What is Product Market Fit?

Every entrepreneur, by now, has heard of the importance of product/market fit.

At first I thought product/market fit was finding someone to say yes they would purchase my product on a survey (this is definitely not the case). Then I thought product/market fit was if someone purchased my product in real life (again, not the case). Then I thought it was if someone purchased my product twice (maybe).

So, what is product/market fit?

Product/market fit is when you have found that 40% of your total audience says they cannot live without your product; they purchase it over and over, AND they refer other people. Congratulations, you have found product/market fit for this SEGMENT.

Why is this important? If your current customers do not make multiple purchases and/or refer new customers, then you can never scale properly ($1.00 in marketing costs has to yield $3.00 in revenue for proper scaling). If you don’t tailor your marketing methods and channels to your core customer segment then you will attract non-repeat, non referring customers and possibly no customers at all.

Effective startup marketing is accomplished once the product, the ads, the images and the customer experiences speak directly to the paying, repeat and referring customers.

So what does this mean?

Before you try to get traction in growth, focus on customer retention and organic referral. The point is to figure out what experiences make your core customers happy, to figure out the psychological profile of the core customer and to understand what experiences make them come back over and over and refer their friends. Once you have found your core customers, study how they think and how they speak to one another, test how your headlines, your design, your pricing and your product modifications resonate with this core segment.

Think about it like this. Let’s say you have a blog, and you work on your blog until you have 100,000 visitors. But 99,999 people who follow your blog do not purchase your product then the blog is useless.

In conclusion, optimize your product, your marketing and your overall brand experience for your core customers now and scale later.