Product-market fit is reached when the market demand for your product sustains its growth and profitability. This means that customers not only support your business but also drive its success.
However, achieving product-market fit requires a deep understanding of customer needs. This understanding enables you to position your product effectively by offering the right features at the right price and time to meet their demands.
In this article, we'll explore the concept of product-market fit, drawing insights from product marketing experts who have successfully achieved it. We'll also provide practical strategies for optimizing your product to achieve the same level of success. So, let's dive in and explore the journey to product-market fit together.
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Why is Product-Market Fit important in the world of Startups?
According to , VP of Sales and Marketing at , achieving product-market fit is when customers are consistently buying your product or its consumption is growing in line with your capacity to supply.
Product-market fit is reached when the market demand for your product sustains its growth and profitability. This means that customers not only support your business but also drive its success.
However, achieving product-market fit requires a deep understanding of customer needs. This understanding enables you to position your product effectively by offering the right features at the right price and time to meet their demands.
In this article, we'll explore the concept of product-market fit, drawing insights from product marketing experts who have successfully achieved it. We'll also provide practical strategies for optimizing your product to achieve the same level of success. So, let's dive in and explore the journey to product-market fit together.
How to achieve Product-Market Fit for Startups?
In the world of startups, success hinges on one crucial factor: achieving product-market fit.
This sweet spot, where your product perfectly meets market demand, is the catalyst for sustainable growth. But getting there is no walk in the park. In this section, we bring together practical tips to help startups navigate the journey to product-market fit.
Whether you're a novice entrepreneur or an experienced founder, here are the basics of getting to product market fit:
Survey your target market, reach out to 25 people, and offer them a gift for their time.
Build a minimum viable product—bare bones.
Set up a simple landing page to test that product.
Target outreach or marketing to send to that page (organic or paid targeted ads).
Pay attention to the percentage of people who take action (buy, sign up, etc.).
Launch the MVP at a discount for early customers.
Ask for feedback via a survey for both customers and anyone who said no (give them something in return).
Look at actions. When are they canceling? When are they staying?
If you have low churn and high return rates, you have something; otherwise, keep iterating on new versions and repeating the process.
Examples of Product Market Fit
In the early 2000s, Netflix gained popularity by mailing DVDs to subscribers, avoiding late fees from rental stores. When DVDs became less popular, Netflix adapted by offering streaming services as a convenient and affordable alternative to traditional TV. Their success highlights the importance of staying flexible and adapting to changing markets.
In the early days, Google competed with other search engines by making money through ads next to search results. In 2003, they took the lead with a new idea called AdSense. Instead of just showing ads on the search page, AdSense placed ads automatically on various websites. Google realized businesses would pay for this service, and AdSense became a success. It scans web pages to show relevant ads; for example, if you sold suitcases, your ads could appear on travel sites. By 2017, AdSense had 11 million users, paying Google $95 billion a year. Google identified a unique need and filled it.
Slack, an instant messaging platform for work, started as a tool for a video game project. The founders made it for their team but discovered the market had enough games. They shifted to focusing on Slack, and now 10 million people use it. Slack's success shows that changing your focus to better fit what people need can be a smart move.
Daniel Ek, Spotify's CEO, saw an opportunity after , a music-sharing platform, shut down in 2001. The pieces for a successful music service were already there: music content, mobile devices, and a user base from Napster. Ek believed people would pay for legal music access. As technology improved, Spotify refined its tools and became popular, especially among young users. By 2022, it had 182 million paid subscribers.
Uber found success by offering free rides between tech events in San Francisco, realizing the traditional taxi system was expensive and outdated. To attract users, they initially provided 50% discounts. Uber solved a problem and created a need, even though people weren't asking for better taxi service. As the app gained popularity, the network effect kicked in, with users sharing positive experiences on social media. Uber now has about 93 million riders, recording nearly 5 billion rides in 2020.
What is Product Market Fit, and how do Startups achieve it?
1. , Founder at .
