The Key to Fast Growth is Achieving Product-Market Fit
You set your alarm for 11:58 p.m., two minutes before the new collection drops. You type as fast as your fingers will let you, adding the coveted items into your cart. But as you hit “Complete Purchase,” the familiar red “Sold Out” text flashes. This has been a common occurrence for your favorite shop: season after season, collections sell out within seconds, leaving some exhilarated and most frustrated at the outcome.
This business has achieved product-market fit.
Product-market fit doesn’t always mean that every collection you release sells out in seconds. But it does mean that people find out about your store by word of mouth, or that you have a steady stream of customers and sales, or that your product solves a problem within a larger, lucrative market.
Here, we’ll cover what product-market fit is, how to prove your product concept, and how to use marketing and customer feedback to find it.
What is product-market fit?
The Lean Startup summarizes Marc Andreessen’s definition of product-market fit as “the moment when a startup finally finds a widespread set of customers that resonate with its product.”
Finding product-market fit doesn’t necessarily provide an aha moment, but you can think of it as when the interest from customers validates that your product satisfies a need or solves a problem.
The reason it’s important for you to find product-market fit for your business is that it’s an early indicator of success. Businesses that achieve product-market fit can use organic marketing or word of mouth to increase their customer base and sales. Businesses that don’t achieve product-market fit need to rely heavily on paid advertising (which costs a lot of money), and can easily get stuck in a cycle of slow or limited growth.
How to find product market fit: advice from an expert
We chatted with expert Andrew Chen, general partner at Andreessen Horowitz, and author of The Cold Start Problem, to get his take on how to find product-market fit. Finding product-market fit is a process, and it’s not always clear where to start. Andrew provides a clear direction and a place to begin the journey, even if you’re still playing with what your product is going to be and who you’re going to sell it to.
Product-market fit, according to Andrew Chen
“Imagine a coffee cup—done? Great. Most likely you instantly found product-market fit, and it took you 100 milliseconds, because a coffee cup is in a well-defined, existing product category. You know the features that people expect and want, and the problem is about differentiation and distribution, not product-market fit.
“On the other hand, imagine a new social travel app that allows you to share short audio snippets about your journey. It’s likely that even if you raised millions of dollars, hired a team of designers, and iterated on dozens of concepts, it would take a long time to find the exact version of the product that gets you to product-market fit.
“In other words, the difficulty of product-market fit exists on a spectrum—with maximum difficulty products that are completely new at one extreme, and undifferentiated but well understood, products on the other. And of course, there are simply more variables to tweak and adjust in a mobile app versus the humble coffee cup.
“When founders have trouble finding product-market fit, I ask them to do this exact exercise. With their product at one extreme, I ask them to imagine the most boring, undifferentiated clone version on the other. For the aforementioned travel app, it might be a travel guide or a travel booking website. Naturally, this will sound dull. But how do you pick a set of features that gives the proper ‘twist’ that exists between the two extremes? How do you dial down your fancy new concept and take a few small steps—but not all the way—towards something that consumers already understand?”
Key takeaway
As you begin the process of finding product-market fit, Andrew suggests walking through an exercise. Simplify your product idea, compare that version with your current plan, and find a version that exists between the two, one that customers will definitely understand.
The importance of a good market vs. a good product
Finding product-market fit often means identifying a good market (one that is large and has demand) and molding your product to fit the needs of that market. You could build the best product that solves multiple pain points for customers—but if there’s no market to support it, or the market is weak, your product will fail.
That’s why it’s essential to use the market as a way to shape and develop your product. “You mold your product to fit a market by listening to the market,” says Elad Burko, founder and CEO of successful business Paperwallet. “Listen to your customers. Take your product to the customer, try to sell it to them. Understand what’s important to them, what’s not important to them. … If there are features in your product that the customer doesn’t care about, get rid of them.”
Sustainable underwear brand Parade is a good example of how a great product idea and a strong market can work together to build a successful business.
The underwear market is always going to be around. And it has extensive fundamental issues—many companies don’t make underwear in plus sizes, and use packaging and materials that are bad for the environment, to name a few. Parade identified those issues and uses its products to solve pain points for its customers. Its underwear comes in sizes from XS to 3XL, is made in sustainable fabrics, and ships in sustainable packaging.
Parade’s founder identified a great market and delivered a product that aims to solve a few fundamental needs. In doing so, Parade has reached a devoted customer base that has fueled its success.
Proving your product concept
The first step to achieving product-market fit is to actually prove that your product is something customers want to buy. Sounds simple, but until you get your first few sales, you won’t be able to get feedback, which limits your ability to know how you’re doing or what changes you can make to improve.
