A direct translation of “Product Market Fit” into English is probably “The suitability of the product to its market”, but this would only very partially describe the concept (or even a phenomenon), which covers much more. You’ve probably heard this very popular term among start-ups? But what does this mean? And most importantly, is it important to you?
What is the concept of the Product Market Fit?
The Concept of the Product Market Fit describes the phenomenon or stage of a company’s development when it is at the stage where the following three objectives are perfectly fulfilled:
- The product or service is desired by its customers and fully satisfies them
- It is cost-effective to produce, including when you significantly increase the volume of customers
- The sales force finds repetitively and for quite some time customers who are satisfied and loyal
Note that all 3 criteria must be at the same time at a high level of performance before you can say that you have reached the sacrosanct Product Market Fit and accelerate your growth.
How do you know if you have found your Product Market Fit ?
Typically, the most reliable (and euphoric) sign for the entrepreneur is a sustained increase in sales (with equal sales efforts, of course). Other signs are, for example:
- your customers recommend you and bring you additional customers
- social networks talk (well) about you
- competitors become nervous and react, for example by lowering their prices
- your hit rate in the funnel of ongoing business increases
- your customers use your product or service more and more
- prospects contact you (inbound)
- your churn is in (sharp) decline
- you have trouble processing all orders and delivering
- the media talks about you
How long does it take to find your Product Market Fit?
In some cases, it may be immediate, but in others never… look below how to do it.
Some examples of how long it takes for well-known companies and some nice verbatims I found here:
- Netflix: 18 months
- Airbnb: 2 years
- Uber: immediately (even if we can discuss it, considering the profitability)
As you can see that contrary to what you might have thought, success, the Product Market Fit is rarely immediate.
What to do once you have found your MFP?
It’s simple: sell, sell, sell!
Indeed, take the opportunity to increase your customer base, become a de-faco standard, and earn a lot of money!
And it should be (almost) easy, or mechanical, because when you have the Product Market Fit, your business operations are scalable, in other words when you add 30% of salespeople, you sell “mechanically” 30% (or more) more. Or if you spend 30% more on marketing, you will “automatically” gain 30% more customers (or even more). And since these acquired customers are profitable, adding customer acquisition costs should be of no worries for shareholders.
And what to do when you haven’t found your Product Market Fit yet?
Unfortunately, no miracle solution: listen, observe, try, adjust, adapt, test!
Need help finding your Product Market Fit? Look at my profile,maybe I can help you in this process?
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