What is Product-Market Fit?
Product market-fit is one of the first steps in creating a successful business. The goal of an entrepreneur is to create the solution to a problem that customers will want to buy. Product-market fit occurs when the product satisfies the market demand. To have product-market fit you need to be in a good market, have a good product, and satisfy the needs of your target market. The goal is to serve the right customers with the right product.
Why is it Important?
Many companies have failed because they do not have a proper product-market fit. For any business to survive, it needs people who are willing to pay for the product or service. Product-market fit also means lower acquisition costs, higher customer retention, and faster growth. Without product-market fit, you do not get the data needed to drive your idea.
How to Achieve Product-Market Fit?
1. Identify Target Customer
You can figure out your target customer through market research. Once you know your target customer, you and your team can create buyer personas so everyone knows who the ideal customer is. This will help you better understand your target customer and their needs.
2. Understand Major Customer Needs
Here you want to focus on the major needs of the customer. That is what will reel them in. Straying away from the major needs will push you further from reaching product-market fit. Another way to look at this is to look at what the customers are unhappy with. Doing so will help you figure out a solution that makes them happy.
3. Know Your Value Proposition
You want to figure out your advantage against your competitors. That way you can outshine your competition and gain more customers. Your value proposition could be better quality, more affordable price, newer services, and more.
4. Specify Your MVP
MVP stands for Minimum Viable Product which is basically a proof of concept. Here you want to expand your value proposition to a tangible set of features. Keep them simple and do not go too overboard to the point that could overwhelm the customer.
5. Create MVP Prototype
After specifying your MVP, you want to create the prototype. A prototype is a representation of your product without actually creating it. An example is creating the mock-up screens of your app without creating the actual application.
6. Test MVP Prototype with Potential Customers
Finally, you want to test the prototype with potential customers. This will let you find out whether or not customers find the need for the idea as well as if they like it. You can take the feedback from this and apply it to your product or service to make it more appealing to the target customer.
How to Measure it
You can measure your product-market fit by doing surveys and looking at data. Customer feedback is especially important here because without it you will not know if your business is successful. The types of data you can look at has to do with if customers are buying your product or service, if there are returning customers, are people spreading the word about your product, and if customers are enjoying your product overall. All of these questions can be collected by directly looking at the data or through surveys.
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