UmarAwanLet’s see why Product-Market fit matters so much in the world of Startups.
In the words of John Pennypacker, Deep Cognition’s VP of Sales and Marketing, achieved product-market fit occurs when customers are frequently purchasing a firm’s product, or its usage is growing at the rate of the firm’s output.
Product-market fit is achieved when the market is viable by supporting the continued growth and profitability of your product. This in effect means that consumers not just endorse your business operations but also determine your success.
But finding that product-market fit does not happen without customer understanding. That understanding will empower you to correctly place your product by providing the right features of your product at the right price and time when they need it.
In this article, we will discuss the product/market fit and use some advices from the best product marketing professionals who reached this state. We will also offer an easy to understand guide on how to modify your product for the same results. So, let’s start and see what it means to find product-market fit and what it takes to get there.
The steps that startups need to take to successfully have Product/Market Fit.
In the world of startups, success hinges on one crucial factor: achieving product-market fit.
The middle of the landscape, the point where your product dovetail with the customer’s need, is the most fertile ground for growth. Still getting there is not an easy feat to pull off.
Here, we compile a set of success facts to inform and assist startups seeking to determine their product-market fit.
Whether you’re a novice entrepreneur or an experienced founder, here are the basics of getting to product market fit:
- Conduct a survey among the target market, approach 25 individuals and give them a reward.
- It establishes a minimum viable product: it’s the bare minimum that can be created.
- Create a small landing page for testing that product only.
- Target content or advertising, to post on that page (ordinary or paid advertisement).
- Look at the raw numbers of people who engage in behaviour (buy, sign up, etc.).
- It’s time to launch the MVP – but in its first forms it should be available for less money.
- Administer a survey to customers, and send a follow-up survey to [anyone who said no] providing something in return.
- Look at actions. When are they canceling? When are they staying?
- If you have low churn, and high return rates, you have something; other wise continue testing new versions and going through the cycle.
In the previous section, we’ve shared some examples of Pledge:
Netflix
And in the early of 2000, Netflix used mailing DVDs to the customers, do not charge late fees from rental stores. Netflix shifted gears and began providing DVD Streams after DVD sales and rentals start to diminish as a cheap and efficient substitute to cable television. They have risen to different positions as a sign of flexibility and attitude to change in the market.
Originally Google started competing with other search engine companies to make its sources of revenues from ads that are posted alongside the search results. In 2003, they took the lead with a new idea called AdSense Then in 2003Google stepped in to take the lead with this new idea called AdSenseonya compelation of different third party web sites. AdSense did not merely show ads or allow advertisers to bid for its placement on the search page; it also placed ads automatically on web sites. Google saw that this was where businesspeople would spend their money, and AdSense took off. It creeps through the pages to display the ads; for instance, if you were selling suitcases, the ads could appear on websites related to travelling. Of which by 2017 AdSense enrolled 11 million users that was paying Google $ 95 billion per annum. There is always a gap and this is where Google spotted the gap and geared towards that area.
Slack
Slack, an application for fast communication in the workplace, began its existence as a tool for a video game. The founders developed it for their team but realized there were enough games out there already. Debating on this, they changed their focus on Slack and now 10 million of people all over the world use it. Slack is a great example of when it makes sense to shift the focus to what people care about.
What is Product Market Fit, and how do Startups achieve it?
Advice for Early Stage Startups Striving to Achieve Product-Market Fit
- Keep Your Eyes on the Prize and Resisting Feature Creep
It is essential for startups to keep the focus. The best products are usually well defined by having a precise value proposition, which simply means they have a narrow focus. Father away from feature creepFeature Creep is the gradual surfectition of extra options which scales back an utility to build up a complex, multitasking software incorrectly-Javadoc-おたく.it Remain faithful to your core values and solve a single problem better than anyone else.
- Adapt and Scale Wisely
Africa moves fast in the tech world and adaptions are needed in order to keep up with its agility. As you move up in tiers, make sure that your growth is within the bounds of PMF and your core values. This is why moving into new material segments should be a strategic decision based on data from consumer demand.
