We all have an idea to solve particular problems we encounter regularly. Good or bad we sometimes tend to get emotionally invested in those ideas. We then go and talk to our immediate network about it and decide to put all our savings on the line. Sometimes we even start raising money from family and friends to start building an app or website without validating whether the idea is sustainable or actually solves a problem.
Instead of jumping right in to solving the problem, you’ll grow faster by validating your product idea with a larger audience. This is called Product-Market fit.
When you are still in the early stages of your business, whether you are building a product or selling a service you need to think about how you are going to grow. For your company to survive, you need to prove that your product will appeal to enough people and bring in the money.
You typically start to see this when you reach the point of launching your product out of beta. You are making headway in growing your business through testing and experiments and are finding your target audience. But at this stage you start having to answer bigger questions. Questions like, When do you know that you’ve finally achieved product market fit? What metrics do you use to determine you’ve reached your goal? Did you set up the right goal?
If you can begin to know what to allow you to move to the next phase, you’ll be well off on your way. But first, let’s break down and understand what product market fit actually is.
Product/Market Fit is a useful Mental Model that meshes together a business, it’s products and it’s customers. Taking time to learn about Product/Market Fit will help you see how well your business and product are doing It can help to inspire new ways to create value for your customers and ultimately grow your business.
What is Product/Market Fit?
It’s a concept familiar to the startup world. In fact there’s actually a few overlapping definitions of Product/Market Fit. The best definition out there is from Marc Andreesen, who originally coined the term.
“Product-Market fits means being in a good market with a product that can satisfy that market.” – Marc Andreessen
While it is a rather vague definition, it’s smart. When I look at that definition I see a couple of things.
You can always feel when product/market fit isn’t happening. When your customers aren’t getting value out of your product, word of mouth isn’t spreading, or usage isn’t growing as fast as you’d like. In fact, some companies might even experience long sales cycles. When any of these things are going on in your business, it’s time to start looking at understanding what’s going on.
You can always feel when product/market fit is happening. When customers are buying your product is selling, your sales cycles are short (or even self-service), when word of mouth is spreading and people are lining you up for podcasts and interviews. This is really when you know you’ve reached product/market fit.
Myths about Product Market Fit
There is this post by Ben Horowitz called The Revenge of the Fat Guy, has the insight that radically improves understanding of product/market fit. In it he outlines 4 common myths:
- Myth #1: Product market fit is always a discrete, big bang event
- Myth #2: It’s patently obvious when you have product market fit
- Myth #3: Once you achieve product market fit, you can’t lose
- Myth #4: Once you have product market fit, you don’t have to sweat the competition
Before these myths cause you or your business harm. Consider reading this post.
How to Get Product/Market Fit
With your MVP product in hand, you need to start analyzing customer feedback. The goal is to help you revise your hypotheses based on what you’ve learned and loop back to an earlier step in the process. The feedback will help determine which step you should return to next.
For example if you only need to improve your design, then you can go back to that step. But if your hypotheses about feature set, value proposition, underserved customer needs, or target customer needs to change, then you would return to the earliest step that requires revision and proceed from there.
In each iteration through the process, you will end up revising your MVP prototype, which you test again with a new wave of target customers. From one iteration to the next, your goal and hope is to see an increase in positive feedback from customers and a decrease in negative feedback.
Know your customers’ current needs and know their future ones. Learn what your customers need by talking to them. This takes time and experience. If you don’t know your customers, you aren’t going to have much luck finding out the product/market fit. To get a better understanding of your target audience, you should spend time with your customers, write for industry blogs, speak at conferences, even find a mentor. Doing these things allows you to gain invaluable connections and gain a solid understanding of the industry needs.
You have one significant value proposition. When you initially built your MVP, it’s likely that you took a wide value proposition. As you learn more about your industry and specifically your target audience, consider narrowing your focus a bit. Consider setting down to one main feature that’s a game changer. It’s difficult, but an absolute necessity. All those ancillary features you want to add can come later as your customers will be willing to wait if your product solves one major pain point they are facing.
Your credible. Build your story. This is the best way to become credible. Your customers want to know how your product or service is going to make their lives easier. If you can inject your brand into that place, it becomes a no brainer. The better you are at telling your story the better you will relate to your customers and help them find the place you want to be in.
Finding Product/Market Fit is a difficult process and one that isn’t something you just one day find. It’s ultimately a series of calculated experiments until you find what starts to answer the questions you have as your business grows. But growing your business is going to be the key to your success and that is what we really want in the end.