Nimi Kular, co-founder of Jaswant's Kitchen, a business that sells all-natural Indian seasonings, says that the best way to validate your product is to start making sales. “Market research, surveys, and feedback from friends and family can point you in the right direction,” says Nimi, “but real product validation only happens when money changes hands. For us, that happened at the first few shows we went to, where complete strangers bought our product. That’s when we knew we were fulfilling a genuine need with a product people would pay for.”
Real sales aren’t the only way to prove that a product will be lucrative, though. Here are a few other ways to do it.
Use Kickstarter to establish proof of concept
Kickstarter provides a built-in audience already interested in supporting new product ideas. It creates a low barrier to entry to try out your idea and see how the market responds.
Elad Burko, CEO of Paperwallet, recommends putting up your products on Kickstarter to see how the market responds. Even if your product fails this time, you’ll gain a loyal base of backers to help you get it right—which may just mean changing up your marketing messaging.
“It was an amazing way to connect to people who are passionate about what you’re doing with your product,” says Burko. People who are “willing to give you the feedback that you need, be it positive or negative. You interact with them so that you can grow so that you can improve. And that’s invaluable to a business.”
Validate product ideas with organic marketing
The founders of Pantee, a sustainable fashion brand that upcycles deadstock t-shirts into underwear, used Instagram to validate product ideas at the very beginning.
When Pantee had around 400 Instagram followers, the founders sent out direct messages via Typeform that asked questions about favorite underwear styles, how much people were willing to pay for underwear, and how they felt about sustainability. The 200 responses they received helped drive product decisions, as the team was still developing samples.
Co-founder Amanda McCourt says that she and her sister used Instagram to do “a lot of community engagement. We didn’t just post one thing, we actually engaged with our audience. We spoke to them, listened to what they're talking about, and what they liked. We did a lot of that and it really has paid off.”
Using organic marketing channels is free, and it’s a great way to start building an engaged audience early on. If you’re still in the product development phase or you’re trying to prove the concept, consider creating a social media account on whichever channel feels better for your brand before your products (or even your official website) is ready. It’ll give you a direct line to the people most likely to buy your product in the future.
Analyze product effectiveness with jobs to be done
Use the jobs to be done framework to better understand if your product solves a problem for your customers. Think about it this way: customers “hire” your product to do a job. You might hire a leash to keep your dog close on walks, or hire an umbrella to keep you dry in the rain. These products fulfill a need. It’s less about what you purchase a product to do (I’m going to use this hammer to put a nail in the wall) and more about the result (I’m hiring this hammer to help me put up this piece of art).
As the original authors of the framework wrote, “By mapping out every step of the job and locating opportunities for innovative solutions, companies can discover new ways to differentiate their offerings.” When you pivot to think about the end result, the usefulness of an item becomes more clear.
Use customer feedback to mold your product to fit the market
Creating an open feedback loop with your customers, especially at the beginning, is key to developing something your target audience will love early on. Those early customers are more likely to be invested in your product, more likely to stick with it while you work out the kinks, and more likely to provide honest feedback. They are the best people to lean on as you grow your business, so giving them an easy way to provide that feedback will make the process easier for everyone.
Creating an open feedback loop with your customers, especially at the beginning, is key to developing something your target audience will love early on.
Aaron Luo, CEO and co-founder of sport bag and accessory company Caraa, remembers his first 20 customers because of the amazing feedback they gave. The key was being transparent with those customers upfront that Caraa was a new business and that it wanted feedback.
Luo basically told customers, “Listen, we are an emerging brand. This is our story. This is what we’re trying to fix in the market space, and here are our products, and we welcome any feedback.”
Properly positioning your product in the market to achieve a fit
Customer feedback also plays an essential role in the way you position your product. You could have a great product and a great market, but if your marketing messaging is off, sales will be as well.
Ultimately, you need to understand your target audience and the problem they need to solve. Elad Burko, CEO of Paperwallet, shares a good example of this during his interview with us on the Shopify podcast.
The message is not, “This wallet is made of paper yet doesn’t rip.” It’s, “This wallet is low profile, durable, water resistant, and will last a long time.” See the difference? The first message doesn’t actually offer a solution to a problem. The second message speaks to common issues customers might have with their current wallet.
There are multiple ways to get feedback on your marketing messaging. Here are a couple of options you can try:
- Meet potential customers in person. Bring your product to farmers markets, trade shows, etc., and get feedback on how you’re presenting your products. Getting a lot or a little interest is even a great way to understand how you’re doing.
- Use social media channels to gauge reception. Establishing a loyal customer base organically is a great way to get product feedback, but it’s also a free way to see how people respond to your product positioning, too.
- A/B test different messaging on paid channels. Paid advertising allows you to test different types of messaging against each other to better understand what resonates with your target market.
Leave room for change
Even as you find product-market fit, what your customers need and the larger market is always going to be evolving. So, it’s important to keep those feedback loops open and to continue iterating on your product and messaging over time. That way, you’ll keep product-market fit even as the market changes or as your customers want different things.
