top of page

Startup Traction and Social Proof


Why traction matters


Traction, also referred to as uptake, is one of the most important factors investors will consider when approached about investing in your startup. It also shows the rest of the world that you have a viable startup that on the rise.

So what is traction? A simple way to put it is: Quantitative proof that there is demand for your product/service.

You might think that traction = revenue, but that isn’t always the case. Depending on the industry you operate in and the nature of your startup, traction can be generated and demonstrated in different ways.



Different types of traction to focus on depending on product or service offered


The most common ways to measure traction are the following:

  1. Profitability

  2. Revenues

  3. Active users

  4. Registered users

  5. Engagement

  6. Partnerships/clients

  7. Traffic

Naturally this is a non-exhaustive list, as the relevance of these metrics will vary from startup to startup.

An example:

Say you’re launching an e-commerce business and you’ve reached a stage where you need an investment. In this case, your potential investors will probably be most interested in the following:

  • Revenue growth

  • Average sales

  • Profit margins

  • Number of customers

  • Frequency of returning customers

  • Units sold

  • Website traffic/bounce rate



How to show traction

1. Formation of business (creating website, forming legal entity, having business collateral)


Registering your business as a legal entity, creating a website, and producing business collateral (such as business cards) are some of the ways that you can show investors that your startup has traction, as it’s gone from an idea to tangible assets.

If you have a business bank account, tax ID, legal advisors and a small team of people working for you, you’ll definitely be more attractive to an investor than if you were to sell them your vision without having any substance.

Not only do these steps give your startup some momentum, they also demonstrate commitment and competency on your end, validating your startup as a worthwhile investment.


2. Customer base (are many people using your product/service? are the numbers rising or declining?)


We briefly mentioned customers as a valid traction metric earlier, so we’ll expand on this a bit now.


You might be in a position where you need funding before you can even build your product or sell your service to your target audience.


How can you demonstrate traction if this is the case? By finding interested customers who will buy what you’re offering when it's available. This can come in the form of client testimonials. Just beware that a few good testimonials on their own don’t necessarily mean your product is going to take off as soon as it hits the market.


If you do already have a product but don’t have the funds to fully launch it in your desired market, then you can start by handing out some free samples to a select amount of people and get their feedback. Or if you want to cover some of your costs, you can give people “early bird” discounts for being amongst the first to buy your product/service.


In the video game industry for example, this is common practice. Developers often release Alpha and Beta versions of the game at a discounted rate so that real-life players can test it out and provide feedback.



3. Develop your product and team

Keeping track of the iterations of your product (Alpha, Beta, full launch) is another important way to show traction, as it demonstrates the progress you’ve made and what you’ve learned in the process. Having a team working for you is also great way to show that your startup is headed in the right direction.


Hiring the right team members is crucial, since it’s often said that investors bet on the jockey, not the horse. When you’re in the early phases remember to hire slow and fire fast.

Hiring slow is important because you want to ensure that you’re hiring the right person for the job, and you don’t have a lot of money to spare - which is also why you need to fire fast (but not in haste).


Having a team comprised of talented individuals working for you shows that you are a good recruiter and able to sell your vision well. The fact that you were able to attract gifted people to work for your startup instead of somewhere else is testament that intelligent people believe in your vision and reflect your startup’s potential.


So now that you’ve created momentum, you need to create traction - which brings us to our final section below.



How to build traction


As you probably know, there are different ways to create traction, here are a few:

1. Public Relations (PR)

A good PR plan will boost your startup’s reputation and consumer trust. Linking with influencers (who are relevant to your target audience) is often a good bet, but beware, some of them can be very expensive.


2. Advertising

There are many different ways to advertise, from costly billboards to more affordable social media campaigns. You need to decide what the best way is to target your market. Ads are an effective way of promoting your solution, but can be difficult to get right and expensive.


3. SEO (Search Engine Optimisation)

This only applies if you have a website. If you do have one (or are planning to), then you’ll want to make sure your website has good SEO. We could write pages about this topic, but simply put: The better your SEO, the more traffic your website will get.


4. Viral video

This only really happens if you get very lucky, so don’t count on it happening to you. But if it does, you’ll need to be ready to react to the situation as quickly as possible. If sales suddenly skyrocket as a result, how are you going to adapt to meet the demand?


5. Blogs

Blogs are a great way of building consumer trust, and an opportunity for your startup to broadcast its unique take on relevant topics. It also helps with improving your SEO if done right, which is the main reason most companies have a blog.

6. Social Proof (advisors, customers, media, investors)

One of the best ways of building traction is through social proof, which can be likened to word of mouth. It can come in four different forms: advisors, investors, customers and the media.


If you have credible advisors supporting your business, potential investors will be more likely to cast a favourable eye upon your startup, since credible advisors usually mean that the business is heading in the right direction.


The same principal applies to investors. If your startup has received significant funding from investors with good reputations, that will be seen as an endorsement of your business.


Big-name customers can be used to build traction as well, in the same way that a certain item gains massive value if a celebrity is suddenly seen wearing it. So if you land a celebrity customer, make sure you talk about it on your website and/or social media.


Similar to big-name customers, if a reputable media channel talks about your startup it shows that it is newsworthy - which you can use to build your company’s reputation. And don’t forget to share the fact that your startup was in the news!

Comments


Commenting has been turned off.
bottom of page