Understanding Product-Market Fit
The number one cause for new venture failure is the building and launching of things that customers do not want. The second reason why many start-ups fail is that they eventually run out of money. Product-market fit can help you avoid both of these scenarios. Companies that can say that they have achieved product-market fit are those that are in markets with a high number of customers, selling products that are in demand. A good market means not only high numbers but also high growth capabilities.
Product-market fit can be measured in several ways. If you find yourself often asking if you have product-market fit, then you most likely do not. Pages per visit, bounce rate, returning visitors, and time on site are some of the most commonly used product-market fit measuring techniques. The results gotten from these methods are compared with the industry average. Your clients can also help you measure product-market fit by doing surveys. If more than forty percent of the clients you issue with surveys say they would be disappointed if you run out of business, then you have achieved product-market fit. If you have a positive net promoter score, then you have achieved product-market fit. When you have a positive net promoter score, your customers have high chances of referring their friends and family to you.
There are several differentiating factors between companies with a product-market fit, and those without. If you have money that is piling up by the day, then you most likely have product-market fit. Another sign of product-market fit is the need to hire customer support staff to help the increasing number of customers. A company with product-market fit is also different from one without in terms of how fast the products produced are consumed.
Product-market fit can be achieved in several ways. The identification of a company’s target customers is the first and one of the most important steps in product-market fit achievement. You need to divide the market into segments for you to identify your target market. For your product team to come up with a product that is appealing to your target customers, you have to be in a position to describe their personas, which is why market segmentation is vital. After segmentation, you have to identify the most crucial customer needs and work on trying to satisfy them.
Next, find out what your competitors are doing, and come up with fresh ideas to get customers excited about your products. You have a lot of time to improve on your product in the future, which is why you only need to include the basic features when starting.
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