Recommendations for Startups Aiming for Product-Market Fit
Stay Focused and Avoid Feature Creep
Maintaining focus is important for startups. Successful products often have a narrow focus and excel in delivering precise value propositions. Avoid the trap of feature creep, which is the gradual addition of unnecessary features that dilute the product's original intent. Stay true to your core values and focus on addressing your users' most pressing needs.
Adapt and Scale Wisely
Adaptation and agility are essential in the fast-evolving tech landscape of Africa. As you scale, ensure that your growth aligns with your PMF and core values. Expanding into new segments should be a strategic decision based on observed consumer demand. This approach minimizes risks and ensures alignment with your startup's mission and values.
Achieving product-market fit requires a nuanced understanding of local markets, a focus on building strong customer relationships, and an alignment of your product with both market demands and company values. The journey involves continuous adaptation, learning, and staying true to your startup's core mission. By following these principles, startups can navigate the challenges and opportunities of their markets, setting themselves on a path to success and, most importantly, sustainable growth.
2. , CEO of .
Recommendations for Startups Aiming for Product-Market Fit
One notable example of achieving PMF at Testlify involved refining our assessment tools based on extensive user feedback. By closely aligning our features with the evolving needs of recruiters and candidates, we observed a substantial increase in user engagement and satisfaction metrics, signaling a successful PMF.
For startups aspiring to achieve PMF, my recommendation is to prioritize customer feedback and iterate rapidly.
Actively seek input from your target audience, adapt your product accordingly, and be willing to pivot if necessary. Additionally, closely monitor key performance indicators to objectively measure your progress. Building a strong rapport with your user base and staying agile in response to market dynamics will greatly contribute to achieving and sustaining product-market fit.
3. , CEO of
Recommendations for Startups Aiming for Product-Market Fit
For us at Balance One Supplements, we started by studying what our potential customers needed and wanted.
Using that information, we created a range of dietary supplements to address their concerns. Although our first products didn't do as well as we hoped, we learned from the experience. We listened to customer feedback, made changes to the products, and adjusted our marketing strategy based on what customers liked and disliked.
The result was a new product line that not only met our customers' health needs but also matched their lifestyles and values. This led to a significant increase in sales and repeat purchases. The positive customer reviews confirmed our success.
One should maintain the readiness to adjust product specifications based on feedback.
Tracking metrics must stretch beyond nanoscopic concerns like sales; it is vital to not only consider customer satisfaction and the repeat purchase rate but also confront the customer acquisition cost.
Finally, bear in mind that achieving product-market fit isn't confined to a one-off occurrence.
It requires unending revision—continuous iterations of your product and strategy—as it responds aptly to the changing trends within the market, all catering appropriately to shifting clientele needs and preferences so as to sustain PMF robustness long-term.
4. , Head Startups at
Recommendations for Startups Aiming for Product-Market Fit
At the early stage of , we were growing fast.
We found our ideal customers, and the service delivery was smooth. At the scale at which we were at the time, we could assume PMF, but as we attempted to scale the solution, it became clear that achieving PMF at that new level of scale was going to be different.
Avoid vanity metrics; they are great for morale-boosting, but they do not indicate actual growth on the balance sheet.
Everything you do should be to move the needle closer to PMF, even taking advantage of vanity metrics for this goal. When you think about product market fit, think of it as market product fit because the market always comes first. First, find a market, understand the problem, and then you can offer a product to solve that problem. The market always comes first.
It's also important to understand that, depending on the product you are building and the market you operate in, PMF can be achieved multiple times at different stages of your startup's growth.
5. , Founder of .
Recommendations for Startups Aiming for Product-Market Fit
An awesome example is , a company I've worked with for a while.
The founders were building a software product for quality assurance (QA) automation, basically testing software interfaces to make sure new features don't break. When they tried to sell it, what they realized was that their customers didn't want to buy QA software, and they had trouble actually making any QA software work.
Instead, what they really wanted to buy was "not having to think about QA."
