What is product-market fit? — Startup Analytics
What is Product-market fit and why is it the holy grail of startups? The moment when you know that your product is something that people want. It’s also the moment when you can truly scale your business. Getting to product-market fit takes some trial and error, but it can be done, and when it happens, you’ll know.
Ask yourself why you are building your product?
Before even embarking on measuring product-market fit, one needs to really think through the need for the product and the purpose it intends to solve for the market aka a certain section of the population called customers.
Without a hypothesis and eventual clarity, the journey to product-market fit is rife with dead startups and projects which died before getting even a single customer. The journey to product-market fit is an iterative process of finding clarity around the question and nailing down the right product for the right audience through the right vehicle or approach.
Once you have worked on this, you have to think about the problem.
- What is the problem that you are trying to solve?
- Why do people care?
This is where it gets us to our next step of finding our ideal customer profile. This is the section of the potential customer base who absolutely need our product and would be willing to accept work in progress solution.
This section of the population needs to resonate with the problem and should be willing to part with either money or their time in return for the pain getting solved or getting something out of the deal. It’s mostly money or subscriptions in the case of B2B startups.
Listen to what your customers are saying
The next step, post the problem statement definition and an understanding of ICP is to start interacting and engaging with this audience. Armed with the right definition of customers, one should be able to find our customers in either of the following avenues:
- FB Groups
- Youtube Channel Subscribers
- Public Forums
and even offline spaces such as schools, universities. Any place where our target audience frequents and spends time.
Meet your customers and hear their feedback first-hand
Now that we have identified the audience and know where they hang out. It’s time to put on your jacket and head to them. Instead of trying to push the product or solution, engage and participate in their conversation. Try to gauge if the problem statement picked up is the right one and a major one.
See, if the audience cares enough about the problem to be already solving it in some way. What are they doing already? How are they solving the problem?
Always try to put yourself in the shoes of the customer. It’s important that you understand what they are trying to solve. The core intent behind the solution etc. It’s not just about getting the problem right but even the intent behind the pain and the need to solve it.
This helps with both the positioning and messaging it right. An organic product can be pitched as an alternative to inorganic food or as a hedge against poor health and corresponding expenses. The latter kind of positioning can make the product more attractive even from a monetary point of view.
Iterate until you find product/market fit
Once you have the basics figured, it’s time to get out with the first version of the working solution and get the initial feedback. This will be key to understand, where we are in terms of solving the problem and what will be needed to be done to improve upon this.
The path to product-market fit might be iterating over the product by adding features, making it more customer-friendly in terms of UI/UX or maybe just focusing on a smaller section of the population but with more rigour and intensity.
The Product-Market dance requires a two-way tango between both product and market. The plan should involve iterations over both the product but at the same time, really thinking through the market as well. Moving up or down, pricing up or down etc.
It is a continuing dance. And the goal is to get closer and closer to that product-market fit.
The better you know your customers, the better you will be able to understand the market and thereby serve their needs through the product. This is where a hypothesis-driven approach to problem-solving is key. Start with a hypothesis, run experiments, feel the experience and then take your learning out of the whole process.
How does one know you have a product-market fit?
There have been multiple definitions and ways to define it and use it as a check. Most of these are anecdotal experiences or statements trying to expand on the exact feeling when this happened?
- You know you have a product-market fit when everything starts exploding! All metrics are buzzing and things just keep growing. I can relate to this with a very specific example. One of my niche blogs called Machine Learning for Trading exploded and the numbers kept growing day in day out for 7 days. This happened a couple of years after writing so the blog finally found the right audience.
- One of the other ways recommended is to go out and get a survey done asking if your customers will be disappointed with your product not being available anymore. If the number is ~40% or higher, feels so. You might be on to something. I can relate to this with a personal experience when a product I had been closely working with had asked their customers for similar feedback. A good chunk, send they would not even notice the missing product. It was an immediate sign of improvement and the need to iterate on the product further.
When you find product/market fit it will be easy to grow your business. When you don’t find a product/market fit it will be difficult.
Some have called this an experience where you go from trying to push the boulder uphill to now trying to catch up to the boulder down the hill. In essence, the business or the market starts absorbing or taking the product faster than you catch up and match up to it.
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Originally published at https://startupanalytics.in.