Most of the questions I get from startups about growth stem from a basic misunderstanding of where they are along the journey of growth, and what that means for their growth priorities and efforts. I’ve talked a little bit about this in two posts - Traction vs Growth and 5 Steps To Choose Your Customer Acquisition Channel.
For those of you who read my material you’ll probably notice I’m a fan of a few things when it comes to writing about growth. Comprehensiveness, quality, and frameworks. The book contains all three of those elements, part of which you get a sneak peek here in Justin’s guest post about their Bullseye Framework.
From the perspective of getting traction, you can think about working on a product in three phases:
Phase I – making something people want
Phase II – marketing something people want
Phase III – scaling your business
Phase I is very product focused and involves pursuing initial traction while also building your initial product. This often means getting traction in ways that don’t scale – giving talks, writing guest posts, emailing people you have relationships with, attending conferences and doing whatever you can to get in front of customers.
As Paul Graham said in his essay “Do Things that Don’t Scale:”
If you’ve made it to phase II, you have a product that resonates with customers – initial traction – and therefore doesn’t require sweeping product changes. In other words, in phase II you have established product/market fit and now are fine-tuning your positioning and marketing messages.
In phase III, you have an established business model, significant position in the market, and are focused on scaling both to further dominate the market and to profit.
Different Phases Require Different Strategies
At different product phases, moving the needle means different things. In phase I, it’s getting those first few customers. In phase II, it is getting enough customers where you’re knocking on the door of sustainability. And, in phase III, your focus is on increasing your earnings, scaling your marketing channels, and creating a truly sustainable business.
Some traction channels will move the needle early on, but will fail to work later. Others are hard to get working in phase I, but are major sources of traction in the later phases (PR is a good example). On the other hand, some channels will be great in phase I but useless in phases II and III because they simply don’t have the volume required to move the needle.
When you’re just starting out, small things can move the needle in terms of traction. A single tweet from a well-respected individual or a speech to a few hundred people at a meetup can result in a meaningful jump in users.
As your company grows, smaller things like that will be difficult to notice. If you have 10,000 visitors to your website each day, it will be hard to appreciate a tweet or blog post that sends 200 visitors your way. As your startup sees more traction, things that worked early on may not scale well (or be worth scaling). What moves the needle changes dramatically.
Moving the needle in the later stages requires larger and larger numbers. If you want to add 100,000 new customers, with conversion rates between 1–5%, you’re looking at reaching 2–10 million people – those are huge numbers! That’s why traction channels like community building and viral marketing can be so powerful: they scale with the size of your userbase and potential market.
In other words, the way you get traction will change. After your growth curve flattens, what worked before usually will not get you to the next level. On the flip side, traction channels that seemed like long shots before might be worth reconsidering during your next growth phase.
But, how do you go about figuring out what channels will drive your next growth phase? How do you figure out your customer acquisition channel?
The Bullseye Framework
With so many channels to consider, figuring out which one to focus on is tough. That’s why we’ve created a simple framework called Bullseye that will help you find the channel that will get you traction. As billionaire PayPal founder and early Facebook investor Peter Thiel put it:
We use a Bullseye metaphor in our framework because you’re aiming for the Bullseye—the one traction channel that will unlock your next growth stage. Using Bullseye to find your channel is a five-step process: brainstorm, rank, prioritize, test, and focus on what works. Rinse, repeat.
Step 1: Brainstorm
The goal in brainstorming is to come up with reasonable ways you might use each traction channel. If you were to advertise offline, where would be the best place to do it? If you were to give a speech, who would be the ideal audience?
Everyone approaches the 19 traction channels with biases. This first step is meant to help you systematically counteract your channel biases. That is, it is important that you not dismiss any traction channel in this step. You should be able to think of at least one idea for every channel – that’s brainstorming!
In terms of research to feed your brainstorm, 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 their marketing dollars.
Some other questions you may want to consider:
- What is the expected cost to acquire a customer through this idea?
- How many customers can you expect to acquire at that cost (before saturation)?
- What is the timeframe needed to run tests?
Of course, you won’t know the right answers to all these questions, but you can make educated guesses.
Step 2: 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.
