Finding product market fit is the most fundamental part of building a company. Don’t worry if your product or service isn’t a perfect market fit on launch day. Every successful business iterates. Use these important product market fit questions to create a product that customers are ready to pay for.
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Product Market Fit Definition
Product market fit definition: the alignment of a product’s features and benefits with a target market’s needs and desires.
To have a successful product, your target market must be large enough to sustain consistent sales that will support your business. If not, you will end up spending a lot of time and money creating a niche product that only a few customers will buy.
The product market fit question you are addressing is this:
- Is there sufficient demand for my product?
Many small businesses build a product based on what they think is a great fit with a market segment. While this approach is useful for creation version 1, it may not resonate with your potential buyers. To find out if there is demand, you must follow a process.
Finding Product Market Fit
When evaluating business opportunities, your goal is to identify products that are in demand. The same applies when you create your own product. If there is little to no demand, you will struggle.
The process of finding product market fit goes like this:
- Build something you think is a good fit with your target market
- Show it to prospects
- Rework your product based on their feedback
- Show it to them again
One of the dangers that entrepreneurs face is being married to their product. There is an emotional attachment to something you create. That’s why listening to feedback from prospective buyers is a crucial step in the process.
Signs That Your Product Needs Tweaking
Hearing is different than listening. To get honest feedback about your product, you have to separate your emotions from the task at hand and really listen to what your prospects are saying. Otherwise, you might be stifling your own progress in finding product market fit.
This is easier said than done so you might want to have a friend or advisor solicit customer feedback. Watch for these signals – they suggest that your product needs modifications:
- Being defensive about certain features that you built
- Needing to coach or guide a prospect on how to use the product or a specific feature (if it takes a lot of time to explain it, people won’t use it – even if it seems logical or obvious to you)
- Answering the same question over and over again from different prospects
- Reading prospects’ faces and seeing confused or neutral reactions
- Learning that few people would be willing to pay for the product
- Finding out that your prospects are only willing to pay far less than what you need to charge
For web-based or SaaS products (software as a service), use screen recordings to get feedback.
Don’t bury your head in the sand if you don’t like what you hear. When you keep an open mind, you can build a profitable product.
If you build a web-based product, try using an automated recording tool like Lucky Orange (affiliate link) that records a screencast of your user interacting with your website and product.
Product Market Fit Examples
For one of the products my company built, we found that our trial signup page had too many fields to fill out. Our screencast recordings show user after user leaving the site after filling out a few fields. So, we shortened the form down to just three fields and our trial signups increased dramatically.
On another product, we developed a project description and created mockups. We then invited some of our clients, who we thought would be ideal prospects for buying the product, to a private meeting.
We showed the mockups and the clients loved it. However, when it came to pricing, we discovered that clients would not be willing to pay enough to cover the cost of production, not to mention adding a profit margin.
As a result, we abandoned building out the full product. It would have cost hundreds of thousands of dollars and months of development. We saved that money and time because we determined early on that the market was not ready to pay for it.
Asking ourselves important product market fit questions was a critical step in our success.
Product Market Fit Questions
During the product feedback process, many entrepreneurs miss their queue which, in turn, leads to failure. They forget to ask the two most important questions that will define their success:
- What do you think?
- What would you change in the product that would make you want to buy it?
These are the most important product market fit questions you can ask anyone. The second question goes to the heart of whether your prospective market is willing to open their wallet and pay you their hard earned money for your product. I first heard it at a Vistage talk I attended by a former executive at Harley Davidson. They used this question to turn around the company during a sales slump.
if prospects are not willing to pay for your product, it means there’s no market for it. You would be fooling yourself into thinking otherwise.
After every iteration of refining your product, ask question #2. It will help you build a great product that will generate a lot of money and save you from pursuing unprofitable ideas.
