February 15, 2022
New businesses and startups all face the challenge of getting enough funds to generate business opportunities and build sustained business traction. Ultimately, companies must build a valid business model in order to start gaining traction and prove themselves in the marketplace, attract additional investors, and stay ahead of their competition.
What is the definition of business traction?
Business traction is commonly defined as the progress and momentum of a startup company. Further, clear indicators of the startup’s growth tendencies and the speed and acceleration of this growth help indicate business traction. Of course, there is more than one way to measure growth, which suggests a wide variety of how traction is earned and measured. However, established measurements of success, such as revenue and support from the enterprise customers, help determine the existence and scope of business traction.
Startup traction is the progress and momentum at which the startup grows.
How to get traction for your business or a startup
The importance of traction for startups lies mainly in the necessity to generate trust. A clearly established mission statement shows investors that the startup is dedicated and willing to do what it takes to be amongst the 1/10 startups that succeed. This includes the internal trust within a business as well as the external trust established, built, and maintained between a startup, its customers, its industry, and any potential investors.
Investors look for signs of the company’s growth to determine potential and be reassured that the people behind have more than just a good idea. In fact, 9 out of 10 startups fail, the third of which fail due to lack of product-market fit. Therefore, no wonder that investors want to see clear indications of progress before each funding round. Business traction is what defines these signs of progress. Here are some ways startups are able to gain business traction:
- Thoroughly research your intended industry and external marketplace factors
- Create an airtight business plan that attracts investors
- Refine your product or service with public sentiment
Business traction is achieved when a business discovers a repeatable, financially sustainable at scale process for revenue growth. Traction usually comes from repeated experimentations with different offerings and exploring various markets, but can also come from brainstorming, outside suggestions, or plain luck.
- Adrian Mak, CEO of Advisor Smith
Types of business traction metrics
There is no single metric for traction. But there are a few ways of measuring it which translate to different types of traction. Referring to these types makes it easier to see how business traction can be achieved in particular cases.
Naturally, the best indicator of success in business is profit. However, no matter how the profit is measured, it’s generally agreed that you should not expect it for at least a couple of years. Luckily, one does not need to turn in profit in order to get business traction. For that, revenue is enough. Seeing money coming in and being reinvested will raise the trust of existing and potential investors. You can check a company's revenue by leveraging firmographic data to ensure that the company of interest is financially sound.
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Another way to signal constant sustainable growth is by innovating, improving the products and services, or updating the procedures. However, for it to truly translate into startup traction, investors and the public need to be notified. Thus, it’s important to keep them informed of all new developments that are being introduced. This will show that things are constantly moving forward and in the right direction. Coresignal's tech product review data allows you to keep track of those new developments. You can see active users' reviews on existing and updated products, comments on new features, and so on.
Online traffic and engagement
Given the importance of the internet for modern life, web page visits, social media followers, and other online activity strongly indicate business traction. It’s also crucial whether the traffic leads to engagement with potential customers. Comments, e-mails, and inquiries from the customers demonstrate a clear interest in the company’s product or service, one of the essential measurements of business traction.
Getting positive media coverage or even neutral attention might mean business traction as well. While this might be hard at first, it can be boosted by contacting online media agents and people covering the specific fields related to the products or services the startup is offering. Thus, knowing the field well is crucial. In addition, thorough research would allow identifying the media outlets that are playing the main roles in forming the understanding of this field.
Business partnerships are also a metric by which can measure traction. Managing to partner up with established, reputable companies shows credibility and potential for future growth. For this, it’s necessary to seek out potential partners and have trustworthy information about them. Firmographic data helps here as well since you can build a complete firmographic picture of the company you're interested in partnering with. Having this knowledge about the businesses would allow you to identify the potential partners and present them with tailor-made offers.
Business traction using Coresignal's data
We have prepared three examples of evaluating business traction in terms of follower count, share of voice, and employee count. The companies in comparison were NVIDIA and AMD—two computer industry giants.