So MuukTest started offering a software and implementation service that gets QA off busy CTOs' plates. And they debugged this through the sales and delivery process. Within 12 months, they had more than 10x revenue, sped up sales cycles, gotten customers from indifferent to raving advocates, and dramatically increased pricing to be commensurate with the value they create.
In short, only by selling and implementing could MuukTest learn what buyers really want to buy and refine their offering. They did this by focusing on what's essential for PMF and not wasting time on a bunch of other things.
First, go out and try to sell.
Start with 1:1 sales, even if you don't like it or if it's uncomfortable. Center your sales process around a "case study," and the goal is to replicate the case study.
Never assume you never have PMF; it is always a moving target!
6. , Managing Director of
Recommendations for Startups Aiming for Product-Market Fit
Product marketing is a relentless commitment to listening, adapting, and fine-tuning your product until it not only meets the market's needs but becomes an integral part of the customer's routine.
At , we achieved this by consistently engaging with our potential users, understanding their struggles in finding agency partners, and refining our offering to make this process as seamless and effective as possible.
Securing product-market fit isn't about hitting a single metric; it's about consistently observing a combination of signals that, together, suggest your product is resonating with the market.
Quantitatively, look at your churn rates, NPS scores, growth trajectory, and market share. These figures should trend positively. Qualitatively, gauge the buzz around your product: Are customers organically recommending it? Is there a rise in media and analyst interest?
These are tangible indicators that you're heading toward true product-market fit.
7. , CEO of
Recommendations for Startups Aiming for Product-Market Fit
The secret to discovering product-market fit lies in maximizing the number of product iterations within your resource constraints. The better you understand your customers, the closer you get to achieving this fit.
Long-term cohort retention serves as the most reliable metric for gauging product-market fit. Once you observe multiple cohorts stabilizing at specific levels tailored to your industry, you've hit that sweet spot. Different product types have distinct thresholds for achieving product-market fit, so it's crucial to assess the retention rates of comparable products that have successfully scaled to determine your ideal benchmark
For startups, my advice is to avoid premature scaling.
A common reason for startup failure is confusing early success with achieving product-market fit (PMF). It's not about being the first in the market but rather the first to reach PMF. Hiring staff post-PMF can accelerate your company's growth, whereas hiring before achieving PMF can slow down your progress, increase your expenses, and potentially lead to a downward spiral.
As Warren Buffett once pointed out, “Only when the tide goes out do you discover who’s been swimming naked.” Following the excesses of the Softbank era, we're likely to see many examples of this in the business world.
8. , CPO of
Recommendations for Startups Aiming for Product-Market Fit
My advice to startups would be to stay flexible and customer-focused.
When we first launched our platform, we hypothesized that customers wanted a wide range of accommodation options at competitive prices.
We built our MVP around this idea and launched it to a small segment of our target market. The feedback we received was invaluable; while price and variety were important, what customers really wanted was a seamless booking experience. We iterated on our product, focusing on simplifying the booking process, and soon saw a significant increase in customer satisfaction and retention rates.
This was our indication that we had achieved PMF.
Don’t be afraid to pivot if your initial hypothesis doesn’t hold up; remember, PMF is a process of iteration. Use tools like customer interviews, surveys, and A/B testing to gather feedback and refine your product. And most importantly, be patient. Achieving PMF takes time, but it’s worth the effort.
9. Head of Online Marketing at .
Recommendations for Startups Aiming for Product-Market Fit
First and foremost, understand your target audience.
While this is now a cliche, it just needs to be said. You don't build a product based on your perception of how the market feels. You need actionable data based on inputs from the real world when you build your product.
The second is to always build with the user in mind. Having a better understanding of the target market will help you craft more effective marketing messages that appeal to them. You also need to identify what your product is meant to solve and communicate it to your audience.
Knowing what it does is one thing, but communicating it effectively is better.
Lastly, don't be rigid. Be open to change. If feedback suggests your product is not hitting the mark, be ready to realign.