It requires nuanced insight into local markets, a focus on building strong customer relationships, and an alignment of your product to market demand and corporate values. This journey involves continuous adaptation, learning, and keeping true to one’s core mission. From here, a startup can easily convert the challenges and opportunities arising in the markets into its path to success, but more importantly, sustainable growth.
Recommendations for Startups That Want Product Market Fit
One such example is how we attained PMF at Testlify: just by refining the assessment features at Testlify through extensive user feedback. By closely aligning our feature set with the evolving needs of recruiters and candidates, we have seen a sharp uptick in user engagement and satisfaction metrics, indicative of successful PMF.
My recommendation to startups hoping to attain PMF is to listen to customers and focus on rapid iterations.
Actively solicit input from your target users, pivot your product to meet their needs, and have no fear of making changes accordingly. Monitor key performance indicators very closely as this is how you objectively measure your progress. It is among the major ways through which you will attain and sustain product-market fit: having a close rapport with your user base and being agile with respect to market dynamics.
Recommendations to Find Product-Market Fit for Startups
At Balance One Supplements, we started by doing some research to understand what our potential customers need and want.
From that, we had developed a number of supplements dealing with their issues. Our first series of products were not doing very well as we had thought. This experience taught us a lesson. We listened to customer feedback against those products and modified them. We modified the products and marketing strategy based on what they liked and did not like.
The result was a new product line that met not only the health needs but also catered to the lifestyles and values of our customers. This translated into enormous sales and repeat purchases. The positive reviews confirmed that we were successful.
Changes in the specifications of our products should always be adopted upon receiving feedback from the customers.
The metrics need to be tracked beyond nanoscopic concerns such as sales; not only should customer satisfaction and the repeat purchase rate be taken into account, but also the cost of customer acquisition has to be faced.
Finally, bear in mind that product-market fit isn’t a one-time thing.
It requires endless revision, that is, continuous iteration of your product and strategy, as befittingly responds to the change in trends within the market; every activity in its own respect would accommodate correctly the changing needs and preferences of the clientele to ensure sustainability of PMF strength for a long period.
Recommendations to Startups for Product-Market Fit
In the early days of DropX, we were scaling fast.
We found our ideal customers, and the delivery of service was just seamless. At the level at which we were at that time, we could assume PMF, but the moment we tried to scale up the solution, we realized that PMF at that new level of scale was going to be different.
Vanity metrics are stuff you totally need to avoid; good for morale-boosting, doesn’t actually indicate growth on the balance sheet.
The whole point is to move the needle closer to PMF; thus, even vanity metrics should be taken advantage of in order to achieve this goal. When you think about product-market fit, think about it more as market-product fit, since the market always comes first: find a market first, understand the problem, then you can offer your product against that very problem. The market always comes first.
It is also important to know that, depending on the product you build and the market you operate in, PMF can be achieved multiple times at different stages of growth for your startup.
Recommendations for Startups Going to Product-Market Fit
One great example could be MuukTest, which I have been dealing with for quite some time.
Founders were building a software product for quality assurance automation, basically testing software interfaces to make sure new features don’t break. It was upon trying to sell it that they realized their customers actually didn’t want to buy QA software and they had trouble actually making any QA software work.
Instead, what they really wanted to buy was “not having to think about QA.”
In the end, MuukTest offers a software and implementation service that takes QA off busy CTOs’ plates. They debugged this through the sales and delivery process. Within 12 months, they had more than 10x revenue, sped up the sale cycles, gotten customers from indifferent to raving advocates, and dramatically increased pricing to be commensurate with the value they create.
In other words, it is only by selling and implementation that MuukTest could learn what the buyers really want to buy and, therefore, refine their offering. They did so by not wasting any time on a bunch of other things that aren’t essential to PMF.
First, go out and try to sell.
Start with 1:1 sales-even when you don’t like it, even when it is uncomfortable. Keep your sales process focused on a “case study,” and the objective is to replicate that case study.
