Summary of Traction by Gabriel Weinberg and Justin Mares

Fourth Traction Channel: SEM (Search Engine Marketing)

SEM is running ads on search engines. It enables you to test ideas before building the product. It also enables you to measure the CPA (cost per acquisition) of a customer.

Ex: if you pay 1 euro each time someone clicks on your ad and it takes 5 customers to have one buying your product, then your CPA (cost per acquisition) is 5 euro. If you sell a product for 100 euros, it is clearly worth it. If you sell your product for 15 euros, not so much.

The basic SEM process is to find high-potential keywords, group them into ad groups, and then test different ad copy and landing pages within each ad group.

The average CTR (click-through rate, the number of people that click out of the number of people that saw the ad) is 2%.

If it is less than 1.5% there is something you are not doing well.

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Fifth Traction Channel: Social And Display Ads

This channel is running ads on different websites. Display ads enable you to reach a broader audience than SEM. While the big platforms have their own ad center, smaller websites use ad networks that run ads on millions of other websites.

Here they are:

• Google Ad Sense
• Facebook network ads
• Media
• Apple advertising
• Adknowledge
• Yahoo network
• Taboola
• Epom
• Airpush
• Leadbolt
• Media.net

Niche ad networks: focus on smaller sites that fit certain audience demographics.

The last approach to display ads is to talk to site owners and ask them to display an ad on their websites. If you know precisely where your audience hangs out, then you can do that.

Getting started

First, you need to understand which ads work in your industry, so look at what your competitors are running. MixRank and Adbeat do just that. Alexa and Quantcast can help you determine who visits the sites that feature your competitors’ ads. Then you can determine whether a site’s audience is the right fit for you.

SEM ads work for stuff people want to buy right now. Display ads work more to introduce new products and generate interest, or reach new buyers. The purpose is awareness, not conversion (usually happens down the line).

Use social ads to create content that teaches or entertains, since that’s the reason why people go to these websites. You can also use these ads to promote organic content. If the content is good, it gets retweeted. Social ads are like helping a fire to start and they should be treated this way.

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Sixth Traction Channel: Offline Ads

These are:

• Billboards
• Print magazine and newspaper ads
• Direct mail: you can actually buy lists of people (Google “direct mail lists”).
• TV ads: mostly used for branding
• Flyers
• Posters (in taxis, train stations, airports)
• Radio ads
• Infomercials

A few principles to guide your use of offline ads

Demographics: the most important factor to consider.

Questions to ask yourself:

• What are the basic demographics of the audience?
• What are the economic demographics?
• How well does this advertising demographic match up with my target customer demographic?

You should get this info from the company you are buying the ad from.

In general, the cost of an ad depends on the reach it has.

To run tests, look for remnant advertising (ad space that is free). Near the publication date, media companies will accept any price to fill up their empty ad space. Some agencies specialize in selling remnant advertising.

Tracking: tracking is hard. It usually entails special URLs or promo codes to measure the effect. You can also ask people the question “how did you hear about us” when they sign up.

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Seventh Channel: SEO

SEO is at its core, having a content strategy.

In SEO, there are two high-level approaches: fat-head and long-tail.

Fat-head: rank for terms that directly describe your company, usually competitive terms, and broad.

If you find nice keywords, test them with Google Ads. If the ads convert, then SEO is interesting to pursue. No point wasting time on terms that don’t yield traction.

Once you found your keyword with Google Keyword Planner, go to Google Trends to see what is ranking over there and choose the best keywords.

Then you should look at which keywords will be harder to compete with using Open Site Explorer, which tells you the number of links competitors have for a given term.

Long-tail: rank for very specific terms in a niche with less competition, but smaller search volume too. About 70% of all searches today.

You need to create content that attracts users to your site with long-tail keywords. This is all it boils down to. Look at your competitors, their landing page (if you can find the sitemap, or on Google), and on Alexa, how much volume they get from search alone.

SEO works well for geographically targeted services and products (pizzeria in Brussels, Belgium).

Another way is to get people to your website by sharing the data you naturally create, collect, or use.

The point of creating amazing content is that people link to it.

Getting links: PR, creating social media pages with your products, content marketing that people want to share, widgets.

