Achieving product-market fit is probably one of the most difficult tasks when developing or scaling your startup. We say that not only because of creative matters but also because you have to listen carefully to what your target customer has to say.
The key is to keep one thing in mind: your product must have potential customers that are willing to pay for it and even be loyal to it.
There’s more: the product-market fit issue doesn’t finish once you achieve it. You have to constantly measure product-market fit, keep making sure your company’s product is still delivering a high-value proposition, and solving clients’ needs.
In this article, we’re going to dive deep into what product-market fit is, how startups can achieve it, and how to make sure you’re measuring it in the right way.
Is there a good market for your product? How many customers would pay for it and for how long? Is it better than other products that solve the same needs?
Those are some of the main questions when thinking about achieving product-market fit. Not answering them clearly could be one of the reasons a startup fails. Answering them puts the company lots of steps closer to success.
So, first, we can say that conquering product-market fit is identifying an underserved need your target customer has, so that you can verify that there’s a market demand for your product.
After that is clear, it’s key to think about how your product meets those needs and adapt, make major changes, or start all over again when designing and developing it. You must be able to leave your idea behind if you don’t find a market that’s large enough to at least cover your investment and give you some revenue.
Let’s explore other ways to understand what product-market fit is about.
Although achieving a product-market fit is mainly about meeting a target audience that is willing to pay for your product—therefore giving them the right product—, the process can be understood by a pyramid logic.
Dan Olsen proposes to imagine the whole product-market fit process as a pyramid to better understand consumers and external factors. At the bottom of this pyramid, we find the target customer, then their underserved needs. After that, the product-market fit appears to connect both to value proposition, feature set, and, at the top, UX.
We’re going to disseminate each part. The target customer is at the bottom because it should be the foundation of all the concepts that appear after. Every single thing you do, think, and create must be based on your customers and their pain points.
A target audience might be made of people of different ages and with different lives, and even they might not share the same state or country. But they do have the most important thing in common: the underserved needs—the second part of our pyramid.
Then, the product-market fit appears to solve those needs and connect the target market with your value proposition. Your value proposition is mainly the way you solve the needs, with a certain feature set—this helps the value proposition come true—, and a user experience that makes sure your product experience is smooth and great for everyone.
This is another point of view to define what product-market fit is but, in the end, all the roads lead to Rome—or to finding a product for a market.
Here’s a bonus track for those that are more gut-feeling like Marc Andreesen—the guy that actually named “product-market fit” in the first place— said that deep inside you, you know when product-market fit is happening and when it’s not.
Money is growing in your company’s checking account. Customers buy your product and, once they do, they come back when they need more. Your customer support staff is expanding. Your sales team hiring doesn’t stand behind either.
Those are just some of the signs that may make you have a gut feeling that you’re on the right track.
This is not only about not living the scenario that we talked about before but also missing word-of-mouth between customers, no growth at all, and not giving a clear value proposition—or not making it clear and easy to harness.
Plus, you might notice that the sales cycles are getting too long, the press isn’t paying attention to your product—or doesn’t speak about it in the best way—, and you have many deals that never finally turn into real agreements and sales.
Well, if your gut doesn’t tell you that your product-market fit is not here, we are going to.
Developing a product that will satisfy clients’ needs is not a one-size-fits-all process. But there are certain steps that all startups should follow to achieve product-market fit.
When doing so, many startups have ended up adapting their core products, identifying a brand new market demand that they hadn’t seen before, bringing old ideas back to life, or even creating a new service or product.
Different possibilities are waiting for startups at the finish line. But let’s focus on the race first—better known as the minimum viable product prototype development.
To do so, you must do some research. Investigate the market and build customer personas. With those fictional versions of the real people that, you think, will buy your product, you’re going to have the input to start solving your customers’ needs.
The main idea is that you make sure you’re certain about who your client is, how he or she thinks, and what she or he needs.
There’s a special step to focus just on that. Now that you know who is your target customer, you must be able to zoom into their needs.
You should think about those things they’re unhappy with when using a product from your competence, for example. But you can also think if there’s a specific need that’s not being solved by any product on the market.
After that research, you can move on to how your product will answer those unserved needs.
This requires that you answer properly how your product will solve those needs in a different way. Think about those characteristics that will make it unique, that will give it more quality, and that will turn it into a more affordable product. Whatever your target customer needs the most.
You have the underserved needs and you have your value proposition, now it’s time to start designing the features that your product will include.
