6 Tips and Techniques to Achieve Product Market Fit
A perfect scenario on a Wednesday. Customers are happy with your product, and your inbox has a lot of feedback.
A dream come true for every entrepreneur. However, reaching this place requires hard work, finding the right market fit product, or both.
But how do you know whether your idea is a market fit?
If your product has demand or not?
Or if what you create will be liked by people?
There are multiple ways and signs to determine the product market fit.
First, you must understand your product’s market fit before you begin building up on it.
And that is what we will discuss today. This article covers all the tips and tricks you must learn to achieve the product market fit in one place.
Read on to give value to your customers and make them advocates of your product!
What Is a Product Market Fit?
Before discussing the tips to achieve product market fit, let’s first understand what the terms mean.
Product market fit refers to the phenomenon when your product solves the problem of your users, the market channel you chose is the right one, and the value proposition is right too.
Together, these will help you stay in business and achieve tremendous success.
Marc Andreessen coined the term ‘product market fit’ in his 2007 blog post. The co-founder of a venture capital firm in silicon valley described it as ‘ being in a good market with a product that can satisfy that market.’
Josh Porter from Rocket Insights has simplified the definition of product market fit. According to him, businesses achieve a product market fit when “ the customers become your salespeople.”
There are three things that Josh points out that must happen to achieve the level of success:
- The first is that your users can recognize the value that your product provides
- Secondly, your existing users will talk about your product to other potential customers
- Thirdly, your business will try to provide an excellent experience to your new customers.
Isn’t this what every business works for in the end? To give the customers value for the product so they will publicize your product through word of mouth.
To summarise, you must know what your customers want from your product.
Product Market Fit Pyramid
The Lean Product Playbook author and product management expert Dan Olsen created a framework known as the product-market fit pyramid.
This actionable model uses five key components to define product market fit.
Every component in this hierarchical model is related to the one above and below.
The five components of the product market fit pyramid are:
- The target customer
- Underserved needs of your customers
- The value proposition
- Your feature set
How to Measure a Product Market Fit?
Achieving a product market fit is every startup’s goal. However, they rarely look into this aspect of satisfying the customers.
You can know that your product is successful in the market when money is coming in, and investors are staking out your company. Also, your customers are helping spread information about your product via word of mouth.
However, there is one more way to determine the product market fit.
You can use surveys and send them to your customers to get their opinion on your product, whether they like it or not, and would it make much difference if your product didn’t exist anymore?
Surveys are now considered one of the tools that businesses can use to measure product market fit. For instance, Slack, a leading messaging app, used surveys to measure their PMF.
Pro Tip: Design your survey questions in such a way that you can get answers to all the essential questions.
Some examples of product fit survey questions are:
- How does our product benefit you?
- How would you react if you could no longer use this product?
- Why are you using this product as opposed to the other alternatives available?
Fact: If your survey results match the 40% rule, then you are good to go! It means that 40% of your customers say that your product is a must-have for them, and they wouldn’t trade it for anything else.
Craft your surveys from scratch using Chisel’s user surveys tool. You can also use templates of your choice.
A product management tool like Chisel also allows you to choose your audience if you don’t have one!
Tips To Achieve Product Market Fit
Most companies use the lean product process to develop their products. What is a lean product process, you may ask?
Here’s the answer: A lean product process is an iterative approach or an easy-to-follow process that has its basis in the product market fit pyramid.
This process guides teams in a sequence of every layer the pyramid has, from the bottom to the top.
You can get three benefits out of this process: being able to articulate, test, and revise your key hypotheses.
All this leads to the development of a product that is market fit.
So let’s dive right into all the six steps through which you can achieve the product market fit.
1. Determine Who Your Target Customer Is Going To Be
The first step and tip are to find out who your target customer will be. They will ultimately decide if your product meets their needs and requirements.
Pro tip: Use market segmentation to bring down all your possible customers to a specific target audience.
Segmentation refers to the process of dividing your entire market into smaller segments. They will include your ‘potential customers with similar needs and behaviors.’
User personas are another great way to understand your target customers. Doing so will help your product development team design and build products accordingly.
Do not worry if you don’t yet have the perfect definition of your target customers. Start with a high-level hypothesis, revise, learn, and take it up from there as you go. This process is also known as iteration.
However, this process can become overwhelming when you’re just starting.
Coming to your rescue is Sean Higgins, a TechStar’s entrepreneur in Residence. The solution is to divide the entire ‘determine your target customer’ process into four parts:
- Analyze your product
- Get familiar with your competitors in the market
- Choose your segment criteria
- Finally perform research
The final step in this process of performing research is most crucial. You can achieve four things out of research:
- Defines your buyer persona
- Identifies the part of the persona you need to focus on
- Conducts market research with survey questions
- Summarize the research findings into takeaways and share them with your teams, such as contributors, executives, and others.