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Eighth Traction Channel: Content Marketing

Unbounce began blogging a year before they had a product. Thanks to the amazing content they put out there, they got recognized in the industry, built an email list, and launched with 5000 people on it. The team relied on social media to spread their post, ask influencers to comment them, etc.

OkCupid wrote interesting stories and stats on their blogs that got pitched to mainstream media which drove users to their blog.

To write valuable content is to help your customers solve problems they have, with actionable results.

Infographics are shared more often than the blog post itself.

If what you are writing isn’t useful to people, your content won’t spread.

To build yourself a reputation, engage in online communities in your industry.

Do guest posting.

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Ninth Traction Channel: Email Marketing

Works best when it is personalized.

Don’t buy an email list. Build it yourself by having a newsletter, a free product (course, book), or premium content accessible once people register with their email addresses.

If you don’t have an email list, then advertise on other people’s newsletters.

Use email to help people have the perfect experience when they use your product. When you see they’re not using a feature, tell them. Remind them to use your product when they drop off (don’t finish signing up, leave purchases in their carts, etc).

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Tenth Traction Channel: Engineering As Marketing

Hubspot reached growth by creating a marketing grader, a free tool that enables you to get a report of your website marketing on your email address. They can collect email addresses at the same time.

Engineering as marketing is an asset that brings you in leads forever. Building a small online tool is done once, forever. Paying for ads is repetitive. 

This traction channel is good as few companies use it. 

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Eleventh Traction Channel: Targeting Blogs

One of the most effective ways to get a first wave of customers.

Here’s how Mint acquired customers so fast:

1. Create a quant-based marketing spreadsheet
2. List marketing channels
3. Ran numbers in terms of traffic, click-through rates, and conversion
4. Calculate the number of expected users for each channel
5. Run tests

They found 600 blogs about money management and asked them to write about Mint, which further exploded their SEO.

VIP access: get the people on your waiting list to get their friends to sign up for the waiting list in exchange for VIP access.

Another way to use this channel is to sponsor blogs (put an ad on the blog). Then track the blogs to see which ones (and which ad) are most effective and what kind of people sign up.

You can also share links under videos, etc in communities where people you target usually hang out.

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Twelve Traction Channel: Business Development

Sales = exchanging value for money.

Business development = exchanging value for partnerships. Eg: when Google partners with Netscape to be their main search engine.

There are different types of business development:

• Standard partnerships: Apple + Nike that make a connected shoe.
• Joint Ventures: a separate company made by two other companies.
• Licensing: Virgin Mobile in the UK, which rents out the Virgin brand
• Distribution deals: when one company is paid to distribute the product of someone else that can then reach customers.
• Supply partnership: self-explanatory

For this channel to work, you must have a clear understanding of your company objectives.

Good BD strategy aligns with your company and product strategy and is focused on critical product and distribution milestones.

Think about why would a company partner with you to select the right partner. Don’t focus on yourself too much.

Make a list of potential business partners in a spreadsheet with columns like company, partner type, ease of use, size, relevance, then a subjective priority score.

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Thirteen Traction Channel: Sales

 Most of the time, your first customer is someone you know. 

A first sales pitch is a list with ten bullet points of what the product/company can do for the client + a deep understanding of the client’s problem. Eg: The founder of an insurance software company went to talk to insurances to find out about their problems, then gave a talk about how their software could help them out (or not). 

How to structure a sales conversation:

1. Situation questions: learn about your prospect’s situation. Can be “how many employees do you have”, for example.
2. Don’t ask too many of these questions as the more you ask, the less likely you will close the sale. Ask just enough. 
3. Problem questions: those that clarify the problems of your prospect. 
4. Implication questions: making the prospect understand that the problem he has is causing bigger problems. Use to make them feel the problem is bigger than what they had thought. 
5. Need-payoff questions: these questions focus attention on your solution and get buyers to think about the benefits of addressing the problem. How do you feel about this solution?

This framework is called SPIN:

• Situation
• Problem
• Implication
• Need-payoff

Cold-calling: Try to get on the phone people that have power, but not too much. 

The structure of a cold call is as follows:

PNAME:

• Process: how does the company buy solutions like ours?
• Need: how badly do they need our product?
• Authority: who in the company has the authority to make this purchase?
• Money: Can they afford it?
• Estimated timing: how fast can they buy? 

