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guide: finding product market-fit (PMF) for startup

Launching a startup is an exciting time. There are so many possibilities and so much potential. But it can also be a bit overwhelming.


One of the most important things you need to do early on is to find your market-fit. This can be a challenge, but it's crucial to the success of your business.


In this article, we'll take a look at what market fit is, why it's important, and how you can assess and achieve it.


Original Source: Product Market-Fit

definition

Product Market-fit is the degree to which your product or service meets the needs of your target market

In other words, it's how well your offering solves the problems of your target customers.

It's important to find your market fit because it's the key to sustainable growth. If you don't have market fit, you'll likely struggle to acquire and retain customers. Even if you do manage to grow, it will be difficult to do so sustainably.

There are a few ways to assess whether you have market fit.

One is to look at your customer acquisition and retention rates. If you're acquiring new customers quickly and retaining the ones you have, that's a good sign that you have a strong market fit.

Questions for Checking Market-fit

Another way to assess market-fit is to talk to your customers and see how they feel about your product or service.


  1. What is the biggest problem you are trying to solve with our product?
  2. How has our product helped you achieve your goals?
  3. What do you think of our product so far?
  4. What features of our product have you found the most useful?
  5. What is the primary reason you are using our product?
  6. What other products have you considered using instead of ours?
  7. What would make you switch to a different product?

If so, that's another good sign that you have a strong market fit.

How to assess market fit

There are a few different ways to assess market fit.


One is to look at your customer acquisition costs. If you're spending a lot of money to acquire customers but they're not sticking around, that's a sign that you don't have market fit.


Another way to assess market fit is to look at your revenue growth. If you're not seeing the kind of growth you want, that could be a sign that you don't have market fit.


Finally, you can also ask your customers directly whether they're happy with your product or service. If they're not, that's another sign that you don't have market fit.


If you're not sure whether you have market fit, it's important to talk to your customers and get their feedback. They may be able to tell you what's missing from your product or service, and how you can improve it.


Additionally, you can look at your customer acquisition costs and revenue growth to get an idea of whether you're on the right track.

The benefits of market-fit

There are many benefits to having market-fit.


  1. First, it allows you to acquire customers more cheaply.
  2. Second, it helps you retain customers.
  3. Third, it enables you to grow sustainably.
  4. Fourth, it makes it easier to raise funding.
  5. And fifth, it increases the chances that your business will be successful.

In addition to the benefits listed above, market fit also allows you to scale your business more easily. With a strong market fit, you will have a clear idea of who your target market is and what needs to be done in order to reach them. This makes it much easier to create a scalable business model.


Another benefit of market fit is that it makes it easier to create a viral product.


If your product is able to solve a problem that your target market is facing, they are much more likely to share it with others. This can help you grow your business exponentially.


The challenges of achieving market-fit

There are a few challenges you may face when trying to achieve market fit.


  1. First, you need to have a clear understanding of your target market.
  2. Second, you need to be able to reach your target market.
  3. Third, you need to be able to create a product or service that meets the needs of your target market.
  4. And fourth, you need to be able to do all of this at a profitable price point.

One way to overcome these challenges is to partner with a company that already has a strong understanding of the market and a proven track record of success. This can help you to quickly reach your target market and achieve market fit.

Tips for achieving market-fit

There are a few things you can do to increase your chances of achieving market fit.


First, make sure you have a clear understanding of your target market.


Second, reach out to your target market and get feedback on your product or service.


Third, create a product or service that meets the needs of your target market.


And fourth, price your product or service competitively.


In addition to the above tips, it's also important to have a marketing strategy in place to reach your target market. Without a solid marketing plan, it will be difficult to achieve market fit.

3 signals that your product has successfully achieved Product Market-Fit

1. Organic Retention. The most obvious and important metric. The more your product acquires users, the more of them should stay and continue to use it. At the initial stage, I recommend checking such retention without the influence of internal marketing channels (push/email, etc.).


2. CAC < LTV. Another signal of a successful problem/market selection - your costs of acquiring a user become less than the revenue from each client. In other words, the unit economics converge "at the fingers" and are easily scalable from the start.


3. Viral Effect. Easily spreading in social networks virality about your product is a good sign that your product successfully solves the real needs of users so much that they are not ashamed and do not fear (!) to publicly tell about it to their friends/relatives.

top 5 Mistakes of Finding Product-Market Fit

1. Not talking to customers. Too often, teams are too focused on building and designing a product, without ever taking the time to understand their customers.


2. Ignoring customer feedback. Once you do start talking to customers, it’s important to act on the feedback you are getting. If you don’t, customers will quickly lose interest in your product, just because the feel you ignoring their needs.


3. Not Prioritizing Customer Feedback. Many startups fail to take customer feedback into consideration when developing their product. Without customer feedback, it’s difficult to understand how users are reacting to your product and to make adjustments accordingly.


4. Not Understanding Your Market. Many startups fail to do adequate market research before launching their product. This can lead to a mismatch between their product and the needs of their target market.


5. Not Analyzing Results. Finally, many startups don’t take the time to analyze the results of their product market fit. They may think that their product has achieved product market fit, but without proper analysis, it’s impossible to know for sure.