Product-market fit is the holy grail of startups. It means that your product solves a real problem for a large and loyal customer base. But how do you achieve it? How do you know if you have it? And how do you improve it over time? In this article, we'll share some of the best ways to improve your startup's product-market fit, based on proven methods and frameworks.
The first step to improve your product-market fit is to define your target market clearly and precisely. Who are you building your product for? What are their needs, pains, goals, and behaviors? How do they find and use your product? You can use tools like customer personas, segments, and jobs-to-be-done to create a detailed profile of your ideal customer. This will help you focus your product development and marketing efforts on the most relevant and valuable users.
Whatever methodology used- the key is having these conversations. In most start ups, the founders had the relationship with customers early on, and the product team never catches up. One of the questions I ask my clients is- how often do your product folks talk to clients. Most answers are “they dont” or “when customer escalates”. Get out of the inward thinking world and Talk To Customers
PMF is less about the "fit" and more about resonance. Fit is about finding a solution to a problem while resonance is about agreeing on the problems. When you define your target market, identify all the customers and verticals who agree with your problem statement. Then you build your narrative on that statement. Approach - The problem statement. Why is this a pain point? These are a few metrics that will improve if this was solved. This is why it is a hard problem to solve This is our approach to solve it This is why we think it is more effective. This
To enhance your startup's product-market fit, prioritize customer research and feedback. Continuously refine your product based on user insights and market trends. Use metrics to measure success and focus on user retention. Clear value propositions and targeted messaging are essential. Don't hesitate to pivot or expand your market. Provide excellent customer support, monitor churn, and make data-driven decisions. Educate users and explore partnerships for growth. Remember, achieving product-market fit is an ongoing process.
Important to call out to the customers in the pilot phase and understand if the said product/platform/feature is serving the specific need and/or the problem, for which the said product/platform/feature was designed/conceived. It’s not “Feedback” (which perhaps is the most cliched term) it is a focused Q&A to understand the effectiveness & impact of the product/platform/feature. The response, will help solidify the proposition &/or plug loopholes &/or help shed light on aspects if when implemented, can help fast-track the GTM strategy.
The most challenging area is finding the right market and this is done mostly with good user research including several interviews to fully understand the problem (not validate your product). For me there are three dimensions to understand from your user: Sociographic, Demographic and technographic.
The next step is to validate your value proposition. This is the core benefit that your product offers to your target market. It should be unique, compelling, and easy to communicate. You can use tools like surveys, interviews, landing pages, and MVPs to test your value proposition with real or potential customers. You should aim to get feedback on how well your product solves their problem, how satisfied they are with it, and how likely they are to recommend it to others.
Customer feedback is critical and the obvious advice is to get as much feedback as possible. Getting customer feedback from a large number of potential customers might not be feasible, practical or cost effective. It is important to be surgical and focus on feedback from two extremes. "Super customers/super users". Folks who are deep into your product, who use any and all features, test the edges and often suggest tweaks and new things. The other end - are customers who may not spend as much time in the product. They want the most important features and display in and out behavior to get their key jobs to be done - complete quickly, easily and effectively. This approach and focusing on quality of feedback will allow to validate PMF.
I’ve found the action item that most folks avoid is just that — taking action. Get up, get out of the office. Talk to 10 potential customers. From those early conversations, talk to 10 more. Refine the narrative until it resonates. Keep talking to folks until they start really…. I mean really begging you to build it. Find those early advocates and really lean on them.
Validation is not solely about confirming that your product or service potentially solves a customer's problem. It extends to establishing that customers are prepared (or will be prepared) to pay for that solution. In the early stages of seeking product-market fit, this can be a challenging balance to strike. However, it's vital to give due consideration to commercial viability from the outset.
Validating your value proposition is a critical step in achieving product-market fit. However, it's important to remember that this process is iterative and requires constant refinement based on customer feedback. It's not just about creating a unique and compelling offer, but also ensuring it resonates with your target market's needs and wants. Furthermore, while tools like surveys and MVPs are useful, nothing can replace the insights gained from direct, one-on-one customer interactions. Remember: The customer is always right.
The third step is to measure your product-market fit. This is the process of quantifying how well your product matches your market's demand. You can use metrics like retention, engagement, referral, and revenue to track your product's performance and growth. You can also use frameworks like the product-market fit pyramid, the product-market fit score, or the product-market fit engine to assess your product-market fit qualitatively and quantitatively. You should aim to have a clear and consistent way of measuring your product-market fit over time.
