What is Product-Market fit?
Product-Market fit is a concept that refers to the degree to which a product satisfies strong market demand. Defining a Product-Market fit is the first of the ventures which articulate the key assumption that underlies why a customer is likely to use your product. Understanding the product-market fit will help you see the market differently and will give you more insight around how to satisfy the market - basically how to articulate your product so that the customers can derive maximum value out of it.
A bad product-market fit can be a disaster for your business despite developing an adequate product. 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, the sales cycle takes too long, and lots of deals never close.
On the contrary, when the customers are buying the product just as fast as you can make it - or usage is growing just as fast as you can add more servers means you have a good product-market fit. Product-market fit is when your customers sell your product - it means when customers itself begin to share their positive experience with others when you can replicate the experience with every new user who your existing users tell, then you have product-market fit on your hands.
How to Measure Product-Market Fit?
Getting a product-market fit is a top-most priority for your business. Talk to customers, change your messaging, rewrite your product, move to a different market, or any other thing that is required for a product-market fit - do it, there are no constraints when it comes to having a product-market fit. To measure a product-market there is no perfect framework, but there are few approximations that can guide your journey to Product/market fit
- Do your Customers Recommend you to Friends?: Net Promoter Score (NPS) is a simple survey, asking customers to rate from 1–10, “How likely are you to recommend _____ to a friend or colleague?”. NPS can show you how excited the customers are for your product.
- Customer Churn: How Many Customers Leave & How Soon? Look at how the percentage of customers regularly active changes from the no. of days of acquisition. If you can retain maximum costumes, that indicates a good product-market fit.