What is Product-Market Fit?
Introduction
The mass-market fit is a trending concept that is discussed widely by the startup community. And with reason, being the key to developing a product that effectively creates a value to the customers. We all have ideas. These are the thoughts that make us fix the current issues in the market or ameliorate our living standards. Nevertheless, do we know whether these ideas are needed by the market? And would they sacrifice to buy these ideas as solutions to their problems? Enter product-market fit. Most likely you have heard about it already but could not quite understand what it is. It is something that every start-up company is aiming at until they can even begin to talk of expansion and revenue generation. Reading this article, you will find out how product-market fit will motivate you to produce the best products that can meet the high demand of the market.
What is Product-Market Fit?
Product-market fit refers to a position whereby a firm provides the right product which will meet a need in the market. It is the first step to successful business where the company attains exponential interest on its product(s). This term was initially coined by Andy Rachleff (Wealthfront, Inc. co-founder). He was inspired by the investment personality of Don Valentine who is the founder of venture capital firm-Sequoia Capital. It would subsequently be popularized in the 2000s by venture capitalist Marc Andreessen, who was co-founder at Andreessen Horowitz. Product market fit would be achieved when you find a demand in the market, and the customers are ready to spend in order to meet the demand. Though this may not be a revelation, other startups fail to work because they have not put into consideration whether there are enough customers who are ready to purchase what they are offering.
Product-market fit has a greater burden on the expansion and sustainability of a company. Early-stage companies or startups must focus on the way to discover product market fit prior to building a product.
Product-Market Fit Indicators
Because businesses vary in terms of their specific niche, there is no product-market fit strategy that fits all. But there are some indications that you are either on the path of market fit success or not. Note these signs:
Customer Engagement
What I mean is that you may have metrics indicating that more customers are using your products with the additional functionalities. This means that they find your product as the solution to their problem. This is excellent since it will enable your customers to interact with it more often. The same applies to the customers who impale them with emails or calls in a bid to clarify their issues. It may just imply that they rely on your products to achieve their business. Regarding product-market fit, it has got elbow room to retain and any problem identified can be addressed at an early stage.
User Acquisition
Typically, user acquisition of new products is costly because it is long and tedious. But what about the case where you have not incurred additional money in user acquisition, but conversion rate has started to increase significantly. It was just an indication that more users are satisfied with the value of your product.
Expansion of a Team
Your business will require additional skilled individuals to come and work in the team. When the team size is increasing, it is a clear sign of healthy business. Moreover, a bigger staff also provides an opportunity to increase the demands of an expanding market, which would justify your product-market fit.
Repeat Business and Revenue Growth
When you can persuade people in a free version of the product to purchase a paid version, then you are doing the right thing of delivering the best value to the customers. Not just will upgrade or renewal result in a growth to revenue, but that too, you will be assured that your loyal customers are here to stay.
Ready to Achieve Product-Market Fit?
Start building your minimum viable product and validate your market demand today!
Start building your minimum viable productWhat is the Way to Achieve Product-Market Fit?
Know your Target Customer
Who are the most likely to benefit most by your products? One should find out who your target customers are at the inception of your business. Target your market to give your target customer description. Basically, you have to profile your customers, to ensure that they clearly know who they are creating this product to. To achieve that, you have to develop a clear buyer persona. It is a research-supported profile that is a description of your target customer. It is also a semi-fictional character of your target audience who comprises their demographics, interests, personalities and characteristics. Buyer personas assist your team in knowing your customers better, which enables your team to make them the focus of your product planning and creation.
Define Value Proposition
Decide what problems of your customers your product can solve. You can not solve all the challenges that the customers have, so you need to concentrate on certain issues that your product may help. Value proposition is associated with the value a company establishes that it is going to develop once customers decide to purchase their products. It points out the important features that will make them superior to their competitors.
Decision on Minimum Viable Product
The other important thing that is needed in order to gain product-market fit is to decide on your minimum viable product (MVP). When you have your value proposition, an MVP can help you to confirm that you are on track with your product. A minimum viable product is a term that seeks to offer a product possessing sufficient working features that will be valuable to the intended customers. You will add more iterations and other features as you go until you get to the appropriate MVP that your customers will consider palatable.
Measure Product-Market Fit Efforts
You can have no idea whether the strategies are working or not unless you measure them. Identify all important measures that will monitor your performance. One of them is measuring your total addressable market (TAM). It is also referred to as the total available market, which is the total market opportunity that is present of a product or service. TAM = the number of potential customers x average revenue per user (ARPU) When you now possess your TAM, you can determine a part of your TAM as your present customers.
Remain the same
There will come the day when you will have achieved the highest product-market fit. Nevertheless, you should not assume it is the end of the road and you will always remain that way forever. Your target market will keep on changing with the passage of time and hence so should you. Never be complacent, constantly check the performance of the market and make sure that you are able to meet these requirements.
One of the possible methods to achieve this is to create a survey. Get customers to give their thoughts about your product and how it can help them in future.
Stay in the Head of your Customers
In brief, product-market fit occurs when your target customers are totally aware of the value your product provokes. Therefore, they will spread their experience with the product more frequently and will also become your sales-people, without charge! Among other things, one should remember that product-market fit does not occur in a day. Your product (or service) might have to undergo a number of tests before it becomes the most-desired product which the market cries out to have.
