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I don’t want to talk about product-market fit in terms of being a startup; I want to talk about it in terms of being an “unsexy business.”
Yea, businesses that sell consulting services, businesses that do taxes, businesses that sell info products.
It’s time for everyone to embrace the product-market fit business mentality and go H.A.M. (Hard As A Motherfucker) making sure it works.
It’s a mentality that allows you to see new connections between you, your customers, and your business. These insights allow you to turn casual customers into evangelists because what you’re creating is so damn useful.
That’s what getting the right product-market fit can do for you.
Well, just like with growth hacking, this term is relatively new, so to define it we’ll go straight to the horse’s mouth. Marc Andreesen
The only thing that matters is getting to product/market fit.
Product/market fit means being in a good market with a product that can satisfy that market
The #1 company-killer is lack of market.
You can always feel when product/market fit isn’t happening. The customers aren’t quite getting value out of the product, word of mouth isn’t spreading, usage isn’t growing that fast, press reviews are kind of “blah”, the sales cycle takes too long, and lots of deals never close
Or Paul Graham that says “Make things that people want”
Sean Ellis has a very simple method of determining product-market fit that can work in any business or industry.
“I’ve tried to make the concept less abstract by offering a specific metric for determining product/market fit. I ask existing users of a product how they would feel if they could no longer use the product. In my experience, achieving product/market fit requires at least 40% of users saying they would be “very disappointed” without your product.”
Ben Horowitz helps expand on what product-market fit is by shedding light on a few of the myths floating around in his post, “Revenge of the Fat Guy”.
Myth #1: Product market fit is always a discrete, big bang event
Myth #2: It’s patently obvious when you have product market fit
Myth #3: Once you achieve product market fit, you can’t lose it
Myth #4: Once you have product-market fit, you don’t have to sweat the competition
To remove all this rhetoric and industry jargon, a product-market fit is making sure you’ve built a product that enough people want. Your messaging speaks to the right people, your funnel converts most of them, and your product satisfies their needs.
Sometimes, that may mean completely changing out your team, business model, market, and or product to achieve your revenue and retention goals.
Let’s backtrack a little bit. Before you ever create the product and hope to find the ideal product-market fit, you need to make sure you’re addressing a real problem for enough people.
This is where you spend time Googling your product/solution and defining it like there’s no tomorrow.
In a Neilson article, they hit on a point many entrepreneurs overlook. The jobs-to-be-done approach. These are nuisances that you can put up with if you have to, but if a better way to do it came around you’d jump at the opportunity.
Febreze freshens our surroundings without us having to scrub everything down, we can whiten our teeth with Crest Whitestrips without having to go to the dentist, and microwave popcorn doesn’t need an introduction.
When you look at these things, they seem like logical almost inevitable products, but it took some very smart people to bring them about.
When you do this deep dive into research, it sometimes makes you pivot from your original plan and create something completely different or stripped of all its features.
That’s what happened with Instagram which was originally called Burbn
Coke lost millions of dollars because they didn’t understand exactly what made their consumers buy their product.
They thought people only wanted coke because of the way it tasted so they conducted research into developing a new flavor that was sweeter than the original.
New Coke was born.
The results were disastrous for Coke and they had to withdraw the product from the market after losing millions in marketing and advertising dollars.
Go to where you know they hang out and express their problems.
This sounds like a no-brainer and it really is, but a lot of people either don’t spend the few hours it takes to do it, or do it very poorly.
I’m going to give you a very high-level overview of how to do it, but I really recommend you take the time to get a more in-depth explanation here.
So where do people hang out? They hang out on the internet in places like Facebook, Twitter, and Google+. While these are great places to strike up conversations with people, they aren’t always the best places to do market research.
That is the special reserve of forums, Amazon, and industry blogs.
Start with Google
A list of most of the forums catering to people who’ll make up your target market will show up on the search results page and all you need to do is look around.
I just clicked on the first real forum there. I happen to be a member of The Fastlane Forum and it’s a veritable gold mine of what entrepreneurs are looking for.
Any one of these threads and the responses will give me the insights I need to inform my product/service creation strategy.
Repeat this exact same process for blogs, amazon, news sites, and any other keyword combination you can think of.
It’s worth it.
Other way to go about it is to get people who make up your market to take a survey. It’s important to use a type of measurement scale like interval or ordinal to gauge the degree of sentiment. It’ll also allow you to easily plot the data you get.