Never assume you never have PMF; it’s always a moving target!
Recommendations for Startups Aiming for Product-Market Fit
Product marketing has to do with the endless determination to listen, adapt, and tune your product to the market’s needs, so as to turn your product into a part of the customer’s routine.
At DesignRush, we did this through constant interaction with our would-be users, appreciating their pain in hunting for agency partners and refining our offering so that this hunt turns out smooth and efficient.
Securing product-market fit isn’t about hitting one metric but rather about consistently observing a set of signals that, when combined, appear to indicate your product is resonating in the market.
Quantitatively, turn to your churn rates, NPS scores, growth trajectory, and market share. These figures should trend positively. Qualitatively, take a reading on the buzz for your product: Are customers organically recommending it? Is there an uptick in media and analyst interest?
These are more tangible indications that you’re moving closer to real product-market fit.
Recommendations for Startups to Achieve Product-Market Fit
The key to finding product-market fit is in the most number of product iterations that can be fitted into a given resource constraint. More you know about your customer, the closer you will be toward that fit.
Cohort retention over time is the most telling indicator of product-market fit. When you start to see multiple cohorts flatten out at levels relevant to your business, you have found it. Various types of products have different levels of product-market fit. In order to determine what constitutes success for your product, you would want to benchmark the retention rates of similar products that have successfully scaled.
Another more common reason for the failure of startups is mistaking early success for PMF. It is not about being the first to market; it is about being the first to PMF. It is only when you reach PMF that you can hire staff to help speed up growth; prior to that, hiring slows you down, increases your costs, and could lead to a downward spiral.
As Warren Buffett once said, “Only when the tide goes out do you discover who’s been swimming naked.” We are going to see a lot of that in the business world in the wake of the excesses of the Softbank era.
Recommendations for Startups Aiming for Product-Market Fit
My advice to startups would be to stay flexible and focused on customers.
When we began our online platform, it was on the assumption that our clients wanted a wide choice of options for accommodation available at competitive prices.
Keeping that in mind, we built our MVP and launched to a small part of the target market. The feedback we then got from our customers was really priceless: while price and variety are the two most important things, what customers want is a seamless booking experience. Iterating on the product to simplify booking, we started seeing improved customer satisfaction and retention.
That was our indication that we had reached PMF.
Never be afraid to pivot if your initial hypothesis is not strong; just remember, it’s a process unto itself: PMF. Get feedback from customer interviews, surveys, and A/B testing, and iterate on one’s product. Most importantly, be patient. It takes time to reach PMF, but it is well worth the effort.
Recommendations to Startups Trying to Achieve Product-Market Fit
Know your audience.
This is now a cliche, but it simply needs saying. You do not build a product based on what you think the market is. You want actionable data from the real world when you are building your product.
The second is to always build with the user in mind. This gives you an edge over your target market and helps in crafting effective marketing messages to woo them. You also have to identify what your product is meant to solve and then communicate to your audience.
Knowing what it does is one thing; communicating it effectively is better.
And last but not least, be flexible. Be open to change. If the feedback is telling you that your product is missing, then be prepared to realign.
Recommendations to Startups Looking to Achieve Product-Market Fit
Every startup who hopes to find PMF needs to have an indication if your product has achieved it and at what point in order to decide on further course of action. Once you’ve achieved it in consumer apps, you should start to see some kind of ‘exponential organic growth’ fueled by word of mouth.
In the case of our brand, we realized when we could repeatedly acquire customers at less cost compared to their value to us.
Once a number of our cohorts stabilized upon a rate particular to our vertical, we knew we reached PMF. The important thing to glean here is that different products are going to have different PMF points; comparing your retention rates with similar, successful products is key in setting the right benchmark for yourself.
For our enterprise business, one of the leading indicators for PMF was how they reacted to the end of a free trial. If customers weren’t highly motivated to buy our product at the end of a free trial, we didn’t have PMF. Their urgency to purchase post-trial is an excellent indicator of PMF.
