We all know that starting a business from the zero is one of the hardest things to do out there. You are there left with a blank canvas and a set of painting supplies that don’t guide you much into the process.
Anyone who is working on a new product doesn’t know the roadmap to a product/market fit. Wait…
“Product market-what?” – you are asking yourself.
What Is A Product-Market Fit?
Essentially, a product market fit is a common concept in the startup world, used to describe the mental model for the interplay between a business, its products and its customers.
It basically means that you are in a good market with a product that can satisfy that market.
Learning about this concept will likely help you see the world with a different set of eyes and inspire you to create value for your customers and growth for your business.
Achieving A Product Market Fit: Two Scenarios That Describe It
As we already described, a product-market fit usually comes from an instinct. However, what can give us a more vivid illustration of what this type of fit really feels like are a couple of scenarios.
The first one is the one when you are feeling that a product market fit is happening – mostly because of your customers and their enthusiasm about your products, the usage which is growing, the word of mouth which is spreading and the press reviews which are more than just positive.
The second scenario is even more basic – customers are buying your products just as fast as you can make it. Your usage is growing just as fast as you can add more servers. Money is coming and piling up in your checking account.
At this point, you should know that you are at the peak and need to expand. But how do you actually come to this point?
So, How Do You Achieve A Product Market Fit?
You should know that there is no one-size-fits-all solution. If that was the case, all of the startups would eventually become successful. In contrast, achievement comes from the problem that you are trying to solve and how significant the problem is for your target market.
On a wider note, it also comes to your product. Knowing that your product solves the exact problem it is intended to, it will succeed more and attract more customers.
The process of measuring the product/market fit, on the other hand, is as following.
1. Identifying your target audience
The first step is to see who your actual customers are and how will they decide whether to use your product or not. It makes perfect sense to do market research and more specifically market segmentation in order to define your customer.
Market segmentation will help you define your “buyer personas” and describe them so that everyone in your team understands who you are actually building the product for.
2. Understand your customer needs
At this point, the task is to determine the most significant needs of potential customers. You should also find specific needs that can create an excellent market opportunity.
Obviously, your needs have to be pretty compelling and vital for your customers.
3. Know what you will offer as your value proposition
Your value proposition is all about your approach to the competition – and how you are going to face it. Even though the market may be full of direct opponents to your business, you should come up with something that is utterly innovative and groundbreaking to win people’s hearts and outperform your competitors.
From new features to fresh new ideas and stuff, you should make sure to include different things that excite buyers and roadmap your product process.
4. Create your minimum viable product prototype
The minimum viable product concept will help you start from somewhere and listen to your customers’ needs as you scale your business. Here, you will need to focus on certain features that will make your product a viable one.
If you get lost at this point, make sure to check out our ultimate guide to building a minimum viable product (MVP).
5. Test your MVP with potential customers
Want the best results?
Give free access to your product to some customers and analyze their use. Potential users, people who might end up buying it later on when it’s ready and everyone within your target audience can work here – all in order to help you pinpoint the strengths and weaknesses of your product.
Time To Test Your Product/Market Fit….
At this point, it is time to test your product market fit. One of the best metric, according to startup gurus, is the so-called 40% Rule which is very simple – if 40% of your surveyed customers say that they would be “very disappointed” if they couldn’t access your product or service – you are definitely succeeding.
In parallel to this, if at least 40% of the respondents say that they consider your product as a “must-have” – again, you are on the winning side.
You can additionally test your product or service through your website, the bounce rate (percentage of users who visit a page on your website and leave it without taking action), the time spent on site, the number of pages per visit and the percentage of conversion.
In the end, every startup needs to fulfill as many metrics as possible in order to achieve market traction.
So, it is important to know that a few metrics won’t always help you reach a product market fit – just like they won’t help you solve a problem or eliminate a huge burden from the shoulders of your users.