What does Product/Market Fit mean?

In the last couple of articles, I’ve covered workshop, PoC and MVP. Now it’s time for the next stage of product development, which is Product/Market Fit (PMF). What’s that exactly? Is there a strategy for it? And more importantly, how to achieve it? Let’s dive into the subject and find out.

The definition of Product/Market Fit

PMF is when a product meets the high expectations of the market. It’s the situation in which users need a given solution, and it satisfies all their requirements – visually, usefully and financially. If these things are done simultaneously, then you have it – a perfect match.

The trick to make it work is to listen to users’ feedback. Thanks to this, you can find out if you have the product they want and need. In other words, you can determine the current market demand. It will help you build a product roadmap and refine a product.

What are the critical indicators of PMF? 

How do you know that you achieved PMF? Is there a way to measure it? Though there’s no one answer to these questions, you can detect the signs that you’ve created something special. Want to know what are they? Let’s take a look.

You know you are on the right track, or you already achieved Product/Market Fit if:

1. Your product satisfies your customer’s needs more than your competition’s alternatives
   First, you should find a market and then create a product. Not another way around. It’s about asking the right questions, gathering the information and looking for a solution to fix the problem.
   
2. Your target users buy out the product faster than you can manufacture it
   Here’s this „desperation” factor. There shouldn’t be a better alternative to your offer. It’s your solution customers are looking for.
   
3. There’s organic growth in the user base
   Provide the early adopters with an MVP. Soon, you’ll see it yourself that if the primary product is good enough, the customers are more likely to find you. What’s the keyword here? References. That’s how you get new users.
   
4. There’s publicity in the media
   Following the previous point, when there are good opinions on the product, the media will follow. You’ll gain even more buyers.
   
5. People are willing to prepay for the solution
   Thanks to the launch of MVP you already have some user base. Moreover, later on, as the opinion spreads, people are probably ready to sign up for the restocking. They may even make a small payment to get access earlier than others.

Thanks to the launch of MVP you already have some user base. Moreover, later on, as the opinion spreads, people are probably ready to sign up for the restocking. They may even make a small payment to get the access earlier than others.

These are only the exemplary cases of signs that you achieved Product/Market Fit. But the truth is, if you address the market that really needs your solution, then that’s it. You probably hit the right spot. This leads to an increase in demand, growth in user base, and financial stability — namely, an overall success. But, again, it all depends. Thus, there’s this saying about PMF that „you know it when you see it”.

Why is PMF important?

Every company on the market is pursuing PMF, whether it’s a startup or an established business. Why? Because Product/Market Fit has a good chance of guaranteeing long-term success. PMF isn’t a blind luck, but rather a product based on comprehensive research of market needs. It’s a moment when desirability, feasibility and viability come together.

Benefits of The Product/Market Fit 

The process behind PMF

The steps in looking for a product that fulfils the demands of the market are similar (if not the same) to final stages of developing the MVP. We should keep in mind, that in most cases, Minimum Viable Product is the first step to Product/Market Fit. Thanks to it, you can get the first-hand opinion of your product from the potential users and then refine it. In other words, it contributes to making PMF. 

1. Test the MVP and collect feedback – track user behaviour and see how they navigate the application or website. The results are going to point for further action. In other words, this information is going to help in targeting and fitting into the real needs of your customers.
   
2. Update, measure, and pivot – when you know what you need to improve, it’s time to update your product. Of course, every change needs to be analyzed, and it needs to be justified. When your product doesn’t meet the needs of the target market, sometimes it’s better to evaluate and change your previous assumptions.

The point in PMF is not to get there, but rather to continually develop the product to fit the ever-evolving market. To stay successful, you should monitor your customers at all times and adapt your solutions to them. The more information you can absorb from the feedback, the closer you’ll get to refining your PMF.

Three mistakes to avoid

Here, we’re going to elaborate on some errors on the way to Product/Market Fit. Some of them are an obvious one, while others are much more complex. All of them, however, can pose severe problems in the future.