Don’t panic: Start with the minimum features you think are key for your first product rollout.
You don’t need to develop the full concept, just focus on what will be at the core of your product. But you do need to be open to iteration once you’ve received users’ feedback; we’re going to discuss a little more receiving clients’ feedback later.
To achieve product-market fit, you must try it with the market, A.K.A. your customers. You can select your potential customers and let them try your product.
During this step, it’s crucial that you get some answers to some key issues like what’s their favorite feature, what’s the worst, and if they do like the product itself or not.
Make sure that you’ve taken all the feedback you considered useful into account before launching your MVP. Don’t get stuck with your ideas: check if you need to focus on another target client, change your value proposition, or modify some features.
You must have the courage to consider all the options required to achieve the product-market fit, including changing your product, markets, names, visions, and even teams.
Having a conversation with your customers isn’t just a step, it’s mandatory. You can’t solve a need without listening to what the actual people that have it have to say.
Last but not least: make sure all your team members are aligned. Achieving product-market fit is a company-wide concern, and every worker must pursue it.
Knowing how many customers are willing to pay for your product, being certain about their needs, and even designing a perfect product for them, is not everything when pursuing a product-market fit.
Product-market fit measurement is about getting crucial information and analyzing it in order to implement changes that enhance it. Maybe the data you find will make you make sure you’re on the right achieving-a-product-market-fit path, or maybe it will tell you that you need to streamline or rethink your product.
It’s key that you embrace ongoing research, so you make sure you don’t realize your product doesn’t match current needs when it’s too late. Plus, that ongoing research can pave the way for scaling your product to other customers. Research can be fueled by metrics and tools.
Ready to jump into some of the most used measurement processes? Let’s go.
You’ve done something like this to find product-market fit. It’s about the conversation between your company and the existing users or potential users. But let’s dive deep into key aspects you should consider when planning your surveys and receiving feedback.
Maybe you started by finding your customers through word-of-mouth and need to lay the foundation of your marketing strategy, maybe your product solves their underserved needs from a small segment of the market, and you need to scale. Whether the scenario is, you can begin with a conversation.
First, you need to own that conversation. That’s why it’s better if you have in-house customer support staff. You’ll have the power to access customers’ data such as concerns, recommendations, and complaints. Adopting a system that collects all that data might be really helpful.
Keep in mind that not all feedback is constructive. Before taking it into account, think about whom it comes from. Does that client always use your product or does he or she have a more occasional use? Is he or she someone you would hire or someone that has invested a lot of money or time trying to solve a need? Does the feedback match your product?
With that being said, you can also consider one-to-one interviews with your clients. The way those interviews take place is up to you and your objectives: it could be by phone, by email, or in person.
Before the interview, you should have some questions prepared to make sure you don’t miss any key pieces of data. For example, you can ask them about their background, their pain points and how they solve them, and if they have been using your product or even have ever heard of it.
First of all, you need to be able to identify the size of your market. For that, you can use some metrics related to the potential revenue. This will help you understand if the customers of that market will spend an amount of money that can justify your investment.
A useful metric to ensure that your product fits the market is the Net Promoter Score (NPS). NPS will support you in the process of knowing how well the product is answering your clients’ needs. Your customers will answer this question: how likely is it that you recommend our product to a friend or colleague?
Users won’t answer directly but scoring from 0 to 10, where 0 is “not at all” and 10 “very likely”. If a user chooses a score between 9-10, you can call him or her a Promoter. If he or she chooses a number between 7-8, then you’re looking at Passives. And from 0 to 6, those are Detractors.
The largest number of participants who get into your NPS, the more trustworthy your result will be. After collecting all of the answers, the NPS index is obtained by converting the number of promoters and detractors into percentages without taking Passives into account and then subtracting the percentage of Detractors from the Promoters. The result is what is called the NPS index.
Your north should be having your NPS in the positive range since the NPS result can be somewhere between -100 and 100. If, for example, it’s between 0 and 50, you might check what you can improve in your product to make it a better fit.
As you can see, achieving product-market fit isn’t a simple task. It involves a series of steps that need to be followed carefully in order to create a product that really fulfills a market’s gap. In a nutshell, it's all about defining your target customers and their pain points; understanding why your product will be unique and how it will satisfy those needs; defining and implementing your MVP, and receiving constant feedback from your users in order to continuously measure and improve your product’s performance.
Now you have all the tools to reach out to that market that’s waiting for your product maybe without even noticing that. If you want to keep reading more about product development, check out our blog.