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Product Market Fit: What is it ?

product market fit

An essential term in the world of Startups and a real challenge to find the adequacy of a product with its market. How do you know if your Startup has found its Product Market Fit? As soon as your product meets a strong market demand, then you have succeeded in offering a product that solves a problem. So you have found a Product Market Fit.

The term Product Market Fit or PMF was introduced by Marc Andreessen.

Subsequently, Sean Ellis proposed an indicator that measured whether a Startup had reached its MFP. By conducting a satisfaction survey on a sample with the following question “How would you feel if you can no longer use this product ?“, he discovered that if 40% of users said they were “Very disappointed“, it meant that the Startup had a high chance of reaching the PMF.

The two categories of Startups !

You see the world is divided into two categories – those who have found a Product Market Fit and those who are looking for a Product Market Fit

You are looking for your Product Market Fit

product market fit - les deux categories de startup

It is often a phenomenon that few people encounter but subject to many discussions!

There is a big discrepancy in the world of Startups. Some are incredibly successful sometimes instantly and others fail completely. There are differences between each Startup in terms of team, product and market. The team can be remarkable or imperfect. The product may be an engineering work of art or not functional. Finally, the market can be growing or remain in a state of nothingness. Therefore, the following question can be asked. What are the most relevant success criteria ?

Let’s define its conditions:

  • The relevance of a team could be defined by the qualities of the CEO, senior managers, engineers or any other key employees. We could ask ourselves the following question. Can this team provide optimal execution? The history of the technology industry has shown the effectiveness of people who have never “done it before”.
  • The quality of a product can be reflected in the impressive effect it can have on its users. Is it easy to use ? Does it work without bugs ? Is it fast?
  • The size of a market for a startup is expressed by the growth rate of users or customers for the product. Assuming that you can earn money with this growth and that your acquisition cost is not higher than the revenue generated by the customer.

Many VCs will tell you that is the team the most important !

Many engineers will tell you that it is the product that is the most important !

But in the end, the most important is the market. First of all, it determines the success of a Startup. He will take the first viable service that comes his way. The product doesn’t have to be awesome. He simply has to do the work and no matter how good the team is.

What are the conditions for a Product Market Fit ?

When you bring your product to market, it is necessary to succeed in these three steps:

  1. Does my target understand what I’m doing ? YES or NO
  2. If the target understands what I’m doing, is it willing to pay ? YES or NO
  3. If my target bought it, does she tell the others ? YES or NO

If you have it, a Product Market Fit leaves no doubt! It is obvious

Surviving success is the most difficult moment in the life of a Startup. The challenge is to successfully manage its growth and move fast enough to contain future competition. The risks are numerous and the work becomes more intense. By seeing the beginning of a success, a team can relax by believing that success is achieved. Nothing is more depressing than failing after finding a Product Market Fit.

How can the entrepreneur discover his Product Market Fit ?

The market is indomitable and merciless, know that!

Until the PMF has been discovered, there is no point in spending money on marketing, press relations, recruitment, etc. All these initiatives are of no interest if you have not discovered your PMF.

Confront the market ! Everything depends on traffic acquisition. It means testing your value proposition using tools such as Adwords or FacebooksAds on a specific target. The challenge is to identify the one that brings in the most “the 1% that brings in 80% of income”. During 24h00/48h00, we buy a lot of traffic and look at the conversion rate. If it is higher than 40%, you can move on to the next step or it is better to stop wasting time continuing. Initiate a radical change. This may involve starting from scratch.

The best way to obtain a Product Market “Kiff” is to reduce the complexity of the problem

To achieve this, it is necessary to ask the right question:

  1. What am I selling?
  2. To whom?
  3. How?

And to reduce complexity by keeping only one target. You have to test one target at a time!

Here are some reasons for the absence of Product Market Fit:

  • Your target does not understand your value proposition: It may take some time to define it. It is necessary to talk about it to verify its correct understanding.
  • You have not sufficiently segmented your target: Define personas to identify those in your target group who understand, buy and talk about your product.
  • Your product doesn’t keep its promises: If your users quickly abandon or don’t buy your product enough, you need to find a good way to make it evolve.
  • You use inappropriate distribution channels: You can identify it when the channels convert little with a lot of traffic. In the case of BtoB, the sales force is unable to attract customers because it does not know the target well or does not have reliable and effective arguments.

The tools

Vous pouvez tester un marché grâce à la landing page en faisant du A/B testing. Cette technique permet d’itérer sur votre texte jusqu’à ce que votre audience comprend ce que vous faites.

There are also web-based tools such as:

Source

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