How to find Product Market Fit: A step-by-step guide
Photo by DeepMind
Finding product market fit is the holy grail for any business. Without it, your startup will be left scrambling to get traction and could end up with an untenable business model. Use these three steps to find product market fit and learn how to maintain a strong presence in your industry.
1. What is product market fit?
Product market fit is when your product meets the needs of your target market. It’s the sweet spot between what your product does and what your customers want.
To find product market fit, you need to understand your target market and what they’re looking for in a product. This means market research, talking to potential customers, and testing your product with them.
Once you’ve found product market fit, it’s essential to continue working on it. This means always being open to customer feedback and making changes to your product based on that feedback.
It can be difficult to achieve product-market fit, but it’s worth it. You’ll have happy customers and a successful business when you have it.
2. Finding product market fit
The good news is, there is a path to finding product market fit. The bad news is it’s not always linear or fast. In fact, it can be a long and winding road with lots of dead ends.
But don’t despair! We’ve put together a step-by-step guide to help you find product market fit with a little hard work and perseverance.
3. Figuring out your target customer
This seems like a no-brainer, but it’s actually harder than it looks. You need to be very specific here. Who are they? What do they do? What do they care about? What are their frustrations? Behaviors? These are the kind of questions that you need to learn more about your audience. Segmenting your audience with buyer personas is a great way to organize this information.
Buyer personas are a well-constructed hypothesis of your ideal customer. They are a collection of pain points, spending habits, budgets, demographics, and needs. The best way to collect this information is to research your customers (both existing and ideal) more than the market. It is good to look to the market for research and inspiration, but product market fit is largely determined by how customer-centric it is. Organizations have failed by copying a successful model abroad and “cutting and pasting” in their market. The results were… unpleasant.
Understanding your target audience’s key pain points is one thing. Understanding the importance of that pain point is what makes a great product market fit. Your initial hypothesis might be correct that some frustrations were a part of your target audience’s life, but they might not be important enough to pay for.
4. Design an MLP (Minimum Lovable Product)
First things first, you might have been reading the subheader for this section and thinking, “do they mean MVP (Minimal Viable Product)?”
An MVP is designed with just enough customer knowledge to start the iteration process. An MLP is designed to have a deep understanding of the customer’s problem.
Once you know who your target customer is, you need to build something that they will actually want to use. Every successful MLP is built around 4 key principles
- Helps at least one target audience
- Addresses at least one pain point for that audience
- The UX is usable and comfortable
- Can be designed and launched quickly (this usually take 3-4 months)
HOW LEAN CAN AN MLP BE?
Well it depends. Airbnb didn’t have a payment portal in the early days. Payments were conducted in person. But that was then. Now there are more regulations and it depends on your industry’s restrictions. A fin tech MLP will need more development than an e-commerce MLP. Considering these factors, an MLP needs to be built enough to answer; does my product solve my customer’s problem?
5. Get feedback from users and customers (and act on it)
This is where things get tricky. You need to get feedback from people who are actually in your target market, not just your friends and family. Try reaching out to online communities or attending meetups related to your industry.
(Net Promoter Score) NPS – gives you an idea of how likely customer would recommend a product
(Customer Satisfaction Score) CSAT– gives you an idea of how satisfied customers are with the product/experience
(Customer Effort Score )CES– This is a measure of a product’s ease. The lower this number, the better.
Depending on your product’s stage, this type of feedback will vary wildly. Circling back to developing your target audience, you want to see how the product fixed or relieved their pain points.
ACTING ON CUSTOMER FEEDBACK
Determining which feedback to act on that’s where things get tricky. More data means more insights, right? Trying to listen and act on all the customer feedback collected is like building a camel by committee. The end result isn’t going to be helpful to anyone. This is where the previous steps will help decide what to iterate on and what to ignore.
Product market fit is the dream of any business, but achieving it can be tough. Hopefully, this step-by-step guide has given you a better understanding of how to find product market fit and what it takes to get there. Remember, it’s all about figuring out what your customers need and want and then delivering it to them in a way that meets their expectations. With the right approach, you can find a product-market fit for your business and take it to the next level.