For B2C products, mastering cohorts analysis is a must. Is it a Weekly or a Daily product? What are the 2-3 actions that sticky cohorts perform? At what frequency? What are the barriers to value for those users who don’t get activated? While quantitate analysis helps to spot the “what”, it also needs to be supplemented with qualitative, properly run / unbiased interviews to dig into the “why”. For early stage products with less than 30% of users getting activated, they often turn out to be vitamin-alike and not painkiller-alike products. The former have a much harder path to PMF and can kill a startup. It’s a sign of over building. Founders who spend tons of time in pre-product interviews / tests to frame the “why behind the why” win big.
A good way to do it is with an alpha and beta. Measure PMF with a small cohort with gates. Once the gates are met, move to GA!
PRETOTYPE AND IMPROVE LIKE TESLA Tesla used a Lotus Elise to interest potential buyers for their first car. In 2003, the founders of Tesla had an ambitious idea (an all-electric 2-door sports car). In order to convince potential buyers to order its car, Tesla created a pretotype of what the car would look like. Lotus supplied Tesla with a ‘glider’ Elise - which was filled with models of key components. This was not a prototype, because the vehicle didn’t function. Tesla was able to show buyers a close proxy for the final design. Tesla asked “Will you put down a $5,000 deposit to have it built to order?” From this test Tesla secured several hundred deposits, a non-trivial result to reassure their Investors.
The fourth step is to iterate on your product features. This is the process of improving your product based on the feedback and data you collect from your customers. You can use tools like user research, usability testing, prototyping, and analytics to identify and prioritize the most important and impactful features for your product. You should aim to deliver value to your customers quickly and frequently, while avoiding feature creep and complexity.
Some of the biggest lessons I've learnt over the years starting businesses include staying lean, open and flexible in the very early stages, don't set things in concrete! Often we can be so married to an idea or concept in our minds that we don't give space to alternative ideas or variations that could actually prove more successful. We can get in our own way! PMF is a continual journey of assessment, listening and adjusting until it feels right. Listen, observe, improve, repeat!
Incorporating AI in the iteration process can significantly enhance the efficiency and effectiveness of product development. AI can help analyze customer feedback and usage data in real-time, enabling startups to quickly identify areas for improvement. Furthermore, AI can predict future trends, helping startups to prioritize features that will deliver the most value to customers in the long run. This not only ensures a better product-market fit but also helps in avoiding unnecessary feature additions. Remember: AI is just a tool, and it is not supposed to replace the product manager.
The final step is to align your marketing strategy with your product-market fit. This is the process of reaching and attracting more customers who fit your target market and value proposition. You can use tools like channels, messaging, positioning, and branding to communicate and deliver your product's value to your audience. You should aim to optimize your marketing funnel, increase your conversion rates, and reduce your customer acquisition costs.
By following these steps, you can improve your startup's product-market fit and increase your chances of success. Product-market fit is not a one-time event, but a continuous journey that requires constant learning and adaptation. Remember that your product-market fit can change over time, as your market evolves, your competitors emerge, and your customers' expectations grow. Therefore, you should always keep testing, measuring, iterating, and aligning your product and market.
Agree with @Peter F. You have to keep many plates spinning as a start up and most product-led startups fall into the trap of ploughing initial funding in to product and engineering. GTM becomes a secondary concern, ‘we’ll build the product first and then worry about a strategy to market it later’. GTM should be approached the same way as product dev - test, learn and iterate until the message resonates with the buyer/user. This is as important as product.
GTM strategy is super important even before writing a line of code. Having an idea of how you are going to acquire your first 10 users (b2b saas) or 1000 users (b2c) is essential before going towards building a product. “Build and they will come” strategy is dangerous for any company esp. for startups.
In my experience, most start-ups are product-driven, not market driven. Meaning that they first develop a product founder believes solves a certain problem. Only then do they go out and test it on the market. And of course, because they have invested so many resources in developing a product they have a hard time adopting a product to the market. My advice is to test new features/new products/services on the market and if they make money lead development in a direction where money is. It is also extremely important for the start-up to stop investing in the development of the product if there is no market for it. To put it short fail, but fail fast. Then start developing a product that will win, based on your info from the market.