. It is a numbers and creativity game. No test is too small, as small changes can have big effects over time. Viral loops that work well often have extremely simple components (forms, copy, email, etc.).

I think of free tools as content (albeit interactive content). At HubSpot, we really believe in marketing channels that have high leverage (i.e., write it or build it once—and get value forever). As such, we take a very geeky and analytical approach to marketing. We think of each piece of content (blog article, app, video, whatever) as a marketing asset. This asset creates a return—often indefinitely. We contrast that to buying an ad, which does not scale as well. When you advertise, the money you’re spending is what drives how much attention you get. Want more clicks? Spend more money. Contrast this to inbound marketing whereby the cost of producing a piece of content is relatively constant. But, if it generates 10x more leads in a month, your marginal cost for those extra leads is almost zero. Further, with advertising (outbound marketing), the traffic you get generally stops when you stop paying. With inbound marketing, even after you stop producing new content, the old content can still drive ongoing visitors and leads.

To really maximize impact, put your microsites and tools on their own domains. This simple technique does two things. First, it makes them much easier to share. Second, you can do well with SEO by picking a name that people search often so your tool is more naturally discoverable.

When you build valuable tools for prospective customers, you get more leads, a stronger brand, and increased awareness while also solving a problem for the individuals you want to target.

Create a stand-alone, low-friction site to engage potential customers. Make sure it naturally leads to your main offering. The case for spending engineering resources on marketing becomes much stronger when you think about these marketing tools as long-term assets that bring in new leads indefinitely after only a small amount of up-front investment. Look internally for site and tool ideas. Perhaps you have already started creating something for yourself that could also be used by potential customers? Another approach is to turn a popular blog post into a microsite. Make them as simple as possible. Single-purpose tools that solve obvious pain points are best. Put them on their own Web sites and make them easy to find, particularly through search engines.

Business development can drive some amazing outcomes for your startup. However, getting traction from this channel requires something that few companies do well: strategic thinking.

This sounds simple and obvious, but in practice it is difficult. If a big company says it’ll work with you, but only in this other way that doesn’t strictly align with your traction goal, it is still extremely tempting. So tempting, in fact, that many startups will waste resources on these deals even though they are off their Critical Path. Business development requires discipline.

Create an exhaustive list of all of your possible [partners]. Don’t ever list Condé Nast without listing every single other publisher you can think of. Make a very simple spreadsheet: Company, Partner Type (Publisher, Carrier, Reseller, etc.), Contact Person/Email, Size, Relevance, Ease of Use, and then a subjective priority score. That list should be exhaustive. There’s no reason why any company shouldn’t have fifty potential business development partners in their pipeline, maybe one hundred, and be actively working the phones, inboxes, and pounding the pavement to get the deals you need to get—be it for distribution, revenue, PR, or just to outflank a competitor. The latter is totally underutilized. If you go in and impress the top fifty folks in your space, it makes it that much harder for a competitor to get a deal done—because you’re seen as the category leader.