What Is Product-Market Fit? + How Do You Achieve It?

Product-market fit definition: Product-market fit is when a business’s target customers buy, use, and promote the product frequently enough to sustain its growth, making it profitable.

If your team had a light-bulb moment for a new product, how do you know if there’s market demand for it?

Enter product-market fit. Achieving product-market fit is essential for your new offering to succeed and help your business grow.

Not quite sure how to measure product-market fit? This blog post can help you, as it discusses the following:

• What is product-market fit?
• Why is product market fit important?
• How to achieve product-market fit
• Product-market fit metrics to track

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What is product-market fit?

Product-market fit is when a business’s target customers buy, use, and promote a product frequently enough to sustain the product’s growth, thus making it profitable.

A business achieves product-market fit when it understands its customers and needs. As a result, the solution it creates — a product or service — helps address the customer’s pain point at a price the customer is willing to pay.

In addition, the product must create organic growth. Through word-of-mouth marketing, new buyers learn about the solution and buy it for themselves. Existing customers, on the other hand, become repeat buyers.

Why is product-market fit important?

Gaining product-market fit is critical for any company. In fact, businesses typically need to present their solutions’ product-market fit to investors before they get funding. Product-market fit shows that your product can attract enough customers to sustain your growth.

With product-market fit, your business can:

• Grow organically
• Acquire customers at a lower cost
• Retain customers
• Help you scale your business

How to achieve product-market fit

There’s no one-size-fits-all approach to achieving product-market fit, as every business is different. However, you can get started with these tips to achieve product-market fit:

1. Identify your target customers
2. Identify your target customers’ needs that are not yet met
3. Define your product’s value proposition
4. Determine your minimum viable product
5. Develop and test your minimum viable product
6. Gather customer feedback to improve your minimum viable product

Let’s go through each one:

1. Identify your target customers

When you come up with a product idea, who is the ideal buyer you have in mind? In addition, how will your product address your target customer’s needs?

If you need answers to these questions, learn more about your target customers by conducting market research. Market research can also help you create buyer personas, which are semi-fictional representations of your customers.

2. Identify your target customers’ needs that are not yet met

What are the customer needs that your product is solving? If similar solutions are available, differentiate yours and find your product’s positioning.

For example, let’s say you’re in the furniture business. Most customers are looking for home office pieces that fit in small apartments. There are many available solutions in the market, but they’re looking for ones that they can easily move around their homes. You can differentiate your home office furniture by making ones that meet this need!

3. Define your product’s value proposition

Now that you know the needs of your target customers, clearly define your product’s value proposition.

Suppose you’re in the business of pest control services. You noticed that most customers want providers that are easy to contact after their initial treatment. You then decide that your brand’s value proposition is providing excellent after-sales care by having multiple communication channels with your customers — through live chat, email, and phone.

4. Determine your minimum viable product

Based on your target customers’ needs and your product’s value proposition, create a list of features your minimum viable product must have.

Think of it as your product’s first-generation version. Keep the minimum viable product’s feature list simple.

5. Develop and test your minimum viable product

Now that you have a list of must-have features, it’s time to develop your minimum viable product. Your first iteration won’t be perfect, so test it by letting prospects try your product.

Get their feedback. What do they like most about your product? What do they like least about your product, and what do they prefer to see?

6. Gather customer feedback to improve your product-market fit

Now that you have tested your product among your target customers, use their feedback to refine your minimum viable product to address your customers’ needs better.

Keep getting feedback with an open feedback loop with your customers. Doing so will help you develop a product that your target audience will be invested in, as they give honest feedback to help improve your product.

Product-market fit metrics to track

Measuring product-market fit isn’t an exact science, and you must look at various metrics to see if your target audience is receptive to your product.

Here are three product-market fit metrics:

1. Net Promoter Score (NPS): Will your customers recommend your product to their peers? NPS can help you determine whether they’re satisfied enough with your product to recommend it.
2. Churn rate: Did your customer stop purchasing or subscribing from you during a particular period? Churn rate can help you answer this question and tell you if customers keep renewing or buying from you.
3. Market share: Your market share tells you the proportion of your revenue vs. the sector you’re in. If your market share is consistently growing, chances are your target customers are adopting your product.

Aside from these metrics, you can tell you’ve achieved product-market fit when people are talking positively about it on social media and recommending it among peers. Media coverage of your product also indicates your product-market fit, as consumers and media alike are looking for more information about it.

Our digital marketing campaigns impact the metrics that improve your bottom line.

See Our Approach

WebFX has driven the following results for clients:

$10 billion

in client revenue

24 million

leads for our clients

7.14 million

client phone calls

Ready to achieve product-market fit?

If you want to grow your business and start achieving product-market fit, let WebFX help. We’re a team of 500+ marketers that are always pumped to deliver results that grow our customers’ bottom line.

Contact us online or call us at 888-601-5359 to speak with a strategist about our digital marketing services that help you gain and measure product-market fit!