How to achieve product-market fit: top 5 tips for startups
You’ve created your project. And in your mind this project is the ultimate best thing our world has ever seen. Maybe it’s a brilliant dating app that can find user a match based on the color of their socks only. And everything’s going well but for reasons unknown people don’t use it as actively as Tinder or Instagram. Market appears to be too whimsical and no matter how good your product is, it won’t fit in it.
But don’t sweat it! This can still be fixed.
Product-market fit is this exact thing we’re talking about.
Expert from MassMedia Group, CMO Alexander Sendulskiy describes this definition somewhat like this:
"Continuing on this dating app example; product-market fit is when your product and the market have a match."
Imagine one wonderful moment when you walk down the street and suddenly hear that everyone is talking about your application. A guy in the line tells someone about a magnificent date he had thanks to your app; pair at the coffee table smiling happily when someone asks them how did they two meet each other, and they reply mentioning the dating app you’ve created. This is a tough thing to achieve but it’s not that complicated as it seems at first.
Definition of the product-market fit first came in sight in 2007, it was introduced by Mark Andreessen to determine the viability of the final product. The concept itself is commonly associated with the other marketing strategy known as “growth hacking”, which aims to raise a startup using other low-cost marketing methods (for example: social networks, target advertisement, etc). Reach the end of this article and you’ll know how to break into the market without breaking it. We’re giving (for free!) 5 irreplaceable tips for everyone who wants not only bring their product into the market but to make the market love it; just so you can get things right.
1. To explore
Explore the market before you start working. The world is evolving rapidly, and customers’ needs (your potential target audience) along with it. To reach so heavily desirable product-market fit you will have to explore your audience, and adapt to it constantly. This implies market segmentation to narrow the target audience to the optimal limit, determining the needs of the final product customer, and those features in your startup that will help satisfy them.
This is a long laborious process, and that’s why the creator of the concept warns you not to misbelief. You can’t reach the product-market fit simply by changing the icon image or interface color; it won't magically appear if you add cutie cats to your app. This process is effort required.
By the way, to educate yourself you can watch this video on how to better understand the concept from Andy Ratchif:
2. To check
So, you’ve decided. Your dating app already exists deep inside your thoughts with all the details and that amazing transformation it’ll make to the world. Focus on the priority needs of your target audience and focus your project on meeting those needs. Target audience you want to hook in the most are people who already in need of your project. The narrower it is, the more powerful market position your startup will be occupying. In short: if you’re creating a dating app, you need single people age from 18 to 35. If your dating app finds user a match by socks, you need people who are interested in socks (or at least wear them).
For example, MassMedia Group kindly provides you with data on the expected viewing rating of this article among target audience.The article is intended for target audience "startup". On the following graphics you’ll see the sacred secret; this is how we’re narrowing target audience for this particular article to work as well as it possible.
As we look closer, it becomes quite obvious which narrow target audience this article is designed for. So that is, most of the views we’re expecting to get from Seed and Pre-seed startups. The potential views from Series A are very low of the total, at the stages of Series B and Series C, D, E are almost insignificant.
Evaluate the market for competition: you will need to create something that will move you one position higher, one step ahead. Create something that’ll make you unique compared to the others, will fit perfectly into users world. Product-market fit is a thing that can’t go unnoticed, so the key to your success is being ready to check and change.
Remember that the parameters for determining the product market fit for different startups will also be different; it depends on how wide is a number of your clients. Someone will be able to acknowledge these indicators based on a few doesents of reviews, whike others will need hundreds.
3. To use MVP
Nobody pushes you to the leap of faith since the very beginning. Recall the time you spent at school or college; every diligent student always used the plan before starting to work on the term paper. Minimum Viable Product (MVP) is something like basic version of your product. Think over all its features, find something in it that will cling to the buyer the best. Whatever makes your application unique - make sure it’s the thing, and it will work with your audience.
Simply find your feature and work with it. The Feature with which it all starts for you should be born here. If you were the creator of Instagram, here you would have filters; Tinder - from here your first swipe would start.