10. , CEO and Founder at
Recommendations for Startups Aiming for Product-Market Fit
For startups aiming for PMF, it's essential to determine if your product has reached it before deciding your next steps. In the case of consumer apps, you should start witnessing 'exponential organic growth' driven by word of mouth once you've achieved it.
In my brand's case, we realized we had achieved PMF when we could repeatedly acquire customers at a cost lower than their value to us.
Once several cohorts stabilized at a rate specific to our vertical, we knew we had reached PMF. It's crucial to understand that different products have varying PMF points, so comparing retention rates with similar successful products is vital to setting the right benchmark.
For our enterprise business, a key indicator of PMF was the reaction to ending a free trial. If customers didn't express a strong need for our product at the trial's conclusion, it indicated a lack of PMF. Their urgency to purchase post-trial is a strong sign of PMF.
11. , Co-Founder and CMO of
Recommendations for Startups Aiming for Product-Market Fit
Keep in mind that achieving product-market fit (PMF) is a process of progress, not perfection.
Product-market fit is a journey of discovery that often requires several iterations. Rarely does anyone get their product perfect on the first attempt. Consider how began as an SMS service, as a job board, and as a film camera. The key is to maximize iterations and focus on understanding your customers deeply.
The better you understand your customers, the closer you are to achieving product-market fit.
I'd also like to add that you should launch as early as possible. Delaying your launch only prolongs the process of iterating through the cycles. Your goal isn't to build a final product but the minimum software required to solve the problem ("MVP").
The less you build initially, the quicker you can receive feedback and refine your solution. Be sure to integrate analytics tracking and error reporting so you can observe how users interact with your product and quickly address any issues they face.
12. , CEO of .
Recommendations for Startups Aiming for Product-Market Fit
Startups seeking product-market fit should prioritize customer feedback.
Feedback from your target audience can inform product development. Use surveys, focus groups, or consumer conversations. Understanding their wants, preferences, and pain points helps you improve your service.
optimized for the market.
Extensive market research was used to identify our target audience's wants and preferences. We developed high-quality human hair extensions to satisfy those needs. Due to user input, we have consistently improved our products.
Find gaps, trends, and competitors with detailed market research. You may establish a unique value proposition that sets you apart from your competitors.
Finally, adapt and change. Product market fit is ongoing. Data, market trends, and client feedback should inform your strategy. Remember, product-market fit requires constant adaptation and innovation to meet target market needs.
13. , Sales Manager of
Recommendations for Startups Aiming for Product-Market Fit
For startups eyeing product-market fit in machinery, dive deep into your target industry.
Listen to users, pivot when needed, and always be willing to tweak your machine until it feels like an extension of your client's team. Oh, and never underestimate the power of a killer customer support team—they're your secret weapon.
14. , Co-founder at
Recommendations for Startups Aiming for Product-Market Fit
For startups aiming for PMF, my advice is threefold: Firstly, invest time in understanding your target market's needs and pain points.
Secondly, ensure your product not only addresses these needs but also stands out from competitors. Finally, be agile and willing to pivot or make adjustments based on customer feedback and market shifts.
Ice-cartel's journey to PMF wasn't instantaneous. It involved meticulous market research, iterative product development, and constantly tuning into our customer's voices. This customer-centric approach not only helped us achieve PMF but also fostered a loyal customer base.
15. Founder
Recommendations for Startups Aiming for Product-Market Fit
To aspiring entrepreneurs looking to achieve product-market fit, I suggest the following:
Conduct thorough market research. Understand your target audience's requirements, preferences, and challenges before creating your product. Conducting surveys, interviews, and competitor analysis to gain valuable insights is essential.
Start small with an MVP: Develop a minimum viable product that effectively addresses the main issue your customers face. This allows you to test the market, gather feedback, and iterate quickly.
Please pay attention to your customers, actively interact with them, and consider their feedback. Implement the necessary enhancements to ensure your product meets their requirements.
