3 Steps to Finding Product/Market Fit
To build a successful business, you have to be able to effectively define, develop, and achieve product/market fit.
In other words, success doesn’t come when you wait to launch until your products or ideas are perfect — instead, it comes when you’re able to identify a strong need in a good market that can be satisfied with a product you can ship.
This concept is great in theory — come up with a product-market fit hypothesis, develop an MVP, market it, and see sufficient sales volume in a short amount of time to validate demand — but what do you do when you’ve been at it for months and you’re seeing no traction, or worse, when you get initial traction, but you just can’t seem to repeat the initial sales success?
One of the most challenging parts about starting and growing a new business is keeping up a pace and rhythm after the initial excitement of starting something new wears off — especially when you aren’t seeing or experiencing the results and success that you thought you would.
So how do you do you keep the pace and energy going? How do you sustain the product market-fit discovery process for 18–24 months (as opposed to something shorter, like 1–3 months)? How do you prevent yourself from giving up too early — as in before market/product fit can actually be achieved?
Here’s how we tackle this challenge at import.io:
Run your customer development process like a sales process and sell your way to product/market fit.
To do it, you have to get certain aspects of your sales process right.
That means focusing on:
- Lead velocity
- Learning how to have authentic discovery conversations with people (i.e. not pitches)
- Using the right tools to record learnings and keep a steady pace
This post lays out a 3 step structure to sell your way to product/market fit.
1 — Develop Your Ideal Customer Profile
To get started, the first thing you need to do is put together an ideal customer profile in order to zero in on your target audience.
There are a number of templates and resources available that can help you do this. Here are a few that I recommend:
- The Ideal Customer Profile Framework & Template From Lincoln Murphy
- These Customer Development Hacks for SaaS Startups From Greg Pietruszynski
- The Customer Segment Process & Development Workbook From Customer Development Labs
Once you have a first guess at your ideal customer profile (ICP) hammered out, you can move on to the next stage in the process.
2 — Start Talking to People (not Pitching)
The next stage in the process requires you to start talking to people that match or fall into the ICP you created. This is where lead velocity becomes essential to your success. It’s something that simply can’t be ignored or skipped over. It is the lifeblood of the discovery process and any future sales process you build.
One thing to keep in mind: you’ll notice that the headline doesn’t say start ‘pitching’ to people. Your goal here is to ask good questions that uncover value — all in an effort to ultimately aid you in the product/market fit discovery process.
Here is a process you can follow:
Find 20 People to Interview
Not sure where to find 20 folks that match your ICP? Here are some ideas:
- Ask friends and friends of friends (a good confidence builder, but not the end game)
- Get publicly available lists using free tools like import.io and/or VAs on oDesk ($5/hr)
- Industry conferences
- LinkedIn groups
- Trade/professional associations typically list members in a directory
- Guess emails like this or use more automated options like Toofr and Salesloft.
If you run your interviews correctly and people have fun you will no doubt get introductions to your next 2–3 interviews if you ask.
Lead velocity is the most crtical part of this whole process, set a target of talking to 10 people/week…listen, learn, adjust, and keep the conversations going. It’s invigorating.
Here’s an email sequence for requesting interviews I use. I’ve used vet practice management software as an example. I would suggest using a low cost tool like SalesLoft-Cadence for this process, it’s cheap and makes a messy process easy to manage.
Develop a Consistent Interview Structure
Make sure you have a script or process in mind before performing your interviews.
A few best practices that have helped me over the years:
- Get your mindset right: Be genuinely curious about how they do stuff (this is so important).
- Do less talking, ask more questions.
- Silence is a good thing…let people think about their responses. Often they really open up when there is an awkward silence, sometimes they just need time to gather their thoughts.
Below is a sample interview script and you can also find some additional ideas here.
You: Hey John, thanks for taking my call. Is now still a good time for you?
John: Yep, now is a good time.
