Product-Market Fit And How To Find It?
Finding product-market fit is key for any business when looking to grow.
Before we dive into the way that product-market fit can be achieved first we need to decide what exactly product market fit is.Here are some definitions according to the people who know best.
What is Product-Market Fit?
Marc Andreessen defined the term as follows: “Product/market fit means being in a good market with a product that can satisfy that market.”Andrew Chen writes in his Zero To Traction deck that product-market fit is "when people who know they want your product are happy with what you're offering". According to author Alex Osterwalder, "you have a product-market fit when Value Proposition, Customer Segment, Relationships and Channels are identified without the need of additional pivots".Thirdly Steve Blank who was the initiator of the Lean Startup movement writes that "product-market fit means having a product for which enough customers are willing to pay so that your company can stay in business."
As a general consensus product-market fit is having a product or service customers need, buy, use and love. Pretty simple.
What happens when you do not have Product-Market Fit?
As a precursor to getting product-market fit, it's good to know when you haven't found it.
- It's tough to get sales or close deals.
- Growth is stagnant or even in decline.
- Customers drop off and don't get value.
- Advertising efforts aren't converting.
- It's hard to attract A-players to join your business.
Now on the flip side of the coin when you've found product-market fit the opposite happens.
- Sales come easily.
- Growth is on the incline due to increased sales.
- Hiring more people comes to the forefront of your mind.
- Advertising efforts are (mostly) successful.
- Outside entities are getting in touch to report on your business or collaborate.
While it can be a long and testing road to find product-market fit it is clearly the most desirable or the two outcomes!
How can I get Product-Market Fit?
This is the million dollar question and there is not one simple answer or silver bullet that will get you there. Getting there is like piling up a bunch of rocks on the beach ensuring they are all perfectly balanced.To carry on the metaphor you have to have a couple of big rocks or key pieces to get started. This is knowing the customers or the person, understanding the problem and being honest about your value proposition. This is important as too many companies are started that miss out one if not more of these three things.Andrew Chen also talks about how to find product-market fit the easy way.
- Pre-existing product category.
- Very large number of customers "pulling".
- There is lots of successful competition.
- A clear axis of competition or escaping the competitive herd.
- Build for yourself. You're the superuser.
- Clone something that already has product-market fit.
- Clone 80%, innovate on 20%.
By taking a big market that contains lots of customers who are looking for your product or service and innovating by 20% you can use the data available to make better decisions on what does and doesn't work. By doing this you will save a lot of time and money in untested markets which may or may not have a customer base.It may go against the common way of thinking but being in a competitive market is a good thing. As long as you innovate and use the data.
Tests and using customer feedback.
One simple but often overlooked ways of getting to PM/F faster is asking existing users how they would feel if they could no longer use the product. Using a simple tool like Survey Monkey and including the following answers as options can provide valuable insights.
- Very Disappointed
- Somewhat Disappointed
- Not Disappointed (it really isn't that useful)
- N/A - I no longer use this product
Here is an example from Setapp, the first subscription service for Mac Apps.
Testing should be an essential part of any teams plan when launching or growing a business, product or service. Although a topic for another day a product has a lot of moving parts and each one can be tweaked or changed to get better or worse results. This can mean simple things like pricing or the copy on the landing page all the way through to using different colours on a call to action or reducing the number of steps a user has to take to complete a purchase.Learn how to conduct A/B tests on your business, they'll become your best friend.
Applying learnings and getting a winning value prop.
Being able to detach from your business, take in data and make the necessary changes to your product or service will be the difference on whether you'll grow or not down the road.
Avoiding critical feedback is often the death of many a start-up business.
Something this can be quick or something this can be a long drawn out death. By constantly using everything you have at your disposal to create the best value proposition and the best product will increase your chances of being successful.
Use existing customers as your most valuable source of information and use it to make your product better. Ignore them at your peril! If you do these things well then your rocks will stack up nicely and you'll be ready for growth.