1. Ignoring your target users – this one is crystal clear and yet, many startups and entrepreneurs still make the same mistake. Namely, they don’t check their idea with its target audience assuming they already know everything about it.
   
2. Cutting your prices from the start – that’s when you’re so focused on the growth and sales that you launch a product at a very affordable price. It’s with such a discount that the product is almost for free, so naturally, people will buy it. This can be mistaken for a Product/Market Fit, where in fact, it’s just inorganic growth.
   
3. Changing the product basis – PMF it’s not about drastically changing the whole project but improving it. All these significant alterations should be done earlier, at the MVP stage. Moreover, such change requires a budget and work from scratch, which may be challenging.

How to test Product/Market Fit

Depending on the product you’re developing, during tests you can record how customers are interacting with it. Besides, thanks to such testing, you can see what areas of the screen people are clicking on the most. Also, you’re able to get the first-hand opinion on the product, which would provide fair ideas for optimization.

Moreover, after launching the product, we should also keep track of the users’ behaviour. Because we already have an expanded database, we can perform general research on how customers use the product and interact with it. 

Many indicators determine how much we fit the market. Most of all, if the product is successful. That includes factors such as:

• whether it brings profit,
• how many customers does the product have,
• what’s its churn rate.

In certain situations, it’s worth doing interviews with people that stopped buying a given product or service. It’ll provide you with data that can be used to improve the product.

Remote ways to evaluate PMF

The question is: How to do customer validation if physical contact is too expensive due to vast distances?

When we can’t reach the customer personally, our team prefers to spread questionnaires through the internet. These interviews with the potential users, you can also do via Skype or other alternative communication tools. Sometimes, this off-site method is even better for some people. You can do more interviews since you don’t spend time travelling. But, if you’re hesitating to Skype or Google Hangouts, a good alternative is getting on the phone. In the old fashioned way. 

All of the above are a great way to test whether or not you’re building the right product.

Product/Market Fit culture

The right mindset, while building a digital product is essential. Great company culture is about transparency, growing together and accepting, that sometimes our assumptions about the market may be wrong.

In the case of PMF, it’s no different. First of all, the team should be flexible. During the process of looking for Product/Market Fit, the team is continually refining the same product. They should keep an open mind for new ideas and changing their previous presumptions. In the end, we’re looking for something special, right? 

This brings us to the second point, that’s a strong focus on market needs. The product that we’re looking for is solving the user’s problems. Let it be the number one priority. 

Lastly, as I mentioned before, we should always keep in mind that no matter how reasonable our assumptions are, they might be incorrect. And that’s fine. We can’t know it all. Once again, the solution is to listen to the people and find out what they expect from the product and then, build it accordingly.

What’s the difference between MVP and PMF

Now it’s time to test your product. MVP is going to help you with that. Build, test, learn and improve it. Even though MVP has only core functionalities, its potential customers can already tell you if they like it. Listen to their opinions and suggestions, but also filter their answers. You can’t satisfy them all, so focus on the majority.

Below you can find a list of questions that will help you in refining your idea:

• Do you need this product?
• What problems will it help you to solve?
• How can it help you?
• Why is it unique?
• In your opinion, what’s its value?
• Would you recommend this product to anyone? And why?
• Would you choose us over the competition? Why?

Our experience

At Gorrion, we’ve worked on many projects in different areas. It provides us with the necessary expertise. If you’re interested in testimonials from our clients, you can find them here. Moreover, our team of specialists will do everything in their power to get to know your idea and your business.

Thanks to our process, we can help you find solutions that your customers need. This, in turn, contributes to the success and growth of your business. By workshop and Product Map, we make sure that the cooperation goes as smooth as possible.

At the office or remotely, there’s always a way to meet and work on your project. Because of comprehensive research as well as developing PoC and MVP, you’re more likely to succeed on the market. All these actions help to ensure you get a solution that addresses the needs, wants, and desires of the market.

Have an idea? Contact us and meet our team. We’d be happy to talk to you. Let’s get from the concept to the product that your customers will love.