Importance of Product Market Fit
Why it’s important to consider Product-Market Fit while setting up a startup
Before you decide to invest your time, money and resources in any simple venture, let’s say a startup or maybe building an app, you must consider some crucial factors. People are making the mistake of running into startups and app development tracks, without doing a thorough research on weighty affairs such as the market needs, the problems that are already there in the market and the possible solutions to these problems. Of course the general law of entrepreneurship will apply in any of the areas that you want to delve into.
The law (something I am defining, it is not a scientific law) simply outlines that, the more unsolved problems there are in any sphere of business, the more the opportunities and the more the risks. In order to hit the jackpot clean and easy, you must determine something that sounds pretty trivial to many beginners, what we call Product-Market Fit. If taken seriously, this component forms the rudimentary skeleton of any successful startup.
Simply put, if your idea, startup or product won’t solve a problem in the market, it’s valueless and probably a waste of time and resources.
What do we mean by Product-Market Fit?
We are living in the era of the Start-up’ boom and this phrase is a common feature in this age. According Marc Andreesen,
“Product-market fit is basically being in a favorable market with a relevant product that will satisfy that specific market.”
Other scholars have complemented Marc’s perspective by implying that with a perfect Product-market fit, a product becomes literally autonomous. Meaning that it markets itself, sells itself and builds itself.
Josh porter deduced that a perfect product-market fit is where people do the sales for you. Why? Because your product is relevant.
After determining that your idea is solid and viable, you must kick start it, anticipating that it will achieve a perfect fit (as you had assumed while planning it.)
How do you gauge Product-Market Fit effectively in your venture?
So after you start your project, which benchmarks do you use to measure the product-market fit of your product? This is a fairly hypothetical questions. But any time we are talking about a startup or a venture we are talking about problems and their specific solutions. In order to measure product-market fit, we can use these three basic criteria;
1. Customer-Product attachment
In the first few weeks that your product or app is live and available in the market, you should research on how badly your customers are attached to the product. Here you ask yourself one question, if I withdraw my product from these people would it affect their behaviors and lives? This is a question you should ask your customers directly. If you find that close to 50% of these people agree that their lives will be distracted if the product is withdrawn from the market, then we can agree that your product is relevant.
2. Rate of recommendation
As mentioned earlier, a product with a good market fit is to some extent autonomous or if you like, independent’. One sign that your product is reaching this phase is if it is receiving some recommendations from users. The simple fact that a customer would recommend your product to someone else means that your product is a relevant one and that it is solving a problem.
3. Market reception and growth of the user base
A viable product in the market is received positively by the consumer. The rate at which customers try the product and decide to settle for it, should be higher than the rate at which they reject or stop using it. If you achieve some sort of equilibrium between these two rates, then your user base is bound to stabilize and probably grow.
Finding and achieving Product-Market Fit
Once you measure how far your product is from achieving a reasonable product-market fit, then it’s time to add up the deficit. Achieving a perfect fit in the market isn’t that hard if your product is a relevant one.
You must first determine how well you are solving the market’s problems at hand. For example, if you are building a social media platform, check whether your product still has the same problems as the other similar products in the market. If so, then you have to smarten up. Solve the customer’s problems better than your competitor and if possible, solve the problem completely.
In order to determine the various weaknesses that users find in other products as yours out there, you must do a market research. Here you can contact the users or customers themselves and ask them exactly what they want added in a particular competitor product. After finding out what they want in your rival’s product, find a way to include that which they want in your own product.
Product-market fit is an essential part of any venture and could be the determinant of how successful your venture will get or not. Never forget this crucial factor.