How to know if I have a product-market fit?
Product-market fit: what is it, and how to reach the desired point? Read the guide to learn more about how to deliver the ideal solution.
How to know if I have a product-market fit?
The way to product-market fit (PMF) is not paved for all projects. Since everyone has their own path, how do you find yours? Or how do you know if you've hit that "product-market fit" point?
“You'll feel it" won't necessarily lead you in the right direction. Although, as Marc Andreessen noted, “You can always feel when product/market fit isn’t happening. The customers aren’t quite getting value out of the product, word of mouth isn’t spreading, usage isn’t growing that fast…” . Indeed, you are more likely to feel that something is wrong. The thing is, many times, companies release a product, see the first positive outcomes, and think they've found the product's fit with the market. Now you can breathe a sigh of relief! But that's not really the case. You may see a fleeting glimmer of success, start expanding the team, increase the resources invested, and optimize your solution before you really find that all the time and money spent has turned to dust.
To make sure you're on the right track, you need to understand what product-market fit is, how to achieve it, and how to measure it. This article is about that.
Starting from scratch: what is product-market fit?
A product-market fit is a state/period/moment when your product addresses certain needs of a certain audience in a certain market segment.
And, as you have already guessed, to find that very unfilled market gap, you need to identify:
- Those very needs.
- That very audience.
- That "problematic" healthcare market segment.
Now let's move on from theory to business.
How to identify product-market fit: 3 steps to overcome
Step 1. Users and their unmet needs
Figuring out exactly who will use your product is paramount. If you have a vague idea of the customer, you run the risk of releasing a product that "fits everybody and nobody at the same time". You should make a clear picture of who will use your product. The details are crucial as only then will you be able to tailor the product.
Of course, it doesn't mean users outside your target won't benefit from your product. It may even be the opposite. But a clear portrait will help provide a benchmark by which you are more likely to reach the very pain point. Identifying that your user is a Gen Z person may not be enough. It's worth expanding into details such as habits, occupation, and even eye color and hair length. More information equals better tailoring and, thereby, higher chances that you will address the need.
For example, a digitally savvy user orders a supplement on a pharma marketplace. Such a user will want to track the delivery of the product to know the exact time of its arrival. To solve this issue, a tracking feature can help them monitor in real-time the product's movement from the "warehouse" to the "courier at the door" moment.
Step 2. It's time to find your UVP and put it into your MVP
The desire to “pack” everything at once into one application is quite natural. After all, the more functions there are, the more likely each of them will find its user. However, this scheme is no longer a win-win. In a highly competitive market, those who represent "less but matter" are likely to take the lead. In other words, whoever manages to provide the market with a unique value proposition (UVP) within their minimum viable product (MVP) will be the winner.
Step 3. Measure performance
How do you know if your app is right for the market? The answer is in the users themselves.
During this step, you put the product in the hands of the user, who is the primary "judge" of your product's utility. Surveys are what will help you understand and document product advances and shortcomings. For example, you can ask the following questions to your potential user:
- What prompted you to use the product?
- Why our product and not another solution?
- What do you like/dislike most about it?
- What is the main benefit you get from using the solution?
- What would you improve about the product?
- Would you recommend it to your friends?
If users love the product, continue to use it, and, more importantly, recommend it to their friends, then you’ve achieved PMF.
In the survey stage, you can pay attention to the so-called "40% rule,"  first introduced by Sean Ellis, entrepreneur, startup consultant, and author of the "Hacking Growth" book. He studied more than a hundred startups, and each time he asked users the following question: "Would you be disappointed if you could no longer use this product?" Then he analyzed the responses and figured out, according to his calculations, the ideal product-market fit rate — 40%. So, if 40% answered "yes, they would be very disappointed," it was a sign that the solution fit the market.
Metrics to use when measuring PMF
- Net Promoter Score (NPS)
It indicates the extent to which customers are willing to recommend your product to others.
- Retention Rate
The percentage of customers who keep using your product for a certain period of time.
- Customer Satisfaction Score (CSAT)
It determines the level of customer satisfaction when using your product.
- PAM, TAM, SAM, SOM
Tools for market size analysis.
It is worth being prepared as, in most cases, a product does not meet the market at the first attempt. Testing, adjustments, testing again, and so it can go on several times. The team behind is what's essential all the way through medical product development. For this reason, it's worth looking to med-focused specialists who know all the pitfalls of digital health. Brandmed can help you with that. From the analysis stage to the roll-out and support stage, we can assist you in creating a PMF-oriented solution. Just contact us, and we'll discuss the details.
- Pmarchive, Part 4 The only thing that matters, https://pmarchive.com/guide_to_startups_part4.html, [last accessed: 25.02.2023].
- PMF Survey, Product/Market fit survey by Sean Ellis and GoPractice, https://pmfsurvey.com/, [last accessed: 25.02.2023].
- Hubspot, How to Determine Product Market Fit in Your Industry, https://blog.hubspot.com/sales/product-market-fit, [last accessed: 25.02.2023].
- Lenny's Newsletter, How to know if you've got product-market fit, https://www.lennysnewsletter.com/p/how-to-know-if-youve-got-productmarke [last accessed: 25.02.2023].