What is Product Market Fit

Product Market Fit(PMF) is the Holy Grail that every startup founder is in search of. And once they find it the probability of the startup taking off like a rocket increase tenfold 🚀 🚀 🚀 🚀 .

So what is it all about? What is the definition of product market fit? In this blog I will take you through what I think product market fit means. Your interpretation of it might be a little different but the core remains the same.

What does Product Market Fit Mean

I can’t really say that if “X” number of customers use your product and “Y” buy it you have reached market fit. It’s not black and white like that. It’s subjective but it’s also data driven. You must be thinking that now I’m just saying contradictory things.

When your phone doesn’t stop ringing and everyone wants to use your product is when you have reached product market fit. By everyone I don’t really mean everyone. It is the people who you want to use your product. Well even that is not accurate. Sometimes you target your product to a certain group of users but it ends up becoming popular among others.

When you are unable to keep pace with the speed at which customers are onboarding, giving feedback, wanting more of  when you have achieved product market fit.

When the market is pulling your product versus you having to push it down people’s throat is when you have reached market fit. It’s the state where the demand outstrips the supply or when you are continuously playing catchup. You are growing faster than you are able to scale your infrastructure.

When any of this happens it means you my friend have achieved Product Market Fit. It’s a great feeling. Achievement Unlocked🏆. But it’s just the beginning.

Why do we need Product Market fit

The concept of product market fit is very popular in tech circles. But the truth is that businesses have been applying it from the beginning of time. They just don’t have a name for it 😂 . It’s a simple mathematical calculation. It’s all about resources. We all have finite resources at our disposal. Unless you are a billion dollar company. History has shown that even they have their limits. Unless you are a maverick, an outlier whose life mission is to see their idea through and it is either that idea or nothing else🤪

You need product market fit because:

You will always find examples that are contrary to what I have written here. People who have defied odds and build companies when it doesn’t seem possible. But they are far and few. And an exception rather than a rule.

How to achieve Product Market fit

There isn’t one, two or three things that can help you achieve product market fit. No magical pill in this case💊 . But there are things that when people do overtime they are able to either achieve product market fit or realize that their product isn’t right. And that is fine too. Let’s look at things you should keep in mind when you want to find out where your idea stands.

Understand the Problem

First and foremost you need to understand the problem. Actually that isn’t very accurate. Let’s try again. First and foremost you need to find whether what you think is a problem is actually a problem. Do you think this is a problem because this is something that has been irritating you for a while. Or are you able to find other people who also look at it as a problem.

Having a firm grasp on what you are going to solve is the very first step towards building something that will be successful. There can be a few different scenarios here:

Write a problem statement. It should answer two questions:

Value Proposition

This is why you think people will buy your product. This is what differentiates you from the pack. Your value problem should be unique. Users should be able to pick it up easily. It shouldn’t be easy to replicate.

Examples of Value Proposition:

Write down what you think is your value proposition.

A clear value proposition is easier for customers to understand. If your target user hears your marketing message and says “Oh, that makes sense. I get it!” it means that your value proposition is spot on.

Value proposition is not a slogan, it’s not a catchphrase, it’ss not a tagline. You can create a lot of them if you are clear about your value propositionThere are lots of ways to do market research and it should not

Write down what you think is your value proposition. Use the following format.

You should use because .

The value proposition should be in plain english minus all the marketing jargon or trending keywords.

Research the market

A lot of the things we are talking about will happen in parallel. It’s not that you first come up with your problem statement and then the market. You must have looked at the market while writing the problem statement. The reason why we have different sections for each of these is so that you spend enough time on all of these. Don’t ignore a section if you find it boring or tough and just want to start building things. There are lots of way to do market research and it should not be limited to sitting in front of your laptop and googling stuff. Even though google can answer almost everything 🤣 .

Some things you can do:

Identify the customers

Find and talk to people you think are going to use your product and find it useful. Create a customer persona. Include information on:

Learn to empathize with them.

Different qualitative and quantitative methods exist that can help you collect this information:

What matters is the quality and not the quantity of your interaction with the user. Make the effort to come up with questions that will help you make decisions. Be cognisant of the everyone’s time and customize your interaction with each of them accordingly,

Build your MVP(Minimum Viable Product)

This is the fun part. You get to apply all your learnings to build something for the users. Your first MVP will most likely not be your last. It’s an opportunity to learn, iterate and repeat. At the end of each MVP you will get a little more clarity on how far your idea is from reality. We will learn how to evaluate the success or failure of your MVP in the next section.

If you want to learn more about MVP then check out our MVP Blog.

How to test Product Market Fit?

Once your product is out it’s time to sit back and relax. Lol No. This is when the real fun starts. Assessment of product market fit is important. You now have a chance to see how users are responding to what you have built. Insights from their interaction(or lack of it) will tell you what is the future for your product. There are three possible outcomes from the MVP:

There could be a lot of different reasons for each of the above outcomes. To find it out you need to look at your data. Here are some pointers.

Who is using the MVP?

If the people using the MVP are the people who you thought would use it then you were correct about your target audience. Your messaging resonates with them as they are making their way to your website. But if the people who are using your product do not match your target audience then you have a problem. You need to find the root cause of this.

How many are using the MVP?

You might have the perfect MVP but if not enough people are using it then you will never be able to get the feedback you need to improve. You will have to look at the different stages of the funnel to see where the customer drop off is.

How are they using it?

People find creative ways to use the product. Sometimes not the way it is intended to be used. At other times they have expectations that the MVP does not fulfil. When evaluating feedback keep in mind the following:

Are they telling their friends about it?

This is an important signal that tells you if you are close to reaching product market fit. If people really like your product they will tell others about it.

How active are the users?

Are people interacting with the product or are they just signing up without spending much time on the product after.

Conclusion

Sometimes you might do everything possible and still fail. You really believe in your idea but it just doesn’t take off. You are not able to find your product market fit. All I can say is to give it your best shot/s. Your product might not have a market to fit in right now. Sometimes the time just ain’t right and the market isn’t ready. It’s tough to put yourself out there, to become an entrepreneur. So don’t give up. Take what you learnt and move on. You live to fight another day. Like I said. Sometimes the time ain’t right.