After the call, send them an email with a recap of the call. 

Your first customer

It is someone DESPERATE for the solution you provide. 

Sales funnel

1. Generating leads: done through other channels (ads, email, blogs, etc). Giving something for free in exchange for an email address is very powerful.
2. Qualify lead: determine how ready your prospect is by putting leads in buckets. A: within 3 months. B: ready within 12 months. C: ready after 12 months. 

Marketing should help sales to arm them with reasons to sell, and aim at people likely to buy. 

Closing

Lay out exactly what you are going to do, and in which timeframe. Ask your customer to commit (with a yes or no) whether they will buy. 

Conclusion

Design your sales funnel from the customers’ perspective. Find out which FUD keeps them up at night regarding whether they want to buy from you or not, and design your sales funnel around that. Answer all of their questions, then give them a trigger that will make them buy what you want to sell them. 

Removing obstacles to sales

• Removing needs to install programs
• Offering free trials
• Channel partners
• Demo video
• FAQs
• Reference customer
• Email campaigns
• Webinars, or personal demo
• Easy installation and ease of use
• Low introductory prices
• Eliminating committee decision-making

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Fourteenth Traction Channel: Affiliate Programs

Your success in using affiliate programs depends on how much you are willing to pay to acquire a customer. The authors recommend using an affiliate network to establish the program. 

The alternatives are to create your own program, select people yourself, or approach blogs. The good thing is that you do not necessarily have to pay people with money – you can pay them with access to your product if it’s a freemium model, for example. 

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Fifteenth Traction Channel: Existing Platforms

Existing platforms are not only something you can leverage as a marketing channel. It can also help you develop products. Many early sites don’t have all the features they need. By building them, you leverage both the platform and the product. 

Eg: Youtube was an easy way to share videos on MySpace. IMGUR was an easy way to share pics on Reddit. 

You can do the same thing by building an extension for chrome, an app for WordPress, Shopify, etc. 

Tip: Evernote builds a version of Evernote to be present in every store and platform that exists. 

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Sixteenth Traction Channel: Trade Shows

Trade shows are good for sales, but they are also good when you are in product development. If you come with some prototypes at the show, you can speak to people about your product and get feedback. 

Make sure it makes sense financially to go. Also, make sure to visit the show a year before going, so you know what to expect. 

Make sure your target market goes to the trade show. It is useless otherwise. 

How to prepare for the trade show:

• Make a list of key attendees you will want to meet at the trade show
• Schedule a meeting with them before attending the event
• People you could meet are: editors of magazines, bloggers, customers, vendors, competitors, potential partners 

To get people to your booth, send them discount codes for your product to redeem at the booth, give free goodies (t-shirts, pens), etc.

Whatever you give should have a compelling CTA (a coupon on the business card, for example). 

One step beyond taking people to dinner is to throw a party. 

Eg: Zappos party at the worldwide shoe trade show.

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Seventeenth Traction Channel: Offline Events

This comes down to sponsoring or going to meetups or conferences, or organizing some yourself. Particularly good for startups that have long sales cycles, like enterprise software. 

The strategies aren’t so different than going to trade shows. You need to talk to people, find the people that need the solution you are developing, and ask them questions.

Conclusion: when you are trying to get your first 1000 customers, you need to do stuff that doesn’t scale. 

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Eighteenth Traction Channel: Speaking Engagement

It’s easy to start. Start by giving talks to small groups of potential customers or partners. Once you are comfortable, you can look for bigger events and email the organizers to see if you can speak there.

You have to get the attention of event organizers to land a speaking engagement. These people need public speakers, so if you have a good idea for an event in your area of expertise, pitch it. Another way is to contact event organizers and ask them what idea they want to be talked about. Then make your pitch. 

To become a speaker, you have to speak once. If you’re good, people will ask you to speak again. It will be like a snowball.

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Nineteenth Traction Channel: Community Building

How to build a community:

1. Build an initial audience

People want to feel like they are part of something bigger than themselves, which is why you need a mission for your community. 

2. Foster relationships in-between the members of your community
3. Talk to your audience
4. Be transparent
5. Ensure quality (create guidelines about the content discussed)

Communities enable many advantages, among which are hiring, feedback, etc.

For more content, head to auresnotes.com.

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