How do you know if your product-market fit is ready for scaling?

Growing engaged users and revenue without huge marketing spends. That's a clear indicator. See if your target customers consistently rate your product as a must-have, refer others, and willingly pay. Check that key metrics like churn, NPS, and ARPU indicate fit. See if outside interest and competitors are taking note of your traction. The more of these signals you have, the more ready you are to scale up through expansion, marketing, team growth, etc.

What’s scary is to allow your ego to think your product is market ready, scale worthy & cash flow friendly when actually Customer perceptions across segments, geography & affluence can surprisingly vary. So, clarity, certainty & above all a purposeful and missionary zeal is essential with a willingness to go way out of one’s comfort zone! Our gut feel is important, a bit of financial projections & a lot of Customer feedback & just go, go, go!

Product-market fit is unlocked when your market repeatedly buy, use and share your product - and you started to grow quickly. Here's what having PMF looks like. Customers POV 1. Your market are clearly ecstatic about your product. 2. All customers come from inbound. 3. They are eager to give you their money. 4. They keep using your product, even if it's buggy. 5. They keep returning to use. 6. They share about your product to their peers. 7. Their peers are excited that they are referred. 8. They are disappointed if your product is no longer available, even momentarily for "maintenance" Company POV 9. You cannot keep up with demand 10. CAC:LTV ratio is beyond 1:3 11. Your growth is explosive 12. You get lots of VC and acquisition offers

Don't confuse product-user fit with product-market fit as defined by Peter Lauten and David Ulevitch of Andreessen Horowitz. Many early-stage companies mistake the former as readiness to scale when in reality, you have a few power fan users. It's important to understand what makes the solution so great for these important early customers and incorporate that in your efforts to expand the customer base. The explanation I prefer is when you're unable to keep up with customer interest which results in too many inbound leads to process effectively, buying cycles reducing and new customer acquisition increasing ahead of forecast. In short, when it feels like the wheels are coming off because you can't cope with demand.

A fancy way to describe PMF is to have the right product offered to the right customers at the right business model. If we break it down to simpler terms it's being able to repeatably sell your product at a profit. Some people would argue that you need to feel a wave of customers banging down your doors, but in reality once you have a selling machine (remember the repeatable requirement from earlier) you should be able to scale your marketing and generate that wave of demand as you are able to do so profitably...

Here are the 5 metrics you need to know to measure PMF. 1. NPS +80% Measures how likely are your customers to refer your product. 2. WAU/DAU Measures whether your customers/users return 3. Sean Ellis test min. 40% must be disappointed if your product is no longer available. 4. R+K>1. R (retention) and K (viral coefficient) should be great than 1. Measures stickiness and how many new users are referred by your existing users. 5. Cohort retention that is smiling or flattening Measures whether they return to continue use your product

Another less traditional way to look at product-market fit is by checking if users are naturally finding new ways to use your product beyond its original purpose.

If you look at finding PMF as being able to being able to repeatedly sell your product profitability, then measuring PMF is simply having a consistent profit and sales conversion numbers over time.

I have a slightly different perspective on Product Market Fit: you know it if you have replicable sales and you can prepare sales materials, hire a sales team, and they can sell using the materials you have without any significant modification. If you find yourself selling in a slightly different way to every customer that is a clear indication that you do not yet have product market fit.

First understand that PMF = product fits with the market. It's market-dependent. Uber does not have PMF with toddlers. Apple Macbook does not have PMF with Linux developer. Validating PMF is fast, simple and works real-time. Launch your product. 1. If your market don't go crazy over it, you dont have strong PMF. 2. If they go crazy over it, you have a strong PMF. Then iterate.

70% of companies failed because they scaled pre-maturely before having a strong PMF. Your options to act: 1. Change different market who have the same problem to solve with the same product. 2. Change different problem for the same market with different product. 3. Change the product with the same market having the same problem. 3 takes the most effort followed by 2 then 1. Unless you unlocked PMF, your scaling efforts will U-turn forcing you to get PMF first.

The worse thing you can do is scale the wrong thing... To avoid that mistake you need to build a repeatable sales machine, AKA a profitable sales funnel that have a consistent (over time) result over time. Once you are able to do this, simply start increasing your budget and measure profitability and CAC over time... Some ways to reduce CAC is to work on repeat sales, building social proof and brand recognition...

Starting with a financial model is critical for scaling. Watch the five parameters of Debtors, Creditors, Inventory, Overheads and Profit. Set realistic targets for each as a spectrum that reflects your aspiration. Take help to do this as required. Once done, measure weekly, quarterly & annually & seek to course correct as appropriate. Practice detached-attachment to the business results & accept the fluctuations within a purpose driven band. Learn when to say enough is enough!

Just look at your metrics, Mainly CAC and LTV. The numbers will tell you everything you need to know. If you are able to keep your campaigns profitable you should be good

Clarity on the market need vis a vis ones’ product proposition is to be the starting point. Is there a niche? A specific demand? A distinct problem that the entrepreneur is able to see, engage with & resolve? Here, the tendency to be a solution provider for many associated demands should be avoided, as focus is key in scaling. Specialisation & appropriate geographical expansion should become relatively easier after that. Every Customer segment can be bifurcated into A,B & C category based on market parameters. Choose the category that best suits your product solution capability, develop your Key Accounts here & LEAVE EVERY OTHER OPPORTUNITY ASIDE!

This is where a solid GTM plan comes in. There are five core areas to consider: 1) Market & Priorities 2) Strategy & Tactics 3) GTM Motions & Resources 4) Engaging customers 5) Review & adjust The key to success is pulling together a GTM team with a PMF mindset. That team needs to be a combination of sales, marketing AND product working in unison.

I would say, engage with a coach. And the qualification for this mentor has to be, 1) expertise in financial modelling as well as 2) domain awareness. The important thing here is to be proactive in steering the context in the direction of: 1) Financial model performance and 2) Business current constraints. 3)Explore ‘What else?’

Product-market fit isn't a guarantee. You might find customers and think you have PMF, but either: 1) The addressable market you found wasn't as large as thought. In this case, growth can stall or sales friction increases. 2) PMF can be lost. Customer priorities change. New trends emerge. Your company can lose focus and perform poorly. PMF isn't a one-time occurrence! Be sure to track the key indicators to help you stay on course or if needed, find a new path forward.