Is your new product fitting your target market? Does your product make people desperately want to buy it? Why wouldn’t it? After all, you have put so much thought and effort into your new product. The reality is this is all not so simple after all.
What is Product/Market Fit?
The concept of Product/Market Fit, first introduced by Marc Andreessen, has become well known in the startup world. It refers to the degree to which a product satisfies a strong market demand. Understanding Product/Market Fit is crucial to predicting the success or failure of a business.
The difference between a large portion of the market wanting to buy your product and having only a small fraction of potential customers convinced is the difference between life and death for your business.
Why is Product/Market Fit so nasty?
You started with a great idea. You did some market research. You know your idea is special. You have spent hundreds of hours building your first MVP, and you celebrated after your first few customers bought your product. Does all this mean you have reached Product/Market Fit?
There is still a high risk that your startup will fall into what Ben Wiener calls the Black Hole of “Meh”. According to Ben, the state of Product/Market Fit is not a binary “yes or no” question but rather varying degrees of it. This is what makes the question complicated. Product/Market Fit can be thought of as a score indicating what portion of your market will actually buy your product. You might succeed with 80%, or maybe with just 55%, but you will probably fail if you reach just 20%. The market reacts to your product with just a “meh”, which makes you suffer even longer because you see something happening, but it is just not enough to survive.
Finding Product/Market Fit by failing faster
There is a lot you can do to make sure you do not get sucked in into Ben Werner’s Black Hole of “Meh”.
Step 1. Know your customer
You need to define the attributes and characteristics of your target users, which we also call “the persona.” This is the best way to describe your target customer so that everyone who works on the product understands for whom they are designing and building that product.
Step 2. The underserved customer needs
Clearly understand the customers problem and the need he has to overcome it. This understanding lies at the core of identifying a business opportunity in order to create value for customers.
Step 3. Bring in your value proposition
Ultimately the value proposition is what makes people pay for your product. People buy hammers not because they have a wooden handle and an iron head. They buy hammers because they want to put nails into walls.
Step 4. Show me your product
Now is the moment to present your product and to show how you plan to solve your customers’ problems with it. Explain what unique features of your product will delight your customers and how your product will outperform the competition.
Step 5. Measure, analyse, and iterate
Test your product with real customers. See how they react. What kind of commitment do they show? Are they willing to pay for it? Are they even recommending your product to others? This is a crucial phase where you can mitigate mistakes. Don’t fall in love with your product. Be as neutral as possible. If you fail, do so quickly, and move on. Change how you present your value proposition, your features, your pricing, and measure again.
Finding Product/Market Fit is tough. The best approach to lower your risk is to test your product as quickly as possible and measure real customer engagement. You can do that with just a landing page, even before expending precious resources building your first MVP. If you want to know more about it, check out my latest post The Great Escape - Don’t belong to the 90% of startups that fail!.