12 Questions To Help You Determine Product/Market Fit
Updated: Feb 23, 2022
If you’re ready to launch your product and working on developing a go-to-market, make sure your foundation is built strong by assessing your product/market fit first before you figure out the channels, pricing and promotions.
What is a product-market fit, you ask?
Simply put, it is how well your product meets your customer’s pain-points, helps them achieve their desired outcome and adds value in a way no other business does.
Every brand - whether it's b2b or b2c, exists because it’s products and services sell. There is a market for it, there are customers who are willing to purchase and even recommend your offerings to others should they fall in love with it. When this happens, you know your product is not only well liked by your clients but there is magic in the air.
A high product/market fit will help your business succeed in the long run. It will make your selling and marketing easier, it will lower CAC and Churn rate as well as turn loyal customers into brand advocates.
A poor product-market fit conversely will impact your business negatively. With an offering that doesn’t fulfill your target audience’s underserved needs or add real value, chances are no matter what you do - how creative you get in your sales and marketing or how innovative you are in terms of technology, your product will have difficulty sustaining and growing sales on a continued basis.
Sometimes a business may confuse a few large contracts as a sign of a product- market fit but it may not be so. Let me share an example - I consulted with a Saas company recently, they had done $2million in ARR in the previous year but their sales wasn’t growing. We discussed their current sales and marketing efforts as well as their go-to-market strategy when they launched their product. After a few conversations we realized they hadn’t spent much time on achieving their product-market fit. They had developed their product, received funding and were in a hurry to start selling. But they had skipped a core step on their journey towards success - understanding their audience.
It’s important to understand that customers might try your product because they love your brand or perhaps your messaging was appealing, but real growth wouldn’t happen without an in-depth understanding of what they want and need.
Marc Andreesen who is often credited with popularizing the concept defines product market fit as : “Product/market fit means being in a good market with a product that can satisfy that market.”
Hopefully your product just isn’t based on a great idea instead on research about what the market wants. It helps your customers achieve the outcome they hope to achieve from an offering like yours.
Besides customers, you also want to think about Competition. Is there anyone else in the space who has similar offerings? Why should a customer buy your product over your direct or indirect competitors? You have to understand how you are well positioned to satisfy your customers.
Now I do want to point out that achieving a product market fit isn’t a 100% guarantee of success, although it does up your chances. There are other factors to keep in mind. You will still have to work on creating compelling messaging and promotions, find distribution partners and right pricing strategies. Further you will have to keep evaluating your product and iterating to match your buyer’s changing usage needs.
How to Achieve Product-Market Fit - Questions
Taking the time to validate your product against your customer’s needs - both functionally and emotionally is necessary for your success to last. You don’t want to be in a rush to launch, invest all of your resources only to find out that your product isn’t well received. That would be an expensive mistake to make.
Here are some questions to keep in mind as you think about for your startup-
Who are your target customers?
What are their current pain points and underserved challenges?
Once they discover your product, will they be willing to pay for your product? Or would they rather just take the free trial but cancel after?
When they engage with your product, how do they rate their experience? Are they happy or not happy?
If they are not satisfied, what features were they not happy with?
What changes or additions would they like to see?
Will they be willing to recommend you to others?
How would they feel if your product wasn’t available to use? Will they be very disappointed?
What convinced them to buy your product?
What is the main benefit of using your product?
Why will they use your product over your competitors?
What makes your product a must-have?
Creating product feedback loops, getting feedback from your early adopters on your website and social media, sending out surveys, evaluating the NPS score and listening via one on one customer conversations are some ways you can start collecting data.
Once you have the responses, you can use the popular 40% metric rule to see where you stand and what you need to do next. It states that at least 40% percent of surveyed customers indicate that they would be "very disappointed" if they no longer have access to a particular product or service. Alternatively, it could be measured by having at least 40% of surveyed customers considering the product or service as "must have".
If you have launched, also look at other product- market fit metrics such as - time on website, bounce rate, usage and product engagement rates, conversion rates and retention rate to see how your product is doing. Whether your customers are delighted or not , data will tell the story.