2. Understand the Underserved Needs of Your Customers
You don’t want to enter a market where customers are happy and the companies consider their needs.
You would instead want to get into a market where customers have challenges, but there is a solution. That brings us to our second tip to achieve product market fit, which is to understand the pain points of your target customers.
Remember to consider the market opportunity while creating a value proposition.
To understand the issues your customers are facing, you can:
- Seek insights from your marketing and sales teams and understand the complaints regularly.
- Collect a pool of data samples to give you valuable feedback
Know that customers will compare your product with the alternatives in the marketplace. Therefore the degree to which your product will fulfill their needs does depend on the competitive landscape.
3. Know the Value Proposition of Your Product
As a startup, having budget constraints is a given. This tells us that it will be a failed act if you try to capture the whole marketplace.
Steve Jobs said, ‘ People think focus means saying yes to the thing you’ve got to focus on. However, that’s not what it means at all. Innovation is saying no to 1,000 things.”
Pro tip: Narrow down a market and focus and dive deep into that industry. Become an industry expert in that domain.
A value proposition is a plan you chart out for how your product will fulfill your customers’ needs much better than your competitors.
Get answers to the following questions to know your value proposition.
- How is your product different from that of your competitors?
- In what way will your product outperform the other products in the market?
- What unique features of your product will make your customers happy and satisfied?
The key to product strategy is pondering over these questions and figuring out the answers.
4. Decide on Your MVP Feature Set
MVP or minimum viable product approach builds enough value that your customers can have a look at it and go, ‘ you are on the right track, go on.
Therefore once you are clear on the value proposition of your product, you need to jot down what specific functionality your MVP will have.
We take the MVP approach to not waste time and effort on building something your customers will later tell you: it is not what they expected.
For instance, once you build the MVP if customers say that some functionality is missing or that what you’ve built is not what they’d pay for. Then you can make the changes and create a new version of MVP.
Continue doing this till you have a minimum viable product that fulfills all the customer criteria.
Note: Don’t lose sight of your product roadmap in building a product that suits your customers. Know that you are addressing your customers’ problems, but not every challenge will fit into your roadmap.
5. Craft Your MVP Prototype
Create a version of your product to show your target audience and get feedback on it.
Pro Tip: To make your feature set a reality, apply user experience or UX to your product.
You could build a live version of MVP but creating an MVP prototype is much faster.
A prototype represents your product without actually creating the product.
However, prototypes vary in fidelity and interactivity.
- The level of detailing in the prototype can vary from the actual product
- The level of interaction can be different compared to the actual product.
For example, a paper hand sketch of your product will have low fidelity and interaction. You can use InVison, a prototyping tool that will help you simulate the user experience.
6. Test the MVP With Your Target Audience
Testing the MVP with your customers is the most crucial tip to achieving the product market fit.
To receive valuable feedback, you must test your MVP prototype with your target audience.
Pro Tip: Ensure you have the right audience to get feedback. Otherwise, you risk heading in the wrong direction. You can use a screener, a short survey to ensure your participants have the attributes you wish to have in them.
Once your customers are ready, it is time to converse with each one.
During the MVP prototype testing period, you must carefully listen and note what the customer says. As clarifying questions to get detailed, get the correct feedback.
Pro Tip: Ask open-ended questions to your customers rather than yes/no questions.
A batch or wave consists of five to eight users you can sit with and test your MVP prototype.
Conducting user tests in waves or batches will give you clarity, focus on every user, listen to them attentively and not become overwhelming.
Others
Measuring the product market fit is also a crucial tip that you must consider. To track performance identify the TAM or the total addressable market. It is the number of people who will benefit from your product.
You must consider product validation to know if your product is desirable and usable.
Before we wind up, don’t forget that once you achieve the product market fit with these tips, your job doesn’t end there! There’s still more.
You will learn a few things, your customer’s needs will change, and to achieve that, you must reevaluate the market conditions and meet your customer’s needs.
Conclusion
Once you follow the above six tips to achieve product market fit at the beginning of your product development, you are secure in that you will efficiently use the available resources.
You will also be confident throughout the product launching process.
All this will reflect when customers purchase your products.
We must remember that product market fit is not a successful kit everyone can apply.
Finding the perfect balance between customer base, value proposition, launching, and distribution will require several tests and adjustments to your product.
It’s true that in some cases, product market fit doesn’t become successful in the first go.
However, it’s also true that if you keep experimenting, trying, making tweaks to your product based on feedback, or sometimes even pivoting, it can help you find the product that thrives in the market.