Measure and learn: Use data analytics and customer feedback to track your progress and understand what's working and what's not. Always stay attuned to your customer's behavior and adapt your strategy accordingly.
Keep in mind that reaching product-market fit is a process that demands patience, flexibility, and a thorough comprehension of your intended audience. You will improve your prospects of enduring success by prioritizing your customers' needs and continuously enhancing your product.
16. , Product Marketing Specialist at .
Recommendations for Startups Aiming for Product-Market Fit
For every startup looking to build a lasting product, you must ensure that your product is reaching the right people.
When I led the Product and Growth Marketing Team at , a financial solution for employees, I achieved product-market fit through constant interactions with customers.
I went beyond virtual demos to engage our customers by visiting them in their offices, leading training sessions, interviewing their employers, and ensuring that the product support team is constantly provided with the resources to answer customer inquiries, be genuinely helpful, and solve any misconceptions about the product. At Salad, we constantly leveraged key customer data to build a successful product that was not afraid to iterate.
At a time when the world is in an economic recession, be diligent with your resources. I would recommend operating on a lean budget.
You can explore the following:
Use surveys first to get key insights, and only invest in paid advertising in later stages.
Avoid using giveaways to create awareness about your product, especially in its early stages.
Spend time interacting with your users. Even if you have less than 20 users, it is crucial to know them. Explore strategies such as webinars, email marketing, and physical sessions to truly understand the people you are building for.
Leverage relationships. For instance, you can partner with another business that has a similar target audience and build a mutually beneficial platform for cross-promotion.
Don’t stop reinventing your product. Remember, your customers’ needs change too, or you may need to build an entirely new customer base the more your startup grows.
17. , CEO of
Recommendations for Startups Aiming for Product-Market Fit
My advice to startups aiming for product-market fit is to build rapport and relationships with their clientele from the early stages.
Your (current and prospective) customers are going to be an invaluable resource for making sure your offerings align with consumer needs and demand. Creating touchpoints and going back and forth will give you a direct line to your customer's pain points instead of having to spend time guessing or researching resources. Not to mention, creating these dialogues and acting on the resulting input will make your key customers feel seen, respected, and valued, thus further boosting brand loyalty and long-term customer retention.
18. , Chief Marketing Officer at and Founder of .
Recommendations for Startups Aiming for Product-Market
For my startup, , we launched as a platform where people can take marketing-based courses for a monthly subscription fee.
As great as that sounded, we didn’t see much traction with it, and people were not willing to pay for it. However, we were getting inquiries from businesses requesting marketing talents from us. Since that was where most of our money and traction was coming from as a company, we pivoted into being a talent matchmaking tool for businesses looking for marketing talents.
For Blurpe, we achieved PMF by not just studying the data of where we were getting the most traction from but also listening to what the market wants and giving it what it wants.
Most importantly, conduct thorough market research before building your product. Listen to what the market wants and give it to them. Keep iterating your product offerings until you find what works for your target market. Learn to communicate your USP effectively.
Conduct market research before building your product. This will not just help you find PMF faster; it will also save you time and money.
19. , Host at .
Recommendations for Startups Aiming for Product-Market
While at as Product Marketing Manager, after a failed product launch that served as an experiment, we soon realized Nigeria is a low-trust market that has relatively low purchasing power.
Nigerians believe in public figures and influencers a lot more than carrying out informed buying and purchasing decisions like the average American buyer. Thereby, it is pertinent to have an influencer, creator, or celebrity integrated into the launch of your features or products via image content or explainer videos in the early stages.
This gives social proof and amplifies trust for the product in the short and long term.
Also, including compelling visual creatives plays a vital role in increasing consideration, intent, and conversion. From what we learned, we decided to launch a new product line at very affordable price points alongside ten influencer campaigns while maintaining great design and a good brand image.
We sold 1K+ pieces, and it was dubbed "the most popular work table in Lagos" on at the time. Overall, it was a huge success.
