This fancy business concept “Product-Market Fit” means building the right product or service to solve the customer needs. While the concept is simple, nailing it takes a lot of research and effort. Achieving product-market fit might be a lot of work, but if you want a solid customer base and business success don’t skip this process.
Today we are going to outline the steps to achieving product-market fit and how to measure if you are on the right track, according to Hotjar.
6 steps to achieve product-market fit
This process will look different for every business or product, but all these steps apply no matter your industry.
1. Define your target customer
Through market and competitor research you need to very clearly define your target customer.
2. Understand your customer’s needs
Go beyond your ideal customer persona and learn your customers’ needs. Find the gaps in the market.
3. Identify your value proposition
Define what sets you apart in the market and how you are best positioned to solve your customers’ problems.
4. Outline and build your Minimum Viable Product (MVP)
Build your service/product in its most minimally effective form.
5. Test the MVP with potential customers
Test your prototype or beta version with real customers.
6. Iterate and improve
Learn from testing your MVP by gathering feedback from customers and making necessary changes.
Head over to the Hotjar article “Product-market fit: what it is and how to find it” for a more in-depth look at these 6 steps.
Measuring product-market fit
While there is no standard metric for measuring product-market fit, here’s some quantitative and qualitative metrics to check.
Quantitative Product-Market Fit Metrics
Churn rate
This is the rate at which people stop being your customers.
Retention rate
This is the percentage of customers who continue purchasing from you.
Growth rate
This includes variables like sales and number of customers over a specific time period.
Qualitative Product-Market Fit Metrics
Referrals and word of mouth
Customers that come to you through referrals are of high value. The more customers you get through word of mouth, the more your business grows. Be sure to find ways to ask customers how they found you.
Media coverage and publicity
From being mentioned on social media to getting interviewed by the press, the more your presence grows the more your company grows. So leverage media connections, make yourself newsworthy and foster engagement on social media.
It’s a process
Acheiving product-market fit is a process. You must constantly be gathering feedback, improving your product/service, and reviewing anayltics/data to keep customers happy and grow your business.
While this may seem like an overwhelming process, it’s essential to ensuring your success. Start by taking time to work through the 6 steps above and put systems in place to monitor metrics.
Need help!
If all of this makes your head spin, we can help! Just book a Business Coaching session with one of our advisors today!
