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Product Market Fit
Product market fit is when an entrepreneur has established the optimum product for their target market, triggering viral consumer activity. Here’s how to achieve it.
What is Product Market Fit?
Also known as “P-M-F”, product market fit is when an entrepreneur has established the optimum product for their target market. At this point, sales of your product are coming in right, left and centre.
It is the holy grail for every up and coming startup. When you have P-M-F, the product goes viral, repeat sales occur and the business becomes scalable. It confirms whether a business model is a winning strategy or not. This is vital because it puts entrepreneurs on the path to making net revenue, being investible and thus being able to scale their business further.
Getting started with PMF
So how can an entrepreneur work towards achieving their ‘product market fit’? To begin with, they must have a clear understanding of their target market and the problem they are trying to solve.
Secondly, for businesses to know they have a successful product fit, they need to have a sound understanding of their consumer. When a product is in earlier stages, collaboration with early adopters & taking onboard feedback is pivotal in order to ensure a product has relevance to their lifestyles.
Once a business has understanding of their market landscape and the pressure points for their consumer, they must then focus on defining a value proposition.
What is your value proposition?
Value propositions are your company’s elevator pitch. They’re your product’s central mandate that clearly communicates:
– The benefits for your users
– How you’re better than your competitors
While you’re in the R&D phase with your product (and sometimes getting R&D grants), it’s important to think about how you’ll attract users with your core offering. Value proposition isn’t just a sentence about what your product or business does, (e.g. Transferwise is an online payments platform), but rather describes how your product intends to create value in a way that’s different from your competitors (Transferwise is an online payments platform that offers bank-grade security without the associated bank fees.)
They established the need for consumers to have an easy online journey, and undercut expensive alternatives like Paypal. In meeting consumer demand like no one else, Transferwise has been able to see viral-like popularity in a relatively short timeframe i.e. product market fit.
The Build Measure Learn loop
Before businesses get ahead of themselves and place huge orders in with their suppliers, a few rounds of product testing is often required in order to get a successful P-M-F. Creating a product prototype and getting feedback from consumers before going mass-scale.
Build, measure & testing should be seen as essential R&D, and consumer feedback is key helping the product getting improved and developed. You should interact with your focus groups to understand why they would and wouldn’t use your product.
Testing your value hypothesis – many founders get caught developing a product where the value hypothesis has not been thoroughly tested and receive a lukewarm launch.
Try to keep questions non-leading and open-ended to ensure you receive feedback that is not biased. Once useful insights have been established, you can use this to create a product that edges closer to P-M-F.
Solid sales strategy
Once you have a product that meets consumer demand and fills a gap in the market, that has been trialed and tested, the next thing is to ensure you have a successful sales strategy to get your product off the shelves.
This then comes back to having a solid understanding of your consumer. From this insight, you can establish what marketing channels they use, how they shop and most importantly, how to connect with them based on the values they associate with the most.
The most important aspect of your P-M-F is to do your homework and understand your market and consumer (better than may know themselves). Once you nail this, these insights will inform all future decisions for your business and ultimately make your road to product market fit more successful.
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Stuart Reynolds is the founder of Fullstack Advisory, an award-winning accounting firm for businesses leading the future. He is a 3rd generation accountant who specialises in tech companies, agencies and entrepreneurs.