You: Great. I’d love to hear how you got into business and about your how you currently manage John’s VetCo and then get your feedback on what we are building. Is the ok with you? (Asking for permission gives John control of the conversation)
John: Sounds great. (John talks about his business and background….this gets the conversation going and loosens everyone up.)
You: Thanks so much for that, it really puts it in context.
[A few questions I’d suggest asking…]
- How do you currently managed appointments at John’s VetCo?
- Can you talk me through step by step how you did that yesterday? (this ensures John is describing real problems that happened yesterday)
- What are you trying to achieve?
- What do you like about the process?
- What is painful about the process?
- If you could magically improve the process, what would you change/make easier?
John: [Answers your questions]
You: Just to confirm I really got everything, this is my understanding of what you’re saying: repeat back the answers to the above. What did I miss?
Side note: You want to get to the level of understanding where you can describe their business as a process and with inputs and outputs. Once you get to this level of understanding you can figure out if your product enables the business to better deliver it’s outcomes (outputs)…your value proposition drops out from here. I think in terms of 2 outcomes: make more money or save more money. Eventually you want to get to the point where you can say, “Every month of delay in buying my solution, you will be missing out on $XXXX savings/earnings.”
John: yep, you got it.
Side note: next steps depend on the maturity of your business. At the idea stage I’d recommend finishing up here, formulating your value proposition, and arranging another call to get his feedback on your value proposition.
If you have a value proposition, you can start to ask questions about what it would look like if you could do ‘X’, and what would this do for your business (e.g. less no-show appointments at the vet) and what is the value of that in $$?
Mindset is key here. Don’t try to close the deal, be an honest broker who is walking through the opportunity with them to see if there is value (pretend to be a consultant). This mindset will really help you ask good questions that uncover value — this is the kind of conversation that someone who is pitching can’t have, because the buyer has their guard up.
Once you have performed enough of these interviews, your next step should be to compile your learnings and re-visit your initial ICP from step 1.
3 — Gather ICP Learnings
It’s important that you develop a way ahead of time to efficiently take notes during your interviews. The feedback you get from the people you talk to will help you improve your ICP and allow you to make tweaks in order to get closer to achieving product/market fit.
At this point, you might be wondering which tools you should be using to record learnings.
Here are some recommendations:
Track your conversations and contacts
You can use a google sheet to manage contacts, but I strongly recommend getting Pipedrive. It’s cheap, simple, visual and can easily be customized on the fly by a non-technical person. The real value of a CRM is when you want to look back in 3mths time at 350 conversations and see which ones you won/lost.
You are as good as your sales pipeline….its an asset and worth paying to manage professionally.
After 50-100 conversations, export emails with deal status (won/lost) and find LinkedIn details (job_title, company, skills etc) for each contact via Rapportive. Dump them all into a spreadsheet like this one and try to find commonalities between contact attributes and won deals (do the same for lost deals). Then find more ‘ideal customers’ using LinkedIn’s advanced search (this is only really useful for B2B products). I would suggest making this a monthly review process that feeds back into stage 1 above. If you’re doing this at scale (>1,000 contacts) I’d suggest using an API like Clearbit.
Pace & Mindset
This whole process can feel like you’re walking through a desert — Fear and Loathing in Las Vegas-style…it’s very easy to lose direction and mindset. Use your CRM and metrics such as # of conversations and # of won/lost (judgements) to keep the momentum going and your confidence up.
Focus on the doing not the outcome, do the process well and the outcomes will fall out by themselves.
Rinse and repeat this process as often as you need to in order to sell your way to product/market fit.
One last thing to keep in mind here: taking notes on what was valuable is important, but the truth is, no note taking will take the place of conversation volume…it will become pretty obvious who your ideal customer is the more people you talk to, especially when they start buying☺
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So what happens when you spend time investing in everything mentioned above?
The final output (hopefully) is that you are able to effectively narrow in on a customer profile and clearly identify a problem you can fix. This learning process is ALL that matters pre product-market fit and then morphs into an ongoing sales-marketing-product feedback loop as you hit product-market fit.
Care to share your experience or insights? Leave a comment below — love to hear your thoughts.