traction map: the shortest path to a scalable startup
TRANSCRIPT
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
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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
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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
• 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 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.
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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
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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