How you can find and retain Product Market Fit

If you have paid enough attention, you must have noticed product-market fit (PMF) being a consistently discussed topic among consumer SaaS PMs and founders.

This is because PMF decides if a product succeeds or fails. The reality is that almost no one finds PMF perfectly on their first try, which means iterating quickly, making the right bets, listening to customers, changing business plans or pivoting makes the difference between greatness and void.

Product-market fit is the most important success factor to the future of your product than funding, ideas and having the best team ever will. This is because you are in business because the market sustains you and you do not want to lose that grip.

A strong recommendation is this - Do not be afraid to move away from your original product idea, when you do not have PMF and have seen a more sustainable opportunity.

What is Product-Market Fit ?

Across different verticals, I have helped find PMF for SaaS products and concluded that PMF is the continuous process of finding the right customers who will do everything to pay for and use your product. The idea behind PMF is that users will dump / ignore every other competitor / alternative with the sense of urgency to buy and consistently engage with your product.

In B2B verticals, one of the ways my team knew we had PMF was when our users started to use our products more than we did, internally. This was mostly true for productivity products. 

Having experienced both sides, I can share the difference in how you know when you have PMF and when you do not.

At what stage should you think about PMF?

In many instances, some founders / product managers have accidentally found PMF in the very early MVP stages, whilst most product orgs discover PMF during beta launches. Two things are consistent with both buckets - Mental models and Consistency.

Ideally, PMF should be top of mind once you discover the problem to be solved. It should revolve around your strategy and how you imagine solving this problem for your customers. Because you have the problem [why] and the product idea [ how], you should align this strongly with the market. Experiments will guide this process largely where you are looking for very clear metrics that validates and sustains your hypothesis.

One PMF signal point is never enough. Continue to test and explore even deeper.

How you know when you have PMF.

As much as they should not be your decision pointers, a strong gut feel is a very important trait for Product Managers. 

When you are in a good market [ time, willingness to pay, readiness], your good product becomes that single source of truth for your audience. They discover your product easily, get the job done easily with it, return consistently and even tell their friends about it.

At this stage, it might be difficult / inaccurate to use substantial data to measure PMF. However, I will share with you a list of questions I almost always use on my teams when we conceptualise new products ; 

• Session time before purchase [ How fast do customers decide to purchase?]
• Are customers talking about your product to their family, friends, or on social media ?
• What is your customer retention rate?
• What is their engagement rate vs action ratio, with your marketing efforts?
• Your servers are on fire and you need procurement. [ Growth stage PMF]
• In some cases, the buzz on social media isn’t just stopping
• Customers and potential users are upvoting your product in water-cooler communities. 
• Referral numbers are building up. 
• Your growth is constant, in some cases - exponential growth. 

How you know when you do not have PMF.

I remember on many occasions I would alert my team to let them know we had not found product market fit for a particular product. How did I know so quickly?

In 2016, we were building a product for handymen in the UK. Imagine an Uber but for handymen. Our first experiment was to collate a group of handymen who we ‘knew’ would eventually pay for our product, built an email list and started sending them jobs to cherry pick, apply and get matched. Whilst our ‘product’ provided value, we noticed 80% of them barely opened the email and of the 20% of them who did, only 2% applied for gigs. 

We later found that the market was not ready. Handymen were averse to any value chain that would supposedly charge them to find gigs, thereby reducing their cut or even dictating their pay. We pivoted to another product and relaunched in 2018 with a different business model and the product currently does GBP 245K MRR.

Generally, you find that your product is not growing, churn is extremely high, your customer support is unusually busy for the wrong reasons and your customers do not not feel disappointed if you shut down your product today .

In growth stages, you should have eyes on the number of customers who have unsubscribed or stopped using your product over a period of time. If there is a consistent spike in this number, you are losing PMF and should act FAST.

How your product can find PMF + How great PMs have done it successfully.

There is no silver bullet to finding PMF and I would recommend that you discover flywheels [ a set of articulated actions that help achieve a goal repeatedly ] that would drive PMF discovery and sustenance. In my personal experience, even when my team launches multiple products in the same vertical, the process is never the same. 

But here are really fine pointers that can help you find PMF ;

First, decide who your customer is and understand the value you are providing and ensure your product is solving a really painful problem. Resist every temptation to serve everyone in this market. I also fell prey to this many years ago and the downside is that you will never build for anyone if you go this route. 

The hack is to prioritize your audience based on several factors [ size, growth potential, closest to your product vision]. Now, Focus on those customers and talk to them! You need to create and jealously guard your feedback loop between interviewing your customer and understanding their needs, then building and testing product iterations. 

In essence ; 

1. Study a small niche (research)

2. Create something you wish existed (product)

3. Grow a community you wish existed (segmentation) 

4. Have users try the product (attention)

5. Validate with no/low code (Iteration)

6. Make it useful & fun + Frantically fix bugs (retention)

7. Watch users till they churn + Learn why and write it down (feedback)

8. Now prioritize what prevents churn and double down on it.

9. Stand out (positioning)

10. Continue to stay alive.

For the past 11 years, I’ve built products at different phases and seen products go wildly right and wildly wrong. When I reflect on the failures, the root cause is mostly rooted in market and execution risk. Remember I mentioned that the audience must be potentially growing. What if that does not happen? PMF will guide you to grow slowly, methodically or pivot.

If your product can solve a painful problem, and does it easier, faster, cheaper, or better than competitors, then you’re on track for product-market fit.

How your product can retain PMF.

Did you know that your customers may love you today, but they might not dance with you tomorrow?

Now that you have found PMF, you need to discover a growth model that shields you from competition / disruption [ since this is out of your control]. This can be many things for different products. During this growth journey, PMF bulletproofs you from burning cash in ways that will otherwise drown your company. 

I have watched many products lose PMF. Case in point - Blackberry, Nokia, Flow, etc and have you noticed that they got saturated and couldn't not figure out a second act. This is still prevalent today.

The problem is that a lot of PMs think PMF is permanent. No, it isn’t. Because the terrain is constantly changing due to several factors, you need to be nimble.

I also strongly recommend that your product org has a quarter time product market fit expert because the coming months will emphasize that gap. 

To retain your PMF, you should triage these elements ; 

• People must value your product enough to continue paying for it. Always re-assess your core value and decide on how to make it faster and easier for the customer. [Retention] 
• Your business model and pricing still fits your ecosystem - Because the market changes really fast, you must be sure that your monetization strategy is perfect to today's needs. [Market Scalable Adoption] 
• Your product must continually follow the customer through different life stages. [ Customer re-discovery ]

One hack that has worked for me is to ensure our metrics are above the industry average by an extremely high margin. We challenge ourselves to stay above disruption as competition entrance is a constant. We have found competitors setting lower goals whilst we remain industry ‘goals’. 

In Essence, 

• Always double down on what works.
• Retire non-core features to reduce your surface area.
• If it’s valuable, measure & optimize it.
• Invent, Yes. But be open to copying great ideas if they help your users. 

Continue to discover your customer's persona. Trust me, it changes.

Summary.

Many product orgs often mistakenly try to test their growth hypothesis before proving out the value hypothesis and this is a dangerous approach. Always isolate your value and prove it efficiently. 

Now that you are looking to grow, focus on the marginal user. Your power users are fine. The feedback from the marginal user will help you understand your target customer’s mindset and the path they take to solve their problem. This is how you begin to design products and experiences with customer empathy in mind.