If you own a startup business, you’ve probably thought not only about how to reach customers, satisfy their needs, but also to make them loyal. So how to make the users love your product? You might have considered multiple marketing strategies, established partnerships with other companies, hired the best employees; however, you should know exactly how to bring a product to market. Only when you understand what needs your potential customers have, you can achieve product-market fit.
PProduct-market fit (PMF) is an interesting and funny concept. There doesn’t exist a single unified definition of product-market fit. However, the root of the concept lies in the degree, to which the product satisfies the market’s and customers’ needs. The term was coined by Andy Rachleff, a co-founder of Benchmark Capital. It was further popularized and defined as the first step in creating a successful enterprise by Marc Andreessen, Sean Ellis, and Steve Blank.
One of the best explanations to what is product-market fit was offered by Fred Wilson, an American businessman, and blogger. In his opinion, getting product right means finding product-market fit. It does not mean launching the product.
Reaching product-market fit means getting to the point where the market accepts your product and wants more of it
So, why do you need to find a PMF? The main reason is that you may invest thousands of dollars into promoting a product that nobody will use and value.
You have to know for sure what value your product will bring to people before starting the actual product development
Understanding who your potential customers are, knowing their needs and their solvency will help you to achieve the product-market fit.
Also, PMF changes your business priorities so that you pay more attention to securing your growth capital. For instance, you can hire a VP Sales or expand your sales team. Furthermore, it allows you to switch your attention from product development to marketing.
The third significant reason to find and measure PMF is that it is safe for you to scale up your business. It means that your new products are more likely to meet the needs of new markets.
Even though the concept of PMF is rather new and hasn’t come into common use, it’s already overgrown with myths. You have to be aware of them not to misinterpret the concept of product-market fit.
Usually, to make ideally fit products for your market, you have to make several tweaks and reforms. Sometimes, your product may not fit the target market as it doesn’t meet the potential customers’ needs. In this respect, to make your product really useful and valuable to your customers, you should undergo quite a long process, which is described in the next section.
Markets and customers’ needs are always changing with time. What was popular 50 years ago, is of no use nowadays. Technology constantly improves and automation of processes and other activities is conquering the world; thus, buyers’ needs change as well. If you’ve achieved product-market fit in your market, it does not mean that you will be on the same stage in a year or two. In other words, your target market is not supposed to remain stable. Thus, once your market changes at some point, you need to find a new PMF.
While giant companies, such as Facebook or Twitter, have already taken a stable niche in the market, for small startups just entering the market, it might be somewhat difficult to find a unique selling point. In fact, only a few software development startups will achieve dramatic results within a short period of time. You should look for the indicators of PMF- high customers’ retention, high percent of customers that come back to use your product once again, and a great volume of referrals. However, you’ll never trust them completely.
Even if customers value your product and use it actively, you shouldn’t forget about the competition. Even after you have achieved PMF, you will need a business growth model to keep your enterprise thriving and to build a strong brand against your competitors. In his article, “The Revenge of the Fat Guy”, Marc Andreessen says: “In fact, the best markets are usually the ones in which competition is fierce because the opportunity is big”.
So, at this point, you already know the definition of product-market fit in economics, understand its importance, and what myths are associated with this concept. Now, you may ask yourself: “How exactly to find a product-market fit?”. Here is a framework of steps to reaching a product-market fit, which was developed by Dan Olsen, a product management consultant, entrepreneur, and the author of “The Lean Product Playbook”:
At this stage, you have to use market segmentation which suggests dividing the whole market into small segments that consist of potential customers with similar needs and behavior. You should start with a high-level hypothesis of your customer’s persona to dive deeply in their needs and interests. The most proper way to do that is conducting research.
You have to know who your potential users are, what they do, what are their pains, their values, and what they are trying to achieve
Based on your research, build an image of your high-expectation customer – a person who knows the market and who can evaluate your product fairly. Divide your audience into small segments with similar pains, needs, behavior patterns, and lifestyle. This division will help you create a buying persona (typical customers that will buy your product).
Understanding the underserved needs your customers have is crucial too.
Before you launch a new product, you have to know what your potential customers are looking for and lacking at the moment. Remember that users don’t want to spend much time and effort on routine activities. They prefer products that will make their lives easier. Thus, even simple apps can perfectly satisfy their underserved needs. A good example would be an application that reminds users to drink a glass of water or exercise.
If you want to bring your product to market, figure out what makes your product different from others. In fact, your product value proposition is what you promise to your customers and how it solves their problems.
The approach of the minimum viable product allows you to identify the core features of your product or service that will be the most valuable to your customers. Based on these core features, develop your product prototype – a demo version of what your product or service will look like. Then, you should test your prototype by demonstrating it to your potential target audience. At this point, you should gather feedback about the product’s demo version and make all the necessary changes.
Once your prototype is created and tested, you have an opportunity to get an honest opinion about your products. It’s of extremely importance to ask your customers about what they like and do not like about your product. Also, you could wonder what makes you different from your competitors in their opinion. Get as much feedback as possible so that you can better understand your target audience and implement all the necessary changes to your product. Your customers’ feedback helps you better understand what is missing from your product, e. g. whether it has a user-friendly interface. Thus, you’ll be able to improve your product in the next iterations.
Although the concept of “product-market fit” is rather new to most entrepreneurs, it plays a crucial role in one’s business success. So, PMF is about satisfying your customers’ needs and, put it simply, making them happy. If you want your users to love your product, you should find your product-market fit and try to keep it aligned with the market needs. And remember that it’s a continuous process.
Article has been originally published on https://gtm-plus.com/in-the-pursuit-of-product-market-fit/