Studies show that a lot of start-ups fail because they launch things that customers do not want. The second reason why many start-ups fail is that they eventually run out of money. Product-market fit can help you avoid both of these scenarios. You will have achieved product-market fit if you find yourself in a good market, selling a product that bodes well with all potential customers. You will know you are in a good market if there are a lot of consumers, and if the growth potential of users is high.
There are several ways product-market fit can be measured. If you do not feel as though you have product-market then the chances that you do not are high. Some of the most common methods used to measure product-market fit are pages per visit, bounce rate, returning visitors, and time on site. Comparing the results from these tests to the industry average will tell you if you have achieved product-market fit or not. Your clients can also help you measure product-market fit by doing surveys. If more than forty percent of the clients you issue with surveys say they would be disappointed if you run out of business, then you have achieved product-market fit. You also know you have achieved product-market fit if your net promoter score is a positive. When you have a positive net promoter score, your customers have high chances of referring their friends and family to you.
There are several differentiating factors between companies with a product-market fit, and those without. One sign of product-market fit is money piling on your account from the sales you make. Another indication of product-market fit is the increasing need for more customer support staff. A company with product-market fit is also different from one without in terms of how fast the products produced are consumed.
There are several ways with which a company can get product-market fit. You need to start by identifying your target consumers. For you to do this, you have to divide the market into segments, with each segment comprising of a group of customers with similar behavior and needs. Market segmentation is crucial in trying to come up with your potential customers’ personas so your product team can develop a product that is appealing to them. After segmentation, you have to identify the most crucial customer needs and work on trying to satisfy them.
The next thing you need to do is look at what competitors are doing, and come up with something different so you can attract customers. When starting, include just the basic features you want your product to have since you will have time to improve later on.