3 Ways to Measure Traction

Traction is an indicator of a startups progress to date, and its potential to grow. This is something investors, philanthropists and/or stakeholders vested in the growth of a startup often care about in their decision making when looking to invest. So how does one measure traction in their early days of a startup? There are many ways to approach this.

Below are 3 examples of how Australian start-ups measured traction in their earlier stages.

1. Generated Revenue and Sales

One of the most common ways to measure traction is through sales. Whether that is pre-orders or revenue to date, it is one of the most common and easiest metrics to measure when describing traction. This is especially valuable for product based startups that are easier to build, and can measure monthly recurring revenue and profit to demonstrate growth earlier in their startup journey.

The founder of TeamTimbuktu (now called Amble) described her traction after 2 years of operating with $200k revenue, averaging a 165% year on year growth. To add to the revenue credibility, she also highlights being featured on big magazines and stocked in the iconic which is also another way to describe traction. This traction has led Amble to be funded by the Alice Anderson Fund.

2. Expression of Interest or Sign-ups

This can look like a low-fidelity landing page, newsletter sign up or a platform. Muso, is an online Australian startup that is a platform for artists available for gigs and hirers to book artists for gigs. They described their early traction with 38 sign-ups on day one of launch, which grew 50% week on week and after 7 weeks they had 400 gigs on Muso with a value of over $120,000. While these are not actual sales or revenue, this is still attractive traction for a start-up that is seeking investment to grow and translate this into sales. This traction also led to Muso raising from many investors.

3. User/customer feedback and engagement

This is one of the most effective metrics of traction because your customers define your sales growth and revenue. In its early pre-revenue startup stage, the healthcare start-up Ovira described its traction by highlighting the feedback of their 77 beta testers who used their period pain relief device. The feedback was described using the net promoter score which was 82, where 100% mentioned they would recommend this to a friend and supplied various photos and text messages with feedback on the product. This led to Ovira raising $1 million from Blackbird Ventures.

Identifying how you might most effectively measure and describe your traction is crucial when looking to raise funding or finding language to describe your growth and potential. Traction will look different for different types of startups and business models, and it is important we consistently recognise and build on our traction throughout our startup journey.