Traction: a repeatable, scalable way to get, keep and grow customers and revenue
Most businesses don’t fail because they don’t build good products, they fail because they can’t generate traction.
Let’s be honest, getting traction for your company isn’t easy. As a business, you need a strong team, customers, and a differentiated product or service in today’s competitive market. Sounds challenging, doesn’t it?
To learn more about how to develop traction for B2B companies, I sat down with Lloyed Lobo to ask a few questions.
Lloyed is the co-founder of the Traction Conference, an award winning event that brings in Silicon Valley leaders to discuss actionable business growth strategies. He also runs growth at Speakeasy, a communications tool that helps sales reps close deals faster.
How is B2B traction different than B2C?
LL: You have traction when you’ve figured out a repeatable scalable way to get, keep and grow customers and revenue. Every business ultimately exists to make money.
With B2B companies, the focus is on getting to revenue almost immediately. With B2C businesses the focus is on building and retaining a large user base that you can monetize later, where more than likely someone else is paying for that large user base. Facebook and Twitter are obvious examples.
However, over the past few years, B2B companies, specifically in SaaS, have been taking advantage of consumer principles to land and expand into larger organizations. The model is to deliver a simple, easy use product that solves the end user’s pain for free (or low cost). The goal here is to spread within a company from the bottoms up so that when you have a critical mass of users within that company, you can approach the decision maker to buy your solution armed with an ROI case. Box, Asana, and Slack are some great examples of this.
Is account based marketing (ABM) or Inbound marketing more effective for B2B companies? When would you recommend one approach over the other?
LL: It all depends on the type of B2B business you are and the LTV (Life Time Value) of your users. Both approaches can work independent of each other as well as together.
ABM is a strategy used to target a smaller number of large companies. It takes into account that most B2B buying decisions are not made by a single person, but rather by a collective group of people. So you target the collective group with a cohesive sales and marketing strategy including direct outreach, events, ads, retargeting, content etc. Sales and marketing alignment is key with ABM. However, ABM can be expensive if your LTV is low.
Inbound marketing can work well for low LTV products. However, the most effective strategy I’ve seen with low LTV products is building a product that sells itself – easy to signup, easy to onboard, easy to use, and easy to share.
Ultimately, the key to winning in business is to have a solid understanding of your ideal customer profile, build a solution that solves a real pain point for them, and design a marketing strategy that gets you traction in the quickest, most capital efficient way possible.
What are examples of B2B companies that are doing it right?
LL: I love companies that build products that are easy to adopt and use. Intercom, Atlassian, Sendgrid, Hootsuite, Box, Slack, MongoDB and HubSpot are some great examples.
If you’re building your strategy based on selling your product to the decision maker and ignoring the end user experience, you’re opening yourself up to be displaced in the long run.
How is startup traction different than traction for established companies?
LL: To me, startup traction is all about moving fast and delivering a great user experience. That’s why many startups are eating into the markets of large established companies. But nothing stops established companies from doing the same. Building smaller, cross functional teams and giving them the autonomy is a good start.
What are the most important metrics to track when a startup is trying to prove demand?
LL: Customer retention is the most important metric. The best companies have less than 5% annual churn and negative revenue churn. If you can’t keep customers, then your first order of business is to figure that out.
Assuming you have that figured out, customer acquisition rate/ pipeline creation rate, customer acquisition cost, and conversion to revenue/ close ratio are key metrics.
To learn more about effective B2B traction strategies, check out the Traction Conference on June 22nd and 23rd in Vancouver. Traction brings together founders and leaders from the fastest growing companies to share their secrets on how to get, keep and grow customers and revenue.
The speaker lineup includes leaders from companies like Y Combinator, Hubspot, Box, MongoDB, The Honest Company, AppDirect, Hootsuite, Foursquare, TaskRabbit, Influitive and 500 Startups.
If you are serious about growing your business, Traction is a must attend event. See more details and register at TractionConf.io.