I can recommend two tools in this regard:
helps startups achieve success by focusing on four key alignments.
Market/Product Fit: Ensure the product solves a significant problem in the market.
Product/Market Fit: Align the product with the target audience's needs and preferences.
Channel/Market Fit: Identify effective channels for customer acquisition and retention.
Model/Market Fit: Ensure the business model is sustainable and scalable within the target market.
By focusing on achieving alignment across these four fits, startups can improve their chances of success and sustainable growth in their target markets.
is a methodology for developing and validating startup ideas. It consists of four steps:
Customer Discovery: Identify and validate target customer segments and their needs through direct interaction and feedback.
Customer Validation: Test the product or service concept with potential customers to confirm demand and refine the value proposition.
Customer Creation: Develop and implement strategies to acquire and retain customers, focusing on scalable and repeatable processes.
Company Building: Scale the business operations and organization based on validated customer feedback and market demand.
It emphasizes understanding customers before scaling to reduce risks and enhance success.
20. , Chief Growth Officer at .
Recommendations for Startups Aiming for Product-Market
. This will not just help you find PMF faster; it will also save you time and money.
Achieving product-market fit (PMF) primarily involves creating a product that resonates strongly with your target audience, generating significant demand and adoption.
Determining when PMF is attained can be subjective, but the more popular approach is through traction metrics such as adoption and user engagement. However, other indicators like profitability, competitive positioning, and even hype or general perception also contribute to defining PMF.
Personally, achieving PMF entails a multi-faceted approach:
Defining the Problem: Clearly articulate the problem your product aims to solve and identify the specific audience segment it caters to.
Feature Development: Develop product features and functionalities that directly address the identified pain points and fulfill user needs.
User Feedback Integration: Actively solicit user feedback throughout the development process, leveraging tools like surveys, beta tests, and user interviews to refine and enhance the product iteratively. Most times, waiting until the end of your development cycle before seeking feedback can be too late.
Brand Positioning: Establish a distinct brand identity and positioning strategy that effectively communicates your product's unique value proposition and resonates with your target audience.
Marketing Strategy Optimization: Create and optimize marketing campaigns across various channels, aligning them with specific business objectives and continuously refining strategies based on performance data and user feedback.
Metrics Tracking: Implement robust analytics to track key performance indicators (KPIs), user engagement metrics, and campaign attribution, allowing for data-driven decision-making and strategic adjustments to optimize for growth & PMF objectives.
For startups striving to achieve PMF, my most important advice to them is to track everything; data literally gives you superpowers. I have a saying I say a lot: “As long as it’s trackable, track it.”
There are 3 key things I believe startups should always track: key metrics and performance indicators, in-app analytics (engagement and retention metrics), and implementing robust attribution models.
Performance Metrics: User acquisition and retention rates, Conversion rates, Average revenue per user (ARPU), Customer lifetime value (CLV), Churn rate, Product usage metrics (e.g., daily active users, monthly active users), traffic, reach, etc.
In-App Analytics: User interactions, Feature usage, Navigation patterns, User journey analysis, Funnel visualization, Cohort analysis, etc.
Attribution: Marketing channel performance, Campaign effectiveness, User conversion paths, Multi-touch attribution modeling, Cross-channel attribution analysis, attribute tracking and reporting, etc.
Startups should also understand that PMF is an ongoing journey rather than a one-time milestone, and they need to continuously strive to innovate and refine their product-market fit based on changing market conditions and user needs.
Conclusions
According to Rongzhong Li, CEO and Founder of , achieving product-market fit involves aligning your product closely with market needs.
Look for signs like organic user growth, high retention rates, and positive customer feedback. For startups aiming for PMF, stay agile, listen to user input, and focus on providing genuine value. Build a community around your brand, engage early users, and use their insights to refine your product for long-term success.
Be open to change. If feedback suggests your product is not hitting the mark, be ready to realign. Agility and openness to adaptation are the driving forces behind many successful startups.
