Product-market fit (PMF) is the goal of every business. Often described as the intersection of a product’s viability, desirability, and feasibility, PMF refers to the degree to which a product can satisfy a market. In layman's terms, achieving PMF means that a company has a) identified a large enough market of potential customers with an unsolved pain point(s), b) successfully built a product that addresses said pain point(s), and c) priced it in such a way (i.e. SaaS, licensing) and at such a level (i.e. price skimming, penetration pricing) that customers are willing to accept.
A strong, refined PMF is the key to unlocking growth and reaching profitability. However, as part art and part science, it can be fraught with difficulties. Below are five tips founders can use to help them stay on track and reach PMF.
1. Focus on a single product
I can't stress this one enough. Founders should always focus on building, marketing, and selling one product before considering new products / verticals. While a pipeline of future ideas is necessary, lack of focus when determining PMF can lead to development delays, missed opportunities, and internal conflict.
2. Seek employees over consultants
I've seen numerous founders — either out of a fear of failure or a subconscious desire for confirmation bias — hire multiple consultants to help them reach PMF. Unfortunately, this rarely works out the way founders think it will. Instead of uncovering some game-changing business insight through market research or a proprietary methodology, these consultants often have a hard time understanding the big picture and how it applies when determining PMF.
Employees, on the other hand, consume themselves with the product — often becoming emotionally invested with real skin in the game. I’ve simply seen better results from a handful of dedicated employees than I have from groups of consultants.
3. Don't promote a product without confirming PMF
Although it can be tempting to go on a marketing blitz before you have confirmed PMF (especially when so much time and passion has gone into developing your product), founders risk wasting significant capital if they fail to establish PMF first. This isn't to say that development stage companies shouldn't spend money on product promotion, but rather that they should be reasonably confident customers will want to use their product before spending piles of cash on marketing.
A great test case for this can be crowdfunding platforms, which enable the ability for a beta launch whilst gathering critical UX feedback. There’s always the chance that target customers won't embrace your product (or at least not until specific changes have been made) — and it'll be much harder to pivot if you've spent your war chest on marketing.
4. Lean on your team for ideas
Given that identifying PMF is one of the earliest parts of a company's development, each employee at this stage should be "essential." In other words, they should be mission critical to your business' success. It stands to reason, then, that founders could significantly benefit from incorporating the ideas, comments, and feedback from such valuable personnel.
Sadly, many founders do the complete opposite. Instead of leaning on their team for creative support, they disappear into the back room with management, only to emerge hours later with the "magic plan." Not only does this often lead to subpar results (groupthink, anyone?), but it can be alienating — and potentially even downright insulting — to employees.
Employees are not order takers — they’re teammates. Order takers watch the clock while teammates focus on results.
5. Get feedback on your MVP ASAP
Even with all the planning, forecasting, and market research in the world, you'll never truly know if you have PMF until you get your product into the hands of your target customer. This is why having a wide number of customers test a minimum viable product (MVP) and provide feedback is so important.
But don't just take it from me — see what Slack CEO Stewart Butterfield had to say about the matter.
"We begged and cajoled our friends at other companies to try it [an early version of Slack] out and give us feedback,” Butterfield recalls.
Butterfield continued,
“The pattern was to share Slack with progressively larger groups. We would say, ‘Oh, that great idea isn’t so great after all.' We amplified the feedback we got at each stage by adding more teams. . ."
Product-market fit is about adapting to customer needs
Achieving product-market fit will test your team's ingenuity, ability to collaborate, and responsiveness to changing market trends. In the end, it will depend on how well your business can adapt to evolving customer needs that will determine whether or not you reach (and maintain) PMF.