This is an important step, but remember, people can’t define what they’ve never experienced.
Remember when talking to potential customers, they can’t define what they’ve not experienced[tweetthis twitter_handles=”@daniel_ndukwu”]Remember when talking to potential customers, they can’t define what they’ve not experienced[/tweetthis]
I don’t care who you are or what kind of success you’ve had in the past. You need to talk to people in order to get a real product-market fit. You need feedback from them because it’s them who are going to buy from you.
I love this post by Bob Dorf on the subject of customer discovery.
This brings about the MVP (Minimum Viable Product) debate.
“Well, I can’t talk to people when I don’t have anything to show them. They’ll just nod politely and say ‘yea, I’d buy that if you made it.”
I understand your hesitation it happens to me and you’re right, you need to be able to show something to your customers because they don’t really understand abstract….
With that being said, a Minimum Viable Product is not what you think it is.
You probably think you need to actually build something for it to be an MVP. You don’t, but again, a landing page isn’t an MVP either.
This post on the Buffer Blog shows how they created their first MVP to test whether people wanted to buy what they were creating.
You minimum viable product doesn’t need to come with all the bells and whistles of a complete product, but it does need to have enough to allow people to make an informed decision.
If they want to actually buy it or sign up for a free trial, that’s when you can open the door to conversation
Your minimum viable product is a road to the conversation. Nothing more, nothing less. These conversations will allow you to shape a product that people want, need, and will actually pay for.
Keep talking even when you’ve built the product.[tweetthis twitter_handles=”@daniel_ndukwu”]Keep talking even when you’ve built the product. [/tweetthis]
This is just a fancy way of me saying you need to test like there’s no tomorrow.
You have limited resources unless, of course, you’re the government of the United States.
That means you need to test different ideas based on the feedback you received when you got out and talked to your customers through your MVP.
If they say they don’t like the way it works, then start from there with different iterations until you get it right.
After getting that one right, you’ll need to test it again against a wave of new target customers.
Keep in mind that the iteration process never ever ends. You’ll be iterating your products and services for as long as you’re in business.
What’s the aim of all this iteration?
It’s simple, to increase positive customer feedback and reduce negative customer feedback. Ultimately, it’s to reach the product-market fit ratio as defined by Sean Ellis at the beginning of this post.
A good product becomes great when you’re able to test it in real-world conditions, try it under different variables, and ultimately achieve the all so important product-market fit.
Like we touched on in the first post in this series, a growth hacker’s greatest weapon is being able to test his experiments and iterating until he has something great companies are built on.
Through this iteration process you may even change directions completely like YouTube. They started as Tune In Hook Up and ended up as the largest streaming video platform on the planet with over a billion monthly active users.
We could have ended this with three steps to finding your product-market fit, but that would be doing you a disservice. The last and most important step is yet to come.
Get everyone involved.
It’s easy to pass the work off to the marketing department or the development team, but that isn’t going to get you where you want to be.
Creating what people want and need isn’t a one week journey or a one month journey. It’s a journey that will consume your business from the very beginning to the very end.
There is no such thing as the perfect product-market fit.
There is such a thing as a good or a great fit, but never perfect.
Do you have a big team? Or are you just a two-man crew in putting in time after work? It doesn’t matter, it really doesn’t. What does matter is that you make sure each and every member of your team is on the same page about the overriding goal.
Make a product that people want. Create a service they can’t live without.
It’s this goal that makes it just a little easier to throw out weeks, months, or even years of work because the people you’re serving just don’t want it.
It’s what keeps you up at night with ideas and lets you work for 20 hours straight. It’s not the paycheck you may eventually receive, it’s truly wanting to make something that has a place in the world.
Before you embark on the road to product-market fit, you’ll look something like this
After you have a semblance of product market fit, you’ll begin to look like this.
I want you to remember, the road to the perfect PMF never really ends.
A quick cheat to getting to product-market fit outlined by Andrew Chen is to copy an incumbent.
As he aptly stated in his post, there are a few fundamental problems with completely cloning someone else’s product.
You can never be number one
You can never switch over other users.
But, since 80% of your success comes from 20% of your effort, you can apply that in product cloning.
Keep about 80% of the framework of your competitor the same while changing out just 20% to your own ideas. This 20% you change should be radical enough to give your product or service a completely new face and differentiate it enough to make it a “new” player.
