Unit – III: Traction of Business:

Meaning of Business Traction, Business

Traction Process, and Metrics to Measure
Business Traction, Customer Retention,
Customer Churning, Relationship Business,
Customer Life Time Value, Identifying the
unnecessary moves in business traction.
Traction of Business using Bull’s-eye
framework. Measuring the effectiveness of
selected channels. Budgeting and Planning.
Meaning: TRACTION OF BUSINESS
Business traction refers to the progress
of a start-up company and the momentum
it gains as the business grows.
When traction is lacking, sales dry up
and the customer base dwindles,
regardless of the effort put into the
enterprise
Metrics to Measure
BUSINESS TRACTION
Itemize investment levels from you, insiders, and family. Professional
investors expect traction discussions to begin with the size of your own
investment, in money and time, plus capital received from friends,
family, and co-founders. If you don’t believe in your startup enough to
risk the capital of those close to you, why should investors?
Define metrics on customer feedback and user counts. Early examples
of traction for any solution, especially free ones, would include website
traffic, number of blog comments, likes, followers, downloads, and active
users. Investors are wary of initial surges due to friends, family, and early
adopters, so sustainable growth over time is critical.
Count connections with experts, media, and influencers. You need
outside advocates who will back your assertions of traction.
Relationships with recognized and influential bloggers, relevant media,
and industry analysts are priceless. Traction with these people is usually
indicative of later traction to come with customers.
Assemble a credible inside advisory board and partners. Investors
and potential partners measure your credibility by the quality of your
advisors and peer partners. If Guy Kawasaki is an advisor to your tech
startup, that is significant traction, even without a product or revenue.
Who you know is still often more important than what you know.
Build an experienced technical and executive team. A sure sign of
no traction is an inexperienced solo entrepreneur looking for an
investor. You need a well-rounded team, including technical, financial,
marketing, and operational experience, and your ability to attract the
right co-founders is a strong indication of fundability and traction.
Demonstrate evidence of key customer interest. If you don’t yet
have revenue, the next best thing is to have orders or letters of intent
from prospective buyers. While these may not carry the authority of
income received, they at least show that you’re talking to potential
customers and seeking product-market fit.
Show validation of key business model elements. One
important measure of traction is a metric on how many of
the key business model canvas elements have been
proven with actual data or multiple experiments. These
would include the cost of customer acquisition, cost of
leads, sales channel, cost of goods, and pricing strategy.
Measure progress against industry barriers. In every
industry, there are known barriers to traction such as
regulatory hurdles, safety standards, and clinical trials.
These need to be listed as a metric, with resolution times
projected and breakthroughs counted. Investors need to
see your past accomplishments and the barriers ahead.
Customer retention
Customer retention refers to the
activities and actions companies and
organizations take to reduce the number
of customer defections. The goal
of customer retention programs is to
help companies retain as
many customers as possible, often
through customer loyalty and brand
loyalty initiatives
Customer Retention Strategies
Reducing Attrition. ...
Sell and then sell again. ...
Bring back the “lost sheep” ...
Frequent Communications Calendar. ...
Extraordinary Customer Service. ...
Courtesy system. ...
Product or service integrity.
A complaint is a gift
customer churning
customer churn occurs
when customers or subscribers stop doing
business with a company or
service. ... Customer churn impedes
growth, so companies should have a
defined method for calculating customer
churn in a given period of time.
Reasons…
1) Bad Onboarding.
2) No Ongoing Customer Success.
3) Bad Support.
4) Competitor-driven Churn.
5) You Closed the Wrong Deal.
6) Cash flow Crises.
7) Loss of Key Users.
8) Product Problems.
Relationship Business
Business relations are the connections that
exist between all entities that engage in
commerce. That includes
the relationships between various
stakeholders in any business network, such as
those between employers and employees,
employers and business partners, and all the
companies a company associates with.
A company's business relations may
include a long list of….
Customers
Vendors
sales leads
potential customers
Banks
Stockbrokers
service providers
municipal, state, and federal governmental
agencies
Customer Life Time Value (CLV)
In marketing, customer lifetime value (CLV) is a
metric that represents the total net profit a company
makes from any given customer. CLV is a
projection to estimate  customer's monetary worth
to a business after factoring in the value of the
relationship with a customer over time

Customer lifetime value: -The present value of the

future cash flows attributed to the customer during
his/her entire relationship with the company
Traction of Business using Bull’s-eye
framework

The Traction Bullseye Framework by

Gabriel Weinberg and Justin Mares:

Traction, is a simple, but effective process

on how a startup team can focus in on the
right channels for distribution resulting in
a surge of customer acquisition. ... Poor
distribution— not product— is the number
one cause of failure
Brainstorm – reasonable ways you might use each traction channel.
Seek to counter your biases to find the most effective traction path
for your startup. You should know what marketing strategies have
worked in your industry , as well as the history of companies in your
space . It’s especially important to understand how similar
companies acquired customers over time, and how unsuccessful
companies wasted marketing dollars. The Bullseye Spreadsheet is a
great guide for this process.
Rank – The ranking step helps you organize your brainstorming
efforts. It also helps you start to think a bit more critically about the
traction channels in aggregate.
Column A (Inner Circle): which traction channels seem most
promising right now? Column B (Potential): which traction channels
seem like they could possibly work? Column C (Long-shot): which
traction channels seem like long-shots?
Prioritize – identify your inner circle: the three traction
channels that seem most promising.
Test – The testing step is where you put your ideas into the real
world. The goal of this step is to find out which of the traction
channels in your inner circle is worth giving focus. You want to
design smaller scale tests that don’t require much upfront cost
or effort. For example, run four Facebook ads vs. forty.
Focus on what works – If all goes well, one of the traction
channels you tested in your inner circle produced promising
results. At any stage in a startup’s lifecycle, one traction channel
dominates in terms of customer acquisition. As you dive deeper
into it , you will uncover effective tactics and do everything you
can to scale them until they are no effective due to rising cost or
saturation.
19 "Traction" Channels to Start
 1. Viral Marketing
Viral marketing is a process where your users and customers bring you new
users and customers, without you having to advertise or market to those
new users.
 2. Public Relations (PR)
The second channel is to get traction through being talked about in the
media. Public relations is the practice of reaching out to magazines,
newspapers, blogs, and other media outlets to have them feature a story
about your company or product.
3. Unconventional Public Relations
There’s also the flip side of typical public relations: “unconventional” PR. By
unconventional they mean anything you could do that would result in a
huge amount of publicity without you having to make an effort for it to
spread, even if that publicity is negative.
4. Search Engine Marketing
Google’s Adwords is still the largest advertising network online, and if you can
afford it, it’s worth testing out. These are the ads that you see above and
alongside search results, suggesting certain sites related to the keywords
you plugged in that might not be the top ranked sites
5. Social and Display Ads
Google and the other search engines have competition though. Last year, the total
spending on social advertising (such as on sites like Facebook and Twitter) 
grew 40% to over 8 billion dollars.
6. Offline Advertising
7. Search Engine Optimization
Good search engine optimization (SEO) means free traffic for your keywords, which
in turn can mean a customer acquisition cost of zero or near zero.
8. Content Marketing
Content marketing is the process of creating content that your users and customers
would be interested in, distributing it for free or at low price, and then using that
content to draw people to your site where they’ll hopefully activate as new users or
customers.
9. Email Marketing
10. Engineering as Marketing
Similar to content marketing, you can use engineering projects that provide value to
your target market to draw new users or customers to your site.
11. Targeting Blogs
While it could fall under PR, targeting blogs deserves a special mention, as well. If
you can build strong relationships with bloggers in your niche, then they’ll be more
likely to reference you and your product in their articles and be more open to
letting you share your content to their audience.
This is any web service, app, or free tool that offers value to your target market for
little or no cost
12. Business Development
Business development is the process of establishing partnerships and agreements with other
companies or startups to promote each others’ products or services.
13. Sales

If you have a high cost product, or a piece of enterprise software, then direct sales may be a
strong traction channel for you.
14. Affiliate Programs

Affiliate programs are a way for you to reward your existing users and evangelists for
spreading the word about your product or service. It can be done one of two ways, you can
reward them with money or services within your service, or you can reward them simply by
paying them for the referral.
15. Existing Platforms

You can also use existing platforms, especially online, to help promote your product.
This is what Facebook games—yes, all those annoying ones—are doing, but there are less
obtrusive ways to take advantage of it
16. Trade Shows
17. Offline Events
18. Speaking Engagements

In between hosting your own events and going to trade shows, you can also look for
opportunities to secure speaking engagements related to your field. If you’re recognized as
an expert in what you do, you might get invited to speak at other people’s events or you can
pitch yourself as a speaker once you hear about an event being put together.
19. Community Building

Last but not least there’s community building. Meetups are a type of offline community
building, but you can also look at building a web community to attract and keep new users.
Measuring the effectiveness of selected
channels
Measurement is the key to optimizing any
process, and marketing campaigns are no
exception. When you 
establish and measure key performance in
dicators (KPIs)
 for your marketing campaigns, you can
clearly see what works and what doesn't.
How to Measure Your Marketing
Success
Return on Investment (ROI)
Return on Investment measures the sales revenue a campaign brings
on every dollar spent
Cost per Win (Sale)

Cost per Win measures the expense of each sale. 

Cost per Lead

Cost per Lead measures the cost-effectiveness of marketing

campaigns. This metric focuses entirely on the leads generated by
the campaign. Since it factors out the sales process it doesn't
measure the quality of leads
Conversion Rate (or Goal Completion Rate)

the percentage of visitors who have converted into leads or customers)

Incremental Sales
Incremental Sales measures the contribution of marketing efforts
toward the sales numbers. Incremental sales show the
effectiveness of your marketing campaigns in generating sales,
and are a great way to compare your marketing efforts.
Purchase Funnel

Using Google Analytics (or a similar tool) you should also measure
and analyze the sales process for the leads generated by each
marketing campaign (for example, conversions and percentages
for visits, interactions, leads and sale). This can help you find drop
off points that can tell you more about your traffic or your sales
cycle.
Customer Lifetime Value
Customer Lifetime Value measures the lifetime value of your
customers by utilizing the following formula: "average sale per
customer" multiplied by "average number of times a customer
buys per year" multiplied by "average retention time in years for a
typical customer." This data will certainly take time to compile,
but by calculating the CLV, you can see which of the marketing
efforts generate your best customers.
Budgeting and Planning.

Market planning is the process of organizing and

defining the marketing aim of a company and
gathering strategies and tactics to achieve them. ... All
relevant teams in the organization should refer to
its marketing plan
A marketing budget is marketing plan in terms of
costs. Marketing budget is an estimated amount of
cost that will be required to promote products or
services. Marketing budget is generally part of
a marketing plan and crucial part of
the marketing process
Here are the six steps to developing a marketing
budget as part of your marketing plan:

Know Your Sales Funnel. ...

Know Your Operational Costs. ...
Set Your Marketing Budget Based on
Business Goals. ...
Position Marketing as an Investment, Not
a Cost. ...
Consider Your Growth Stage. ...
Understand Current and Future Trends.
Six Actionable Steps to Build a Strategic
Marketing Plan at Your Organization

There are six components to developing a

complete marketing plan–
1)business objectives,
2)marketing priorities,
3)marketing goals,
4)marketing strategy,
5)key actions, and
6)dependencies and risks.