Product/Market Fit: What It Means and How to Measure It in 2018
One of the biggest challenges in growing your business is finding product/market fit.
In addition to transforming the way you market your product or service, finding product/market fit completely changes (and improves) the product development process.
With good product/market fit, you offer a product that you know your customers want, ultimately, making it extremely easy to convince them to buy it. But like with anything, without a thorough understanding of product/market fit, you’re basically guessing.
What is Product/Market Fit?
The term product/market fit was originally coined by entrepreneur, investor, and software engineer, Marc Andreessen:
“Product/market fit means being in a good market with a product that can satisfy that market.”
A “good market” is one that’s either large enough or has enough demand to be profitable – ideally both.
A small market can be profitable if there’s a high demand for what you offer and a massive market might completely ignore your brand if your offer doesn’t spark interest.
In other words, product/market fit means you are offering something that a group of people needs and there’s enough people in that group to provide sustainable growth for your business.
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Why is Product/Market Fit Important?
Product/market fit is the golden rule for any startup – entrepreneurs need it or their concept will fail. However, defining product/market fit isn’t as easy as it sounds because it requires a deep understanding of the market you are targeting.
Product/market fit is more than simply providing value, it’s about providing the right solution to the right person and being able to clearly explain why your product is valuable to them.
You haven’t successfully achieved product/market fit until your prospects can tell you why your product is valuable and then offer to buy it.
The Quick Way to Establish Product/Market Fit in Your Marketing Message
Finding product/market fit is usually a time-consuming process.
Don’t get me wrong, it’s well worth the time required, but I know how impatient marketers can be and you want to get started now.
While it doesn’t go to the full extent required to develop products your customers can’t live without, the following method does help you establish product/market fit with the products you already offer.
Introducing The 8-Question “Before/After” Grid created by Ryan Deiss:
“Before you create or market another offer — go through this exercise.
Ask yourself these 8 questions…
- What does your prospect HAVE in the “Before” state?
- What does your prospect HAVE in the “After” state?
- How does your prospect FEEL in the “Before” state?
- How does your prospect FEEL in the “After” state?
- What is an AVERAGE DAY like for your prospect in the “Before” state?
- What is an AVERAGE DAY like for your prospect in the “After” state?
- What is your prospect’s STATUS in the “Before” state?
- What is your prospect’s STATUS in the “After” state?
For example, we’ve done some consulting for a company that offers a product to parents of babies.
It’s a little, squishy baby bath tub you place in a sink or in a larger bathtub. It keeps the baby comfortable and safe while the parent bathes them.
But it does so much more than that.
As a father of four, I know that bath time for baby is a scary, frustrating experience.
Customers that buy this soft, safe baby bathtub are transformed…
- From HAVING a cold, hard bathtub to a warm, squishy bathtub.
- From FEELING scared and frustrated to confident and in control at bath time.
- From having an AVERAGE DAY with a terrible bath time experience to making bath time a breeze.
- From a STATUS of unappreciated as a mother to a “super mom.”
Average marketers only articulate what a customer will HAVE if they purchase their product or service. Great marketers speak to how a customer will FEEL, how their AVERAGE DAY will change, and how their STATUS will elevate.
With this simple 8-Question “Before/After” Grid, any half-decent copywriter will be able to create a marketing message that will have an impact.”
Now that you have an effective strategy for showing product/market fit in your marketing, let’s dive deeper into the process of finding product/market fit.
5 Steps to Finding Product/Market Fit
When it comes down to it, product/market fit is really product/people fit. Your market is a group of people and to successfully sell to those people you need to understand them very well.
There are a lot of tactics you can use to find product/market fit, but the most important one is investing the time it takes to truly understand the people you’re marketing to.
1. Develop Buyer Personas
Understanding a particular market really means understanding the people in that market. In the Inbound Methodology, we call the ideal target customer your “buyer persona.”
Your company can have multiple buyer personas, but you should only focus on one at a time with each offer. Each buyer persona should include:
Basic Details About Persona's Role
- What is their role at the company?
- Are they a decision maker?
- What is their title?
- What knowledge and tools are used in their job?
Key Information About the Persona's Company
- How large is the company? (Employees)
- How long have they worked there?
- Annual revenue?
Relevant Background Info
- What associations and social networks do they belong to?
- Educational background.
- Are they married?
- Do they have children?
- What are their hobbies and interests?
- Age range
- Household income
Personal and Professional Goals
- What are they responsible for?
- What does it mean to be successful in your role?
- What do they wish to achieve?
- Long term goals?
Challenges to Persona’s Success
- What are their biggest challenges?
- What is keeping them from being successful?
- What type of solutions are they looking for?
You can learn more about creating buyer personas here.
2 . Talk to Your Buyer Personas (In Real Life)
Once you’ve identified a buyer persona, you want to get to know them as well as you can. This requires you to actually talk to them.
Although it’s convenient to chat on social media or in industry forums, you should look for opportunities to meet these people in person or at least talk with them on the phone.
Your goal isn’t to pitch these people on your product or service, unless they ask for information about your company, of course. Your goal is to identify all of the areas where your product can provide value.
You also need to learn how your buyer persona talks about the problems they need to be solved or the goals they want to accomplish. Their language creates your perfect marketing message.
3. Understand What Your Customers Need Now and in the Future
Product/market fit changes as your market changes. To maintain consistent product/market fit, you have to anticipate changes and be flexible enough to move with new trends.
Too many companies have failed because they misunderstood product/market fit – Blackberry is a good example.
The same quality that originally perfected their product/market fit, the full keyboard, was the exact quality that turned their customers away because their needs changed.
Stay up-to-date by reading (and participating in) industry blogs, surveying customers, and actually talking with prospects in your market so that you can be better prepared to make changes as needed.
4. Focus on a Specific Value Proposition
Although it’s very tempting to promote as many features as possible, it’s more effective to drill down on the one, most important feature. You have to identify the quality that your buyer personas can’t live without or that your competitors can’t provide as well as you.
There will be plenty of time to share more features with your prospects and they will be more interested once you’ve already got their attention.
To see this in action, take a look at each new iPhone launch by Apple. Each new version of the phone has dozens of new features, but Apple usually focuses on one feature, such as Siri or the screen size.
Ask yourself what’s the biggest concern of your buyer personas right now? That’s where you find your value proposition.
5. Establish Credibility for Your Brand
Credibility is a powerful marketing tool. Finding product/market fit is much easier when your buyer personas respect your brand.
Granted, poor product/market fit can also ruin your credibility, so don’t think your brand is too big to fail because you’ve won the market’s respect.
The best way, and also the quickest way, is to tell a story. What is your brand all about? How did your product or service originate? Why should your buyer persona care about you?
There’s nothing more engaging than a story, but there are other ways to further establish your credibility.
The major one is being involved in your industry.
Publish all types of content for your market, write guest articles for industry blogs and magazines, and show your prospects that you know what you’re doing.
Trust is critical for establishing credibility and increasing the lifetime value of your customers.
Choosing the Right Traffic Source
The content above was an excerpt of our new guide, "The Inbound Customer Value Optimization System (Using HubSpot)." To learn about choosing the right traffic source for your business and the rest of the Customer Value Optimization System, get your free copy of the full guide by filling out the form below.
About Bob Ruffolo
Bob is the founder and CEO of IMPACT, an agency he formed in 2009 to help people and their organizations succeed by changing the way they market themselves online. Since its founding, IMPACT has achieved its status as one of HubSpot's Diamond Partner Agencies and secured its place as one of the top inbound marketing agencies in the country.