- You need to utilise the feedback of the current users as a way of enhancing your tests
- Additionally, modify this idea in accordance to the data collected and be ready to switch the course when the need arises
- When the customers form the center of your business plans, your job is made easier
Tags
Introduction
The mass-market fit is a trending concept that is discussed widely by the startup community. And with reason, being the key to developing a product that effectively creates a value to the customers. We all have ideas. These are the thoughts that make us fix the current issues in the market or ameliorate our living standards. Nevertheless, do we know whether these ideas are needed by the market? And would they sacrifice to buy these ideas as solutions to their problems? Enter product-market fit. Most likely you have heard about it already but could not quite understand what it is. It is something that every start-up company is aiming at until they can even begin to talk of expansion and revenue generation. Reading this article, you will find out how product-market fit will motivate you to produce the best products that can meet the high demand of the market.
What is Product-Market Fit?
Product-market fit refers to a position whereby a firm provides the right product which will meet a need in the market. It is the first step to successful business where the company attains exponential interest on its product(s). This term was initially coined by Andy Rachleff (Wealthfront, Inc. co-founder). He was inspired by the investment personality of Don Valentine who is the founder of venture capital firm-Sequoia Capital. It would subsequently be popularized in the 2000s by venture capitalist Marc Andreessen, who was co-founder at Andreessen Horowitz. Product market fit would be achieved when you find a demand in the market, and the customers are ready to spend in order to meet the demand. Though this may not be a revelation, other startups fail to work because they have not put into consideration whether there are enough customers who are ready to purchase what they are offering.
Product-market fit has a greater burden on the expansion and sustainability of a company. Early-stage companies or startups must focus on the way to discover product market fit prior to building a product.
Product-Market Fit Indicators
Because businesses vary in terms of their specific niche, there is no product-market fit strategy that fits all. But there are some indications that you are either on the path of market fit success or not. Note these signs:
Customer Engagement
What I mean is that you may have metrics indicating that more customers are using your products with the additional functionalities. This means that they find your product as the solution to their problem. This is excellent since it will enable your customers to interact with it more often. The same applies to the customers who impale them with emails or calls in a bid to clarify their issues. It may just imply that they rely on your products to achieve their business. Regarding product-market fit, it has got elbow room to retain and any problem identified can be addressed at an early stage.
User Acquisition
Typically, user acquisition of new products is costly because it is long and tedious. But what about the case where you have not incurred additional money in user acquisition, but conversion rate has started to increase significantly. It was just an indication that more users are satisfied with the value of your product.
Expansion of a Team
Your business will require additional skilled individuals to come and work in the team. When the team size is increasing, it is a clear sign of healthy business. Moreover, a bigger staff also provides an opportunity to increase the demands of an expanding market, which would justify your product-market fit.
Repeat Business and Revenue Growth
When you can persuade people in a free version of the product to purchase a paid version, then you are doing the right thing of delivering the best value to the customers. Not just will upgrade or renewal result in a growth to revenue, but that too, you will be assured that your loyal customers are here to stay.
Ready to Achieve Product-Market Fit?
Start building your minimum viable product and validate your market demand today!
Start building your minimum viable productWhat is the Way to Achieve Product-Market Fit?
Know your Target Customer
Who are the most likely to benefit most by your products? One should find out who your target customers are at the inception of your business. Target your market to give your target customer description. Basically, you have to profile your customers, to ensure that they clearly know who they are creating this product to. To achieve that, you have to develop a clear buyer persona. It is a research-supported profile that is a description of your target customer. It is also a semi-fictional character of your target audience who comprises their demographics, interests, personalities and characteristics. Buyer personas assist your team in knowing your customers better, which enables your team to make them the focus of your product planning and creation.
Define Value Proposition
Decide what problems of your customers your product can solve. You can not solve all the challenges that the customers have, so you need to concentrate on certain issues that your product may help. Value proposition is associated with the value a company establishes that it is going to develop once customers decide to purchase their products. It points out the important features that will make them superior to their competitors.
Decision on Minimum Viable Product
The other important thing that is needed in order to gain product-market fit is to decide on your minimum viable product (MVP). When you have your value proposition, an MVP can help you to confirm that you are on track with your product. A minimum viable product is a term that seeks to offer a product possessing sufficient working features that will be valuable to the intended customers. You will add more iterations and other features as you go until you get to the appropriate MVP that your customers will consider palatable.
Measure Product-Market Fit Efforts
You can have no idea whether the strategies are working or not unless you measure them. Identify all important measures that will monitor your performance. One of them is measuring your total addressable market (TAM). It is also referred to as the total available market, which is the total market opportunity that is present of a product or service. TAM = the number of potential customers x average revenue per user (ARPU) When you now possess your TAM, you can determine a part of your TAM as your present customers.
Remain the same
There will come the day when you will have achieved the highest product-market fit. Nevertheless, you should not assume it is the end of the road and you will always remain that way forever. Your target market will keep on changing with the passage of time and hence so should you. Never be complacent, constantly check the performance of the market and make sure that you are able to meet these requirements.
One of the possible methods to achieve this is to create a survey. Get customers to give their thoughts about your product and how it can help them in future.
Stay in the Head of your Customers
In brief, product-market fit occurs when your target customers are totally aware of the value your product provokes. Therefore, they will spread their experience with the product more frequently and will also become your sales-people, without charge! Among other things, one should remember that product-market fit does not occur in a day. Your product (or service) might have to undergo a number of tests before it becomes the most-desired product which the market cries out to have.
- You need to utilise the feedback of the current users as a way of enhancing your tests
- Additionally, modify this idea in accordance to the data collected and be ready to switch the course when the need arises
- When the customers form the center of your business plans, your job is made easier
Tags
