“Product-market fit,” defines startup coach and investor Marc Andreessen, “means being in a good market with a product that can satisfy that market.” When an entrepreneur recognizes a need in the market and builds a solution that customers want to buy, that’s product-market fit.
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The advantages of product-market fit
Discovering product-market fit assists validate and laying the groundwork for your business.
Product-market fit offers you:
- Which features or elements your product requires to satisfy audience expectations/demands
- What demographics are possible to care about the product, and why
- How you can get prospects’ attention and encourage them to purchase the product
- What steps do you require to drive growth and turn your satisfied buyers into advocates?
Examples of product-market fit
Businesses can utilize various metrics to analyze the product-market fit. Simple examples include:
● 40% rule
This straightforward metric specifies the impact your product makes on the market — or, instead, the effect it would make if it were no longer available.
● NPS
NPS (Net Promoter Score) is another critical metric for finding your product-market fit.
NPS measures the number of people willing to suggest your product to others. Those that show they would be happy to share their experience and lead fellow customers to purchase can aid drive new customers to your business.
● Customer lifetime value
This metric specifies the financial worth of each customer. If you have many buyers with significant Customer Lifetime Value, you have reached a satisfactory product-market fit.
● Returning visitors
This metric is a website metric that links with Customer Lifetime Value, though different. Returning visitors may or may not buy.
For instance, prospects who see an ad or suggestion from another buyer may visit your site to examine the product. They may come back once, twice, or multiple times before converting. If they resume return after making a purchase, their Customer Lifetime Value could potentially be high.
● Media interest
Finally, another instance of discovering product-market fit is attaining traction in the media. Are reputed websites publishing blog posts or videos about your product? Are journalists reaching out for interviews?
Construct alerts for mentions of your business and product online. Attempt to track people’s responses. If this seems a little hard to investigate, you can always count on a good digital marketing agency to do it for you.
How to achieve product-market fit
It is possible to create this in various ways. You can adapt your main product to new markets, specify strong market demand, repurpose or reorganize old ideas, go where the market is, or even do a new service.
Dan Olsen, Lean Startup consultant, delivers six steps for a lean product procedure:
1. Specify your target customer
Who do you think will purchase your products and services? How will it meet their requirements? You may not know precisely who your target customer is at first, but you can discover through market research. And by utilizing that research to make customer personas, which are fictional versions of those real people, you can expect your target customer and make products for them.
2. Identify underserved customer needs
It’s not easy to sell a product or service in a market full of solutions that people are already happy with. You can’t have a breakthrough in fields like digital marketing services. A better option is to discover what they’re unhappy with. How can you aid them in fixing it?
3. Describe your value proposition
Whenever you’re thinking about product market fit ask yourself: How will your product meet your customer’s requirements better than any current option? Will it deliver better quality? A more reasonable price? New services?
4. Define your Minimum Viable Product (MVP) feature set
Determine the minimum features you like to include on your first product rollout. Keep it straightforward and possible.
5. Make your MVP prototype
Don’t worry about making your complete concept—instead, make a bare-bones product. You can repeat that after you get customer feedback.
6. Test your MVP with customers
Show your product to a pick group of your possible customers. Get feedback from customers. Ask them what they like about it and what they don’t like. What would they want to see instead?
How is Product-Market Fit Measured?
Andrew Chen, a venture capitalist, delivers some signals that a company is heading in the right direction with its offering:
- When surveying possible customers or letting them test your product, does some segment point they will switch to your product?
- Are some users who have left similar products on the market willing to try yours?
- Do people accurately group your product with reasonable competitive offerings when user testing?
- Do users show an awareness of your product’s differentiators or particular value propositions?
Conclusion
All in all, this concept may seem straightforward. Still, it’s essential to make sure there are enough people who desire what your business delivers and to specify your value proposition. As said there are different methods to fulfill this task but writing better content might be the easiest one to start with.
