Product Market Fit
As an early stage startup how do you find your best product market fit?
By Lenka Davis
42% of startups fail because there’s no market
“...we did a lot of things right, but it was useless because we ignored the single most important aspect every startup should focus on first: the right product.” - Kolos
You could do a few Google searches and find a relevant article about how to find your product market fit. And then you would have a couple hours of reading to do. But what if you wanted to bounce ideas off of someone, get answers to questions, and revise your marketing plans for more success? Also, you just might need to focus on everything else right now and would like some assistance.
Product market fit is a bit of an art when you see an opportunity that has not been fulfilled and a bit of a science in that you test your product in the market, make changes, then iterate until you build the best product. Fit is achieved when you are in a good market with a product that can satisfy that market”, as stated by Marc Andreessen, who coined the term “product-market fit”. Below we have made a short list of steps to take to determine your product market fit for early stage startups or small businesses.
Start with the following steps
Describe your target customer
Talk to your customers
Specify your value proposition
Research your market
Focus on one market segment
Measure the product market fit
Describe your target customer
As a startup you have a target customer in mind. Your solution is built for this customer. The target customer is best described in your marketing persona. A marketing persona is a semi-fictional character that describes your target customer. Create a document describing your persona.
To build a persona use as much of the following basic demographic information as possible. Then add in any goals or behaviors that describe your persona. Top it off with as many motivators as you can get. Motivators such as, why does your persona watch, or play, or do what they do? Does your service or product solve their problems, save them time, help them with what they need to get done?
Basic parts of a persona
Age, gender, location, education, and occupation
Goals
Behaviors
Pain points
Knowing unique combinations of traits that your target customer shares is helpful for all the other aspects of your marketing. It will help you communicate with that customer in ways that make sense to them resulting in a community of users for whom you can build the best product.
Talk to your customers
Talking to your customers is not only helpful to build a useful product or service for them, creating the best experience, but also because of the insights you will gain. Customers will be able to tell you what they like and don’t like, and sometimes they will be able to tell you why. Talking to your customers is the preferred way to find this information out, however email, or video chat, or surveys also do the trick. The benefits are that you can add these insights to your persona, learn more about your customer community and also improve your product.
Specify your value proposition
The value proposition answers the question on why your customer should buy your product or use your service. What makes your product unique from others. Your value proposition will also be useful for your messaging. Think about the following questions when pulling together your value proposition:
• What problem are you trying to solve for them? Or what change do you want to make for others?
• Is it a need or a nice to have product? Is your product the aspirin or the vitamin for your customer?
Research your market
Research what other solutions are out there. Find out who are your competitors and what features or solutions they have. Do they serve the same customer segment that you do? A deep understanding of the market will help you talk about your product in a way that customers will easily and quickly understand. The advantage here is that you are able to differentiate yourself from your competitors.
This is especially needed if you have a solution to a problem for an established market that has low margins, for example. Here it will be helpful to understand not just the customer's pain points, but also the teams and organizations that are part of the sales process and their pain points. Are you creating a product that is hardware versus software, or both? Or, are you providing a solution that will be used for decades or just a year?
Focus on one market segment
Your product or service may have many applications and startups can pivot in many different directions. For the best success in launching, focus on one market segment and get that right before moving to the next market segment.
One of our clients' product ideas could go into many industries, markets and be created into many different apps. They needed to focus on one market segment and create the best app and customer experience for that market. With some deep research and discussions with various industry experts they found that one particular segment was the best way to start.
Measure your product market fit
How do you tell if you have enough product market fit? There are several ways you can measure product market fit. Depending on what kind of product you have or what development stage it’s in, try one of these options to keep tabs on the direction your market fit is heading.
Ask your customers how they would feel if they could no longer use your product. Rahul Vohra writes that a 40% response rate to the question is achieving product market fit. Asking this question is one thing, but achieving that percentage is another. For this method you will need to have some customers to ask. For a startup, focus on moving the response rate up from wherever it is to getting to the ultimate product market fit.
Another method is to use the 8-question Before and After grid created by Ryan Deiss. In this method you ask yourself four questions: What does your prospect have, feel, do in their average day and their status Before and After they use your product. Incorporate the answers to these questions into your marketing messaging to help communicate the benefits of your product.
The above information gives examples and advice on the importance of product market fit. A good article that summarizes much of this is Pete Flint’s NFX.com article titled, The Product Thinking That Built Slack & Twitter with April Underwood. In that article there is a section named, The Product Is Not the Code, where he writes: “Great product leaders drive toward product-market fit. This is where the role of the Product Manager, and certainly the product leader, has to continue to hone that strategy, to help customers understand your vision, where you’re going, what makes you different from a competitor, and to lean into principled stances.”
Can’t wait to hear about what success and pain points you have with getting your product to market.
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Fun Fact
The term Product Market Fit was first mentioned in Marc Andreessen’s 2007 blog post, The Only Thing That Matters. He debates that Market is more important than Product and Team in a startup.
What do you think, is the market more important than product or team in a startup? Share in the comments below.
Lenka Davis is a Managing Partner at Fly to Soar. She has worked in marketing, managing projects and building tools in the high-tech industry for Fortune 100 companies and also ran her own business. Follow Lenka and the Fly to Soar Team on Twitter @flytosoar.
Reference
Kolos was an iPad racing wheel, started in 2012
Photo credit: Bongkarn Thanyakij
Additional Reading
Watch how Weebly found product market fit and how long it took them to get it.
If you are further along and have an idea of what your product market fit is, take a look at getting a channel and model fit.