Social Media Metrics for Startups
The early stages in the entrepreneurial startup lifecycle are tenuous times for everyone. It’s all too easy for inexperienced entrepreneurs to try to rush their progress and move quickly toward angel funding or first-round investment before they are really ready. In reality, a more measured and gradual approach in the early stages has a greater likelihood of attracting capital than the rush to get in front of potential investors with a slide deck.
One of the most important metrics that early-stage capital investors look for when evaluating a potential investment is something called traction. Traction is both a qualitative and quantitative measure of the extent to which the fledgling business is engaged with its target market.
Startups that have achieved traction with a well-defined target market that is large enough to support both growth and competition have accomplished something real and tangible in the marketplace. This is extremely important to investors.
Once founders make the commitment to build traction before pursuing capital, the question then becomes how to do it.
There is a high probability that operational funds will be limited in this phase of a startup’s lifecycle, making effective use of all the resources available, especially time, is important. Social media should be an important part of this effort because of the network effect.
Here are some ways founders can leverage social media to build traction.
Social media and traction
Social media metrics can be well-defined and easy to gather. Metrics from different social media platforms will tell founders and investors where potential customers who are most likely to engage can be found and help entrepreneurs determine where to focus their efforts. Starting broad and narrowing the field to the platforms that produce the most engagement is an effective approach.
Traction equals transactions
Founders should remember that customer engagement is two-way. Getting feedback, likes, comments and other evidence of engagement from prospects, leads and actual customers is wonderful, and all these are special kinds of transactions, but the most meaningful transactions are measured in the number of people who are willing to pay for the product or service the startup is offering. The more quantitative the metrics for transactions and engagement that measures traction like sales, active monthly users, etc., the more appealing the startup will be to potential investors.
If traction and growth of traction are substantial enough, the startup may be able to forgo asking for startup capital. This is a great reason to start measuring traction early.
Social media transactions and evidence of engagement can help entrepreneurs refine their vision and understanding of the target market as well as gathering valuable feedback on the viability of their product or service. Every time social content like blogs or tweets are shared or create other forms of engagement, entrepreneurs have an opportunity to learn more about what their target market really thinks, wants and needs.
What do customers value
At a minimum, this means having at least the promise of a product or service that resolves a need or desire that members of the target market will instantly recognize. Getting to this point means the startup founders have engaged in meaningful ways with individual customers and have a detailed understanding of what those customers value most.
Is the traction sustainable
Tracking social media engagement earlier helps founders understand their growth trajectory and this in turn will help them understand the real impact of turning point events like product upgrades, advertising campaigns, strategy pivots and the like. Without tracking and analyzing data about user engagement, entrepreneurs are missing opportunities to understand the real impact of choices they are making.
The real benefit of tracking social engagement from the get-go will be confidence. When the time comes to stand in front of investors and tell them about the traction you have achieved you’ll know the numbers and you’ll know why they are important. This is the way to get an investor’s attention.