Nazuk Jain

What’s Product Market Fit?

Nazuk Jain -

In your path to become a top tier Product Manager you will hear this term a lot, you better get familiar with it if you want to succeed.

  • Introduction
  • Definition of Product Market Fit
  • Why is it so important?
  • How to know if your product has Market Fit?
  • How to achieve Product Market Fit?

Introduction

“The only thing that matters is getting to product/market fit.” - Andy Rachleff's Corollary of Startup Success (source Marc Andreessen).

A phrase that may sound too solid, convincing for some, overwhelming and even devastating for others thinking that the path to a successful product is the people and the team building the product. But coming from someone with the experience of Andy Rachleff… the man's got to be right isn't?

With this introduction I wanted to make sure that this will not be just one more article you read somewhere. It has to be the article that opened your eyes to an empirical demonstrated reality, to the truth.

We love to be involved in the creation of really cool products, being part of the entire development process, even being the founders of a startup with a great idea! We love getting things done in the best way possible, our team is the best of course, the best Product Manager, the best Software Engineers, the best Designers and someone with a lot of hands on experience come at you and says “yeah… that’s nice but you need product market fit or you can start looking for a new job because this is not going to work”.

Let’s define what Product Market Fit is

It’s pretty simple actually, product market fit is the ability that you, your product or your company has to satisfy the demands of a given market.

If you have a product that will be good enough for the market to buy it consistently, you have product market fit.

If you have the best product in the world, in a market that is not demanding for it, and will never demand it, well, you still can use the product as a great experience for your CV right?

Experience and thousands of startups that were left in the way have already made it clear that it’s not about the technical proficiency of your team, or the excellent quality of your product, increasing your chances of success is about achieving product market fit. And that’s what we are going to talk about next.

Why is it so important?

Having product market fit is important for you as a Product Manager, because it is the only sign you will have to know if you have a chance of being successful with your new product.

You need to know if there is a market for the product you are envisioning and trying to build. Best case scenario, you are able to get orders and sign contracts with customers after showing them designs, mockups, dummy storyboards and imperfected MVPs.

This way you know you are in a good position to move forward, it means you have solved a problem that needed to be solved for a big market, a market with a lot of customers ready to take the product out of your hands.

How to know if your Product has Market Fit?

There are several ways to know if your product has market fit. From the more basic tools like seeing and listening to what’s going on with your product and the customers to a little bit more advanced mechanisms.

Survey and Market Feedback

Signs that you are not reaching product market fit:

  1. If it looks like customers are not getting added value from your product, the problem you intended to solve for them seems to still be there.
  2. The market is not talking about your product, the word is not spreading about it, usage is not increasing at the pace you would like to.
  3. Reviews, either from posts on social media, articles, lists of products aiming to solve similar problems and customer feedback is not positive or doesn’t look like they will generate great buzzing about your product.
  4. Several deals that were supposed to be closed with potential customers fall out, and sales are difficult or take too long.

In the other hand, you can detect that product market fit is happening when:

  1. Your sales are going really well, the customers are acquiring your product as fast as possible.
  2. Usage of the product is going up steadily.
  3. You have the money to hire more staff to cover new needs or to take care of the increasing load of work generated by usage and buyings of the product.
  4. You start to have presence in events, talks, conferences about startups and how to be successful when coming up with ideas, new products and new companies.

Analytics and frameworks

1. The 40% metric says that if 40% of surveyed customers express disappointment about the idea of not being able to use or have access to your product anymore you have reached product market fit. Or the opposite use of it is, if 40% of surveyed customers consider your product like a must have product or service then you have reached product market fit.

2. A more advanced way for understanding how your product is doing regarding product market fit is the use of analytics and KPIs. If the KPIs that were selected to understand how well your product is doing in the market are returning great numbers then you are reaching or you may have reached product market fit.

How to achieve Product Market Fit?

This is easier said than done, but we have some guidelines to get there, to achieve so desired product market fit.

  1. Focus on the market, don’t allow yourself to fall in love with the product, but fall in love with the opportunity, with the market, if you need to make adjustments to the product, do it, just pursue the product market fit, that’s the number 1 priority.
  2. Worry about launching the first version of your product, don’t focus on excellence, quality or growing your team, worry about releasing a first version of the product to get customer’s feedback so you can make needed changes to increase sales and closed deals.
  3. Give steps through the use of an MVP, if you are in a really good market an MVP will get you the customers and the sales you need.
  4. Experimentation: using MVPs you will be able to run experiments and get results that are going to be of great help for moving fast, adjusting your strategy, and the direction you are going in order be in alignment with your potential customers needs.

Summary

- Product Market Fit, the key to success.
- Why, as a Product Manager, you should work hard to achieve Product Market Fit?
- Achieving Product Market Fit is the only thing that matters, period.
- How to know if you are close to achieving market fit or not.
- Recipe to increase your chances of getting to Product Market Fit.