It’ll also save you time and energy on the path to product-market fit.
Let’s take Facebook and Myspace for example. They’re basically the same platform, but one went on to be worth billions of dollars and the others faded into obscurity.
Many people will argue that they’re pretty much the same thing. Friends, sharing, profile customization, etc etc. The 20% that could have differentiated them was the exclusivity of Facebook in its early days. Do you remember when you needed a college email address to register for Facebook and be at least 18 years old?
Measuring Product-Market Fit
During the period of testing, and working to get to product-market fit. There are a series of questions you should be asking your current customers about how they feel about your product. These questions or this question will give you what’s called a net promoter score.
It basically determines how satisfied your current customers are with your product and whether or not they would recommend it to their friends and associates. The question is simple “on a scale of one to ten, how likely are you to recommend this service or brand you to friends or colleagues?”
MaxCDN asks me this question every time I log in and chat with a customer support representative.
They even add a nice touch called their transparency page.
The Grouping of Net Promoter score as defined by Netpromoter.com
Promoters (score 9-10) are loyal enthusiasts who will keep buying and refer others, fueling growth
Passives (score 7-8) are satisfied but unenthusiastic customers who are vulnerable to competitive offerings.
Detractors (score 0-6) are unhappy customers who can damage your brand and impede growth through negative word-of-mouth.
Subtracting the percentage of Detractors from the percentage of Promoters yields the Net Promoter Score, which can range from a low of -100 (if every customer is a Detractor) to a high of 100 (if every customer is a Promoter)
If you’ve got a majority of people saying they love your product then you’re golden. If not, it’s time to ask more questions to find out why.
Josh Pigford, the founder of Baremetrics, incorporates the 40% rule developed by Sean Ellis while adding a few questions to get to the root of customer dissatisfaction.
There are six questions in total.
These questions will give you invaluable insights into what you’re doing right and what you’re doing dead wrong when it comes to achieving product market fit.
You should be focusing on the users who think you suck right now and what you can do to improve their experience.
This is a more direct approach to determining how well your product market fit is going.
A more indirect approach would be to dive into your analytics.
Data Geeks are going to love this part.
The average time on my website is just over two minutes with some of my articles, like this one, keeping people on the site for over 10 minutes. This metric lets you know if the information/service you’re offering is interesting to the people that are visiting your website.
Let me say something about this, the average time on your site as given to you by Google analytics is quite skewed. For example, if you’ve written a guest blog post and users click over to your website, the tendency is for them to stay longer.
Google search traffic, on the other hand, may have a lower time on your site.
If they’re regular users of your product, they may actually stay for a shorter amount of time because they know exactly what they’re looking for and don’t need to spend time learning the ropes.
Conversely, if you’ve just written a 5,000-word article and people only stay for 15 seconds then you know you’ve got a problem on your hands.
When you’re drilling into your data, please segment and interpret everything in context.
Hell, this metric here is really quite important, but only when taken in context. Bounce rates differ from industry to industry. If you’re running a blog, the bounce rate is usually very high, about 70-90%. While the bounce rate for an Ecommerce site is about 20-40%. (source).
Bounce rate can let you know if you’re creating compelling copy and resources for your potential and currnt customers. I’ll dive deeper into this in another post in this series.
If you’re not measuring this then what exactly are you measuring?
Knowing how long someone stays with you lets you make growth decisions based on predictable revenue.
Is your retention rate 75% or 15%, do you have any idea? I’ll dive much deeper into this on the last post in this series. For now, just know it’s akin to the lifeblood of your business.
Product-market fit is a process that’s insanely user centric. Everything you do is done to make the experience for your visitors better. This in turn will grow what you’re trying to build and make everyone happier in the end.
It’s no longer just for startups, it’s something that every business in every industry is looking to achieve and it’s the first step to being a successful growth hacker.
Without having the right product serving the right market, you’re not only going to waste time and money, but become super discouraged in your idea.
Take the time and devote the resources to understanding your market and then working to fulfill their needs as best you can.
It’s not rocket science, your customers are telling you something every day of the week and it’s important that you listen if you want to move the needle and growth hack some shit.
In the next post of this series, I’m going to show you how to put your creative muscles to the test and create growth hacking campaigns that stand the test of time.
Plus a whole bunch of examples.
Let me know any strategies you’re using to get to the perfect product market fit in the comments and don’t forget to share.