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What is the Product Market Fit ?
The Product Market Fit must be considered starting from the first stages of product creation. It allows you to check the relevance of your product and determine if it has a place in your market. Whether you are a Product Manager, Product Owner, entrepreuneur. se, member of a product team (or just curious) this article will help you take one of the first crucial steps of Growth.
What is Product Market Fit?
The Product Market Fit (PMF) is the latest trend in the product world. But, what exactly is it?
Theorized by Marc Andreessen, American entrepreneur, it can be summed up in this sentence: “In a terrible market, you can have the best product in the world and an absolutely killer team, and it doesn't matter – you're going to fail .”
So the idea of Product Market Fit is to build a product using the following recipe: A real problem + a solution + a target who perceives the benefits and who is ready to invest in your solution/product = Product Market Fit.
The Product Market Fit comes into play on different aspects of the AAARRR Funnel:
UNDERSTANDING: users understand the purpose of the product and its added value
CONVERSION: the product meets the expectations of potential users
REFERRAL (OR RECOMMENDATION): users are satisfied with the product enough to recommend it
If these three conditions aren’t met, we must keep working on the message, the product itself, or the target market.
As described by Dan Olsen, who popularized the concept of Product Market Fit through his book “The Lean Product Playbook”, the PMF is the strategic link between the product and the market.
Product-market pyramid - Dan Olsen
Product Market Fit and MVP (Minimum Viable Product)
The question we can ask ourselves is: “What is the place of the MVP (Minimum Viable Product) in the definition of Product Market Fit?”. These two concepts are linked — the Product Market Fit can be determined once your MVP has been built.
The Product Market Fit is considered to be achieved when the product team has found a model that can grow and evolve. It is difficult to reach this stage without first developing an MVP that allows you to submit your ideas to early adopters and get feedback.
It’s critical that the added value of the product is visible from the first design phases.
The Product Market Fit will therefore arrive in the next step to show how it can find an audience and market share.
📚 Read our article on the Minimum Viable Product.
How to test your Product Market Fit?
The Market Fit Canvas
In order to test the Product Market Fit, use the Product Market Fit Canvas.
This tool was created to help product teams define and validate the characteristics of their product and in order to reach their future users.
Market Fit template example
Let's go into detail on this:
In conclusion, the “key metrics” can show if you’ve reached your PMF.
💡 Learn from mistakes
“I have not failed. I've just found 10,000 ways that won't work.” - Thomas A. Edison.
During the life of a product team, the product must often be changed or taken in another direction altogether to adapt to the market — for example, by targeting another audience or by focusing on a particular feature.
During a crackdown on music piracy, Spotify launched a legal music streaming platform, available via a monthly subscription. To convince its customers to pay for this type of service, it emphasized the "Playlist" feature. So, Spotify took advantage of the trend of the moment and created a new use case.
But this isn’t always true — take Google and its Google Glass project. Users worried about privacy issues with the photos it could take, battery life and more. The project was abandoned because it failed to find an audience. There was a clear idea for the product, but no audience.
How to achieve your Product Market Fit?
Now that we know that Market Fit Canvas helps test the Product Market Fit, what indicators do we use to know if it has been achieved?
How do you know if you have created the magic recipe for Product Market Fit?
This is a question that arises from the very beginning of your product construction, and continues through its initial release productions.
We generally distinguish user feedback into two distinct groups: quantitative feedback and qualitative feedback. A balance of the two is necessary for the best understanding of its users.
Here is a (non-exhaustive) list of criteria to check in order to confirm that your product has reached its Product Market Fit.
- Strong customer satisfaction: you can use a survey, for example, to measure customer satisfaction via the NPS (Net Promoter Score)
- User sharing and recommendation: do your users share content from your product?
- Positive user feedback following testing: you can hand over wireframes or even prototypes of your product to obtain feedback, find areas for improvement and measure overall satisfaction.
- User preference of your product to market rivals: A competitive analysis is necessary. The “Feature table” will let you define your added value by comparing the different features of your competitors in relation to your product.
- Users easily see the added value of the product: user interviews are an opportunity to understand why your users use your product. Is the vision of your product the same for everyone?
How to validate your Product Market Fit?
Find your target
Firstly, tools like Google Ads, Facebook Ads or Adwords can help you create a first panel to identify your target.
Then, after you make an initial selection of potential users, an emailing campaign will allow you to collect and analyze feedback in order to refine your product and your target audience.
As with any user-centric approach, be sure to put the user at the center of the process. It is not enough to collect user opinions — you must also analyze their behavior.
There’s a big difference between asking a person if they are ready to buy a product and if they really will.
In this phase of research, take into account its biases and those of the people interviewed. Have this question in mind: “Is my product impactful enough to justify the purchase?”
To obtain objective results, define 1 or 2 key KPIs that will measure whether your target is the right one. For instance :
- The number of pre-orders on your landing page
- The investment rate on a crowdfunding platform (such as Ulule or KissKissBangbang)
If you don’t achieve your KPI objectives, repeat the first step and redefine your panel.
Test and measure your approach
Once your target is defined, you can test and refine your hook.
The common mistake of product teams is to invest massively in marketing from the start — it’s better to limit it until you’re sure of achieving Market Fit.
If you find that potential users are interested in your product due to premature marketing operations, you may achieve a high acquisition rate and even activation, but a low retention rate. It is likely that you won’t keep your users.
Marketing actions in the pre-Product Market Fit phase must therefore be sufficient to test the main principles (essential features, etc.). Before launching significant marketing actions, the following questions must be answered:
- What is the problem solved?
- What is your unique value proposition? What makes you different?
- Who is your typical user?
- What are the results of the user interviews?
- What is the market?
- Who are the direct and indirect competitors?
- What is your price positioning?
Growth of a start-up
Source : https://lehub.bpifrance.fr/comment-valider-son-product-market-fit-sans-y-laisser-30ke/
Testing your Product Market Fit means comparing your market research to the reality on the ground. To do this, it’s essential to clearly define your MVP and know your users.
There is no magic recipe in Growth, only products with the needs of users in mind. Interviews, a workshop around the Market Fit Canvas and the regular calculation of your NPS should allow you to take the necessary step back to understand if your product has reached its Product Market Fit by making it evolve according to need and use.
In reality, there is no real failure because you learn from your mistakes. It is rare to succeed on the first try — several iterations and tests are necessary to fully understand the users’ needs and build a suitable product.
Even once the Product Market Fit has been reached, each added feature will require the same reflection: what is the value of it for users?
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