How to Map Product-Market Fit as an Early-Stage Startup
31% of start-up founders do not know what Product-market fit (PMF) is and over half of them do not know how to achieve it (as per a survey Eximius Ventures conducted). Not being able to achieve PMF is one of the biggest reasons a startup fails.
Product-market fit (PMF) is a point that every early-stage startup strives for but finds hard to navigate. If you search what PMF means, you will probably land on different versions of its definition. At their core, all of them mean this:
PMF is when customers start buying and using your product without the need for marketing.
In other words, it denotes a phase when marketing funds are no longer required for customer retention but for growth and scale. Huge marketing budgets can bring customers to the product, but not retain them in the long run. More than building a stellar product, achieving PMF depends on what you do before and after it.
Whether you’re a founder wondering how to achieve PMF for the first time or returning to nail PMF again, here’s a step-by-step process to map it:
- Narrow down your customer base
Even when you’re solving a problem you’ve personally faced, there will be as many experiences as there are people.
Before thinking about the product, think about who you see using it. What income group, age, geography, etc. do they belong to? What related problems are they facing?
Along the way, you might refine the persona or discover that you are building for more than one personas. The main idea is to know exactly which group(s) you’re selling to so that your efforts are laser focused from the get-go. It is important to ensure that the product is built for more than just a handful of people.
2. Dive into the market
A market is made up of everything from sellers to products to buyers.
What is the existing customer behaviour? What solutions are in use already? Would customers be willing to pay for a new solution? How much?
Identify gaps that you can fill with your product and break through. This can be better features or affordability or convenience or better experience. If you’re unsure, take surveys to understand your cohort’s needs more.
Lastly, determine whether you have an already thriving market or plan to disrupt it with your product. The former will take less time but the latter will take longer, since customers would need to be educated. If customer behavior needs to be changed or created, try to understand if it is possible in small groups.
3. Working your solution
This is where you find the sweet spot between your persona(s) and their underserved needs.
You might have recognized several gaps in the previous steps, but be specific and cater to the core problem initially, instead of spreading yourself too thin. Separate the essentials from features that can wait.
Build a minimum viable product (MVP), a painkiller which will solve your core problem statement in a very simple way and tell you if customers will find the product useful.
4. Deploying and testing MVP
Once your MVP is ready, pick a small group from the persona(s) you defined and test it with them. Try to have a good representation in the group to ensure that you are not taking feedback from a lot of people but at the same time not narrowing your scope too much either.
Instead of relying on the product alone, make it go hand-in-hand with educating customers on its usage, features, etc.
Once they use the product, utilize your team to ask questions that allow you to understand how the user experience is:
- Are they adopting well?
- How likely are they to continue usage?
- Are they willing to pay and how?
When it comes to the first few customers, it’s best to go for one-on-ones for thorough responses. However, scan for any helpful online reviews that come your way as well.
5. Incorporating feedback
You can filter responses according to levels of usage (free vs. paid features) and then identify common user patterns or concerns, which can help refine your MVP.
You might discover that you can solve the gap in a bigger way and build a second MVP or that you can educate users more.
The more iterative your product development process is, the more likely it is to get closer and closer to your customer’s definition of “valuable”. A product that they can return to, pay for, and most importantly, recommend.
Until then, incorporate feedback and then go through the process again.
Once you have hit PMF, it is time to scale rapidly and start expanding your customer personas.
All things considered, the most important part is realizing that PMF is not a checkpoint, which when once passed, will not require more effort. Your product can (and likely will) need updates with evolving customer needs or with competition entering the market. As long as you consider this process of learning as a way to ensure lasting improvement, you’ll piece it together.