We understand that the initial stage inspires you and it's easy to see the resounding success of your project. But take it slow; create an MVP so well that you yourself will enjoy using it. Think over even the smallest details so that later, based on the test results, you'd be able to change the application and fit into the needs of your direct target audience.
Most startups (about 70% according to Startup Genome) try to scale too fast across the market, and it's a common mistake. According to the same data, this is what determines such a large number of those who don’t enter the big arena (about 90%).
An advice: To measure the achievement of a product market fit, use the Net Promoter Score (NPS). This simplest questionnaire can help you find the percentage of your allies and haters. We all know that haters gonna hate, but ignoring criticism is obviously not something that will help you get maximum results. Invite your users to evaluate different aspects of your application from 1 to 10. This survey may include the following questions:
- How would you rate the UI and comfortable usage of the app?
- How would you rate app functionality?
- Are there any misses/loopholes?
- How would you rate our support service?
- How would you rate the product compared to other similar applications?
You can learn more about MVP by reading our article: How to create quality MVP for Startup.
4. To test
Here you can apply the means of the method of “growth hacking." For example, many startups choosing this method for themselves encourage users to test their project in an informal setting: in a coffee shop, at home or in any comfortable environment. This can help you save and reveal the potential of everyday usage of your app. When launching an alpha test try constantly listen to the audience and follow what they say about your product.
The creator of Instagram, Kevin Systrom, without which not a single smartphone can do today, not always was famous and rich; he even once worked in a vinyl music shop. The application started as just an app for students, but began to gain its popularity only after its founder came up with his first filter, and after that all the others features started rapidly increasing. The audience was captivated by the simplicity of the app, and with every new user it increasingly entrenched in the market.
But even after launching the application on a wide market, remember that the product-market fit is not permanent. It's as easy to lose it as your partner after your first date or left sock in the morning. Therefore, the product will have to be tested constantly, just as well as you'll have to adapt it to fit into the market needs.
An advice: keep an eye on the bounce rate. This term defines how many people remain in your application or on the page of your website. If your bounce rate is higher than 60%, your product is in serious danger. The reason for such a high indicator may be scanty or poor-quality filling of the resource, its slow operation or incorrect functioning of the interface elements. There’ll be a lot of stress but we believe you can handle it!
5. You’re ready!
Here it is - a clean version of your product. All tests were over, all bugs were fixed and all features were finished. Everything is ready to go, and so are you. May the force be with you, but do not forget all that we have taught you here. There're a few parting words we have for you before you go and conquer the universe.
First: even if you've reached a product-market fit, it won't save you from competitors. Yes, you have a product without which people cannot imagine their lives, but competitors can use what you’ve already created to surpass you. If you stop monitoring the market, you will give way to those who will do it better than you. CONSTANT VIGILANCE!
Benny Lewis, creator of Fluentin3months.com, says changes are drastically important if you want your project to fit in. To the question “What is the best way to attract customers to your site”, he answers:
"Nobody came up with anything better than writing quality content that people like.”
Second: 40% rule. The rule introduced by Sean Ellis, who was at the forefront of the popular Dropbox cloud service, works flawlessly. Its essence is to conduct a survey among the regular users of the application. One simple question that you should ask your target audience will help you see the real picture of your product’s life. Ask them, “what would you do if this application disappeared?”, And if at least 40% said that they would be seriously disappointed with this situation, then you are on the right track.
Check on yourself! What would you do if Instagram, Facebook, Uber suddenly vanished from the world?
Despite the constant fickleness of the market, it is still possible to create something that will fit into your customer needs. These simple rules can help you achieve what you want, and your imaginary dating app will become damn indispensable in our crazy world. The main thing, as always, is your idea, its relevance and all the forces that you are ready to invest in your brainchild.
The video of Mike Marples will help you organize all the knowledge about product-market fit you've took in this article, before you start working.
Conquer the universe carefully, change along with it, and we'll definitely hear about you in the not so distant future.