This article will try to explain what is product-market fit, how to achieve it, and explore the ways to conduct and measure it.
Product/Market Fit is a common concept in the startup world, also known as PMF. For new Product Managers, it deserves to be more widely understood and it remains the driving force behind the success of every product or service.
1. What is Product-Market fit?
To start, have a read at Marc Andreessen’s “On product/market fit for startups”. It has been the single most influential post for me as someone breaking into Product Management and working in the startup scene.
Product/market fit means being in a good market with a product that can satisfy that market.
Can’t get a better and precise definition than that. In order to expand on this further, describes the stage of a startup company where they have successfully identified a target customer and serve them with the right product.
Finding product-market fit = focusing on the market first
Product-market fit means that you’ve found a product and a market that wants it. But don’t find a small, diminishing market — otherwise, your company won’t last for long. Find a great market.
2. How to find it?
Now that you know what Product-Market fit is (at least a little bit, if this is the first time you’re hearing about it), the questions move on to “How”. How can you achieve/ find a Product-Market fit?
Before I answer that, let’s ask who is responsible for finding Product-Market fit?
In reality, achieving it is a shared responsibility. It is everyone’s job to play a role in finding it, from those who are building products to those that make strategic decisions or interact with customers.
Your product/service will probably satisfy a small segment of the market which you found and attract your first customers. Start with establishing a relationship with your customers and talking to them (over and over again) is crucial if you want to develop this understanding in the first place.
The six-step process is:
Step 1: Line up your product goals first
Step 2: Come up with product hypotheses
Step 3: Prioritize the product hypotheses
Step 4: Get feedback from five customers
Step 5: Make small bets with MVP’s
Step 6: Evaluate market traction
Put everything on the table. Find and identify your product goals and target customer. Follow up by what their needs are what value proposition your product can provide for customers to hire your product to solve their problem.
Changing teams, markets, products, names, and visions are all reasonable in pursuit of product-market fit. This will be done for you to do whatever is required to achieve Product-Market fit.
Do one on one interviews with the customers and users. You can do this in-person or virtual setting whichever fits best for both stakeholders. Have questions about what you want to achieve in terms of discovery/investigation. Understand your customer and where they are coming from. Break down what problem they’re trying to solve and how can your product/ service help them solve this problem.
Usually, interviews might not be enough. Coming back to everyone in your team is responsible for finding product-market fit. Use internal customer teams; sales, marketing, support to provide insights. This can also help you drive your understanding of what your target market and customers need.
Not all feedback is equal
Who is given you the feedback and the context of the feedback differs from customer to customer. This information is used in product and service design, aiming to match customer’s desires and eventually improve Product/Market Fit. The thing about feedback is, it differs from the customers who rarely use your SaaS can be weighted differently from those who use it daily. The type of user — free vs paying — also affects their feedback value to your business.
3. Measuring Product-Market Fit
The next step is to measure and analyze the data. Is it creating organic growth, where people spread the word on their own? Are people willing to pay for your product? If they are, you have product/market fit.
What gets measured gets managed
Usually to guide your to understand if you’ve achieved Product-Market fit look at NPS and CLV
Net Promoter Score (NPS): Do your Customers Recommend you to Friends/ Family?
Customer Lifetime Value (CLV): What is the lifetime value for customers in the product lifecycle? How many customers leave and how soon?
If people love it, they will absolutely tell you. Think about the products you’ve bought in your life and how have you reacted. You have told your friends and family about it— because how can they be living life without this product?
Your product should be a fit in a great market. So, it’s important to understand whether you are just solving a problem or you are eliminating a huge burden from the users’ shoulders.
Hope you liked reading this! :)