Market Traction
About market traction
Emerging markets offer a precious opportunity to produce huge investment returns.
Once a start-up can establish a dominant position in a market, it’s tough to dislodge – even for larger, more established players. That’s why building market traction is critical. Without it, failure is almost always the result for start-ups.
A company has achieved market traction when its product is being predictably sold to buyers in the same market segment.
The company knows the sales cycle and has established a pipeline of orders. This market segment then serves as the beachhead from which all subsequent market share will be won.
There are six main milestones on the road to market traction.
The Milestones to Market Traction
Each milestone has unique requirements for marketing and sales. When in alignment, marketing and sales work in concert as a powerful market traction engine.
A young company’s resources and time are limited, and can all too easily evaporate in the absence of an effective plan. An effective plan exploits the company’s early entry position and maximizes return on investment.
Explore the six stages or take the test to find out where your company is today.
Momentum: choosing your beachhead
Momentum is the inflection point on the curve. It’s where you choose the market segment in which you’ll build your beachhead, and it’s the trickiest milestone on the road to market traction.
A beachhead is a defensible, dominant position in one segment. That doesn’t mean owning 51% of the market. It means being bigger than anyone else in that segment.
Differentiation comes first
The segment you choose should be one where your competitive differentiation is tied to what makes you different from everyone else. You don’t want to spend your resources defending against a legitimate competitor; you want to be unlike any other option. That makes differentiation the number one criterion for every candidate segment.
The ideal path
- Hypothesize the segments you could win.
- Test the first one by trying to achieve repeat sales.
- When you get repeat sales, move on to the second segment.
- Once you have at least two, and ideally three or four, choose the segment in which to build your beachhead.
By then you know everything you need to know about selling into each segment: how long it takes to sell, who to sell to, what you can charge, how you beat the competition and why your value proposition is essential. That isn’t the usual path, but it’s the one that takes the most risk out of the decision.
Why investors care
Investors are looking for risk reduction. Ideas are plentiful, and technical execution is rarely what holds a company back. The ability to find and serve a market is still a real differentiator, and a company that has tested its segments this way can show it.
A common moment for an interim executive
The leader who gets you to your beachhead isn’t always the one who builds on it. Once the segment is chosen, you may need someone with deep domain knowledge or a reputation in that market. An interim executive can lead you through the choice and then help you bring in the right permanent leader.
Frequently asked questions
What is market traction?
A company has market traction when its product is being predictably sold to buyers in the same market segment. It knows the sales cycle, has a pipeline of orders, and holds a dominant position in that segment, called a beachhead.
What is a beachhead market?
A defensible, dominant position in one market segment. It doesn't mean owning a majority of the market; it means being bigger than anyone else in that segment. It's the base from which all later market share is won.
What are the Milestones to Market Traction?
Six stages a technology company passes through: Eureka (a working product), Kaa Ching (first revenue), Two Thumbs Up (credible reference customers), Momentum (choosing the beachhead segment), Building Buzz (becoming a recognized key player) and Market Traction (dominating the segment).
How do you choose a beachhead segment?
Make competitive differentiation the first criterion. Hypothesize candidate segments, test the first by trying to achieve repeat sales, then the next. Once at least two (ideally three or four) have been tested, choose the one in which to build your beachhead.
What is the Market Traction Test?
Six yes-or-no questions that take about 30 seconds and show which milestone your company has reached, the milestones you've passed and those that lie ahead.
Accelerating market traction
Moreland Associates specializes in helping companies accelerate market traction. If your company is ready to get to market traction faster and with fewer resources, we’re ready to work with you.