Place each of the traction channels into one of three columns, with each column representing a concentric circle in the Bullseye:
- 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?
The research you did and ideas you came up with in the brainstorm step should guide your rankings. Usually, a few ideas you thought of will seem particularly compelling – these traction channels belong in column A. Channels with ideas that seem like they could plausibly work go in column B. Channels with only ideas that seem like more of a stretch would belong in column C.
Step 3: Prioritize
Now identify your inner circle: the three traction channels that seem most promising. If you already have three channels in Column A, you’re done! If you have more than three, then you need to get rid of some and vice-versa.
It is often the case that there are a few truly exciting and promising channels that emerge from ranking, but not a lot. Draw the line where there is an obvious drop-off in excitement. That drop-off often occurs around the third channel.
We want you to have more than one channel in your inner circle because we don’t want you to waste valuable time finding your successful traction channel by testing channels sequentially when you can do so equally well in parallel.
You can run multiple experiments at the same time since tests take some time to run after they’ve been set up. Yet doing too many things in parallel leads to errors from lack of focus, which means the number needs to be somewhat low.
Step 4: 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 focusing on.
You will make that decision based on results from a series of relatively cheap tests. These tests should be designed to answer the following questions:
- Roughly how much will it cost to acquire customers through this channel?
- How many customers are available through this channel?
- Are the customers that you’re acquiring through this channel ones you want?
These questions are very similar to the columns we suggested making in the brainstorm step. When testing, you are replacing your educated guesses with real answers.
Keep in mind that, when testing, you are not trying to get a lot of traction with a channel just yet. Instead, you are simply trying to determine if it’s a channel that could work for your startup. Your main consideration at this point is speed to get data and prove out your assumptions.
You want to design smaller scale tests that don’t require much up-front cost or effort. For example, run four Facebook ads vs. forty. You should be able to get a rough idea of a channel’s effectiveness with just a few hundred dollars.
Step 5: Focusing
If all goes well, one of the traction channels you tested in your inner circle produced promising results. In that case, you should start directing your traction efforts and resources towards that most promising channel.
At any stage in a startup’s lifecycle, one traction channel dominates in terms of customer acquisition. That is why we suggest focusing on one at a time, and only after you’ve identified a channel that seems like it could actually work.
The goal of this focusing step is quite simple: to wring every bit of traction out of the traction channel. To do so, you will be continually experimenting to find out exactly how to optimize growth in your chosen channel. As you dive deeper into it, you will uncover effective tactics and do everything you can to scale them until they are no longer effective due to saturation or rising costs.
Why Use the Bullseye Framework?
Bullseye is designed to be a straightforward way to direct your traction focus and maximize your results. First and foremost, it forces you to take all the traction channels more seriously than you would otherwise. This is accomplished via the brainstorm step and then again by forcing you to think about all of the channels through the rank and prioritize steps. These steps systematically uncover strategies for getting traction that you wouldn’t have found using other approaches.
The framework is also meant to help you zoom in on the best ideas as quickly and cheaply as possible, while still casting a wide net: hence the Bullseye metaphor.
Bullseye in the Wild
Noah Kagan talked to us about how he used a version of Bullseye at Mint, a site that helps you track your finances and was acquired by Intuit for $170 million. Their initial traction goal was 100,000 users in the first six months after launch.
In steps 1–3, Noah and his team brainstormed and picked several traction channels that seemed promising (targeting blogs, PR, search engine marketing) to focus on in their inner circle.
In step 4, they then ran a series of cheap tests in each (sponsored a small newsletter, reached out to financial celebrities like Suze Orman, placed some Google ads) to see what worked and what didn’t.
In step 5, after running these experiments, Mint focused on the traction channel that seemed most promising and that could reach their goal. In this case, that meant targeting blogs. In the early days, the tactics of sponsoring mid-level bloggers in the financial niche and guest posting allowed them to acquire their first 40,000 customers.
When this channel maxed out, they repeated the Bullseye process, and found a new traction channel to focus on: public relations. Within 6 months of launching, they had 1 million users.
We heard stories like this over and over again when talking to successful startup founders. They would research many channels, try a few, and focus on the most promising until it stopped working. Bullseye is designed to systemize this successful process. Use it!