What is Product-Market Fit? And How Do You Find It?
It all starts with an idea. You’ve come up with a product that you feel certain is going to resonate with customers and become the next big thing. And now you’re ready to market it to consumers. Not so fast. If you don’t do your homework on the front end, you are almost certain to fail. The key is to find that magical place known as product-market fit. But how do go about finding it? And how do you know when you have achieved it? Check out the following tips for answers to these questions and more.
- Know Your Target Customer: Before you can sell anything, you have to know who you are selling to. Without understanding the makeup of your customer, you will never find product-market fit. Think about who will benefit the most from your product. Then write out a description of that person or company. Include as much detail as possible that describes who they are, what they do, what challenges they are facing, and what goals they are trying to achieve. This customer “persona” will help your team members know exactly who they are catering to and how they can best meet their needs.
- Differentiate Yourself From Your Competitors: Chances are your idea is not brand new, but there is something about your product that makes you different from the competition. What are you offering that will solve an ongoing problem customers are experiencing? That aspect of your product, known as value proposition, is where your focus should be. Once you have established your value proposition, you are better prepared to outperform your competitors with a product that is needed in your industry.
- Ask for Feedback: This may be the most helpful tool of all in finding product-market fit. Who knows better what works and what doesn’t work for them than the customers themselves? Ask current customers how they would feel if they no longer had your product. Ideally, you want them to say, “Very disappointed.” As a general rule, if 40% of your customers says this, you have found product-market fit. But if you get a different answer, find out why and use that information to improve your product. Don’t have customers yet? Then get out there and talk to prospects. Ask them if they have ever used any similar products in your industry and what they did and didn’t like about those products. Then give a brief explanation of your product and see what sort of reaction they have. Does it sound like something that would help them? Do they want to know more about it? If the answer is yes, then you may be on to something.
- Test, Retest, and Test Again: Testing your product in the market and keeping a record of the results is vital in measuring fit. Pay attention to conversion rates and customer churn rates. Also look at repeat buyer percentage and daily usage of your product. And be sure to consistently check in with customers to see if they are happy or if they need assistance with anything. Evaluate test results and feedback on a regular basis to see what is working and what needs to be changed in order to succeed.
- Don’t Get Complacent. Finding product-market fit is a huge achievement and definitely warrants some celebrating. But don’t get overconfident with your success. Customers’ needs can change with time, and your product-market fit may change as well. It’s important to continuously stay in tune with market conditions so that you can consistently meet the needs of your customers.
The Bottom Line
Finding product-market fit is not something that happens overnight. It takes time to ensure that customers understand the value of your product. The ultimate goal is to find that “aha” moment—that moment when customers realize the value of your product. Once they do, you will experience not only an increase in sales but also repeat sales and referrals from successful customers. Let Funnelfly help with the process by putting your product—and your message—in front of prospects and customers on a continuous basis using our automated marketing and sales platform. Learn more about Funnelfly, the marketing and sales software built by startup founders to specifically meet the needs of startups.