See the graphs below to find what insights you can gather by using our data.
Follower count is an indicator of a company's social media presence. A large number of active followers can help a business succeed, especially if those companies increase advertising in relevant channels. Social media metrics matter in terms of digital advertising and marketing efforts. It allows you to see how much traction a business is gaining online.
In this case, you can see that AMD has not been able to overcome NVIDIA in terms of follower count. That is not to say that AMD is performing poorly; it has been gaining more and more traction since 2020 and most likely earlier than that. However, NVIDIA seems to be more successful in terms of social media presence, therefore indicating more efforts distributed to online brand awareness.
Share of voice
Share of voice is the part of the market that your brand owns in comparison to your competition. In this particular case, the keywords NVIDIA Drivers and AMD Drivers were compared. The goal of analyzing share of voice is to determine which site gets more traffic when the same keywords are entered.
Here you can see that AMD is doing significantly better than NVIDIA. At this point, you could start analyzing what could have contributed to such a drastic difference. Perhaps NVIDIA has subsidiary companies that attract and convert some of the traffic while NVIDIA is still getting profit and recognition from it? Maybe AMD is that much better at online presence even though social media metrics are lacking in relation to NVIDIA? You can raise a multitude of questions in search for answers; questions, that wouldn't be so easy to raise without leveraging public web data.
Employee count is one of the greatest metrics in terms of company growth. It can show whether a business is booming or crumbling down, and at what pace.
Here again, you can see that NVIDIA comes out on top. Both companies started relatively close to each other, but along the way NVIDIA picked up the pace and kept it until the beginning of 2022. However, it's important to note that AMD also showed a sign of exponential growth between mid-2021 and the start of 2022.
Judging from the graphs it's safe to say that both companies are competitive and eager to be the leaders of their industry. However, as far as investment opportunities are concerned, you would need to perform a deeper analysis and gather more insights from the data.
A few business traction examples include follower count, website traffic, and employee count.
Traction from different perspectives
While viewed from different perspectives of industry professionals, business traction might mean many things and be important for various reasons.
Tracking investment opportunities
For investors, reviewing the business traction of the startups means being aware of investment opportunities. To be able to identify important variables signaling business traction, investors look at various types of data. This especially includes public web data, such as social media data, as it helps to see signs of traction as soon as they appear. Therefore, startups looking to boost their traction and get the necessary funding in the upcoming investment rounds should also be consulting public web data to see what works and what does not. Seeing what the investors are most likely looking at will help to adjust and further develop plans for generating traction.
Business-to-business and building reputation
Business clients are professionals looking to work with someone they can trust. Therefore, they will look at traction for indications of credibility and ability to deliver on established commitments. In order to find such clients, it’s necessary to understand the industry. This can be achieved by analyzing information about the firms in the industry. In addition to firmographic data for tech startups, it’s also especially important to look at the technographic data. Once agreements are reached with business clients, it’s a good idea to get the letter of intent. This kind of traction will help demonstrate a company’s credibility to investors and other businesses, building a solid reputation.
Business-to-customer and raising awareness
Before profit or even revenue comes in, the most important measurement of business traction for B2C is the awareness of the product and the brand. This is achieved by employing targeted, well-developed campaigns. Social media is a great place where the buzz can be started, and the needed startup traction generated. For example, engaging with customers online and generating customer demand might lead to subscriptions to the newsletter or sign-ups to the webpage, which would allow the public to stay informed about the developments. This, in turn, would translate to more business traction. Utilizing public web data on web traffic would help design a strategy for such beneficial usage of the internet.
Traction is the signal that cuts through the noise; the proof that you have something worth building.
- Bruno Pešec, President of Pesec Global
Business traction is an elusive term that assumes various meanings in different situations. But the underlying idea is always the necessity to have something to show for all the work that is put into the building of a business model. It’s then possible to work with the self-validation and reputation that comes with measurable business traction, using it as a stepping stone to move forward.
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