Traction map: the shortest path to a scalable startup

Traction map: the shortest path

to a scalable startup

Scalable startup

Primary goal of a startup: to

build a scalable business

Find profitable and scalable

channels: put money, get more

money

$ $$$

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Customer discovery: find customer segments with a

problem you can solve. Make sure that customers are

willing to pay.

Testing channels: find channels with enough customers,

profitable economics and potential for scalability.

Phases

Valueproposition

Confirm theproblem

Modeleconomics

MVP

Confirmsolution

Firstsale

Valueproposition

for thechannel

Acquireusers

MVP forthe channel

First salein channel

Flow ofsales

Unit-economicsprofitable

Profitablewhen

scaling

Customer Discovery & Customer Validation Testing channels

Traction map

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• Customer segments on the left. When segment confirmed –channels on the right.

• One or more channels for each segment.

• Cells contain a description of stage outcome.

• Current stage in red. Don’t go to the right of a red cell – it’s too early.

• Current focus in green. You may focus on 2 or 3 segments or channels.

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Define your customer segments. Describe a customer, Their

problems, what is valuable for them. Different value

propositions = different segments.

Why aren’t they buying?

Initial set of segment is a hypothesis. It will change.

Define a value proposition for the segment and conduct

problem interviews to confirm, refine or reject a hypothesis.

During the interviews you may find new segments or refine

existing.

Customer discovery

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As soon as the problem is confirmed – start modeling

economics for the segment. On what conditions do

economics become profitable? Are these conditions

realistic? How much money is there in this segment, is it

worth the effort?

If the economics are potentially profitable – you can start

building an MVP.

M is for Manual

When MVP is ready – conduct solution interviews to

make sure it is indeed solving the problem.

Solution interviews lead to first manual sales.

Customer discovery

When customers are paying and you know

why they do so – you can begin testing

channels

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• Sales channel is a combination of 3 items:

– Marketing channel – traffic source (Adwords,

cold calls etc.)

– Sales instrument – landing page, presentation,

sales script, sales letter etc.

– Product (features, content) and its price

• Your goal: to find scalable channels

• Goal within the channel: profitable

economics

Testing channels

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• Friends and networking

• Context ads

• Cold calls

• SEO/organic

• PR

• Email and content marketing

• SMM

• Offline, TV, BTL

• and more…

Marketing channels

Value proposition for the channel

• Channel: Context ads.

VP: Video present from photos

• Channel: Wedding agents.

VP: An entertainment activity during celebration

VP for partner: Increase revenue per client and customer retention

Value proposition in the channel

• Don’t forget to have a value proposition for

each partner.

• Consider customer expectations in each

channel. AdWords customer knows what he

is looking for while in cold calls you have to

explain what you are talking about.

Acquiring customers from the channel

• Test whether there are users first, then improve

the landing page

– At first you don’t need a landing page at all – draw

traffic to a competitor’s site

• Don’t optimize on traffic cost

Sales instrument and product

• Landing page

• Email sequence

• Call script

• Presentation

• Meeting scenario

• etc.

• Different sales instruments = different channels,

because economics differ. The same goes for

product and price.

First sale

First sale

• Long sales cycle – a lot of time till the first sale

• No movement for too long – look if there is

movement in the funnel

• Still no movement – try different channels.

Cold traffic vs. early adopters

First sale

• Warm leads from web: working scripts, go test

economics and scale

• Cold calls: different scripts, no sales, nothing

to scale yet

Statistically significant flow of sales

• С1 = 0,2% - not profitable

• С1 = 0,5% - profitable

• Traffic: 200 unique users / day.

Can you tell if it’s profitable or not?

• What’s the point in metrics if there’s no traffic?• No sales flow for a month – try different channels

Profitability per user

The St. Church of

ARPU > CPA

Profitability on scale

• Can you increase sales flow by x10 and keep it

profitable?

• Is there enough channel capacity to scale?

• Will traffic cost grow when scaling?

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Primary goal: to get to the right side of the map at least

in one channel. Or in 2-3 channels in 1-2 segments.

Instead of a few steps in each channel – focus on just

one and get to the end.

Bottlenecks

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Don’t optimize landing page while you don’t have traffic

Don’t build the product unless you proved the problem

exists

Don’t scale unless your economics are profitable

Bottleneck is a spot in your

business where you actions give

you maximum results. Less work,

more advancement tot your goal.

Bottlenecks

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1. Segment. In which segment have you got more to the

right? In which segment there’s more money?

2. Channel (if you have proved the segment and are

testing channels). In which channel have you got more

to the right? In which channel there’s more money? If

stuck for too long – go to a different channel.

3. Cell. The current red cell in this segment or channel is

your bottleneck. Work on it.

Search for the bottleneck

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4. If your current cell is first sale, the bottleneck would be

either traffic or current step in the funnel.

5. If current cell is economics or scaling, bottleneck is the

metric with maximum leverage

6. If the metric with maximum leverage is conversion,

bottleneck is the funnel step loosing most customers

Search for the bottleneck

HADI-cycle

Each cell in the traction

map contains one or more

hypotheses:

If we do this and that we

will move to the next stage

or improve that metric or fix

that funnel step etc.

Hypothesis

ActionData

Insight

Cycle of improvement

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Every week you identify your current bottleneck and

plan your actions for the week to come that improve that

bottleneck

Next week you check whether you have done what you

planned or you wandered away

Tell this to someone not from your team

Weekly cycle

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• Where are you going – 3-6 month goal

• Where are you now – traction map and metrics

• Bottleneck a week ago

• HADI-cycles of past week

• Bottleneck today

• HADI-cycles for next week

Weekly cycle

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Fill your traction map

Identify current bottleneck

List hypotheses to test this week and define HADI

cycles for them

Now let’s do it