Traction.
I had a number of founders in recent weeks ask me what people are looking for when they ask for traction.
Simply put, traction is evidence that customers are interested in and willing to pay for your product. The evidence can be anecdotal and small, but some evidence is better than no evidence.
As an investor, it’s hard to understand how valuable your product is to the end user and that there is demand. Both are critical to successfully scaling a startup. A customer’s willingness to pay for your product is a shortcut to validating that real value is being offered and they would rather have your product than their money.
A customer’s willingness to pay is also one of the first things a founder should be validating in their startup. You want to know that customers will use and pay for your product as soon as possible.
So how do you demonstrate traction if you don’t have a product yet or any sales?
Traction can be any evidence that a customer will pay. It can be in the form of marketing engagement, pre orders, manual validation, or market comparables.
Let’s take an example. If you’re planning to build a product that sells vehicle accessories on a dealership website, you’re going to have to sell that product to dealers. Here are some cost-effective ways you can demonstrate traction before the product is built.
Create a marketing campaign advertising some of the benefits of your future product. Bring the campaign to a landing page with a waitlist. The conversion to the landing page and to the waitlist will help evaluate whether the product has value for potential customers and the description resonates with them.
Sell “pre-orders” to customers based on what your product will do and non-working prototype renderings.
Build a non-automated manually-created landing page for a potential dealership customer that helps them sell accessories. While this might only be for one model, it will demonstrate that the product works before the technology is built and help you quantify the value for the user.
Design a button without the actual widget on a dealer website. Place the button on the website to ensure people will click the button to get to what will eventually be your widget. The goal is to demonstrate that customers will engage with your content once you are live.
The point is that traction comes in many different forms. Each of these can be done while a product is in the concept phase, and a successful demonstration of traction significantly decreases the operational risk of a startup. The next time you’re pitching an idea or building a product to test it, look for ways to demonstrate traction before building.
