Product-market fit is a situation where a company targets customers to buy, use, and tell others about a product in large enough numbers that it sustains the product’s growth and profitability.
You can think of it as the level to which a product satisfies market demand, and this process has been determined to be a crucial first step in building a successful business.
Good product-market fit is where a large enough number of people want, use, and recommend the product. This includes the market size as well as the industry’s overall willingness to buy your product and how much they pay for it.
Poor product-market fit means that the market doesn’t want the product, in which case it will be very hard to achieve your sales objectives.
There are many reasons for bad product-market fit, such as introducing a product to the wrong market or a marketing message that is not aligned with the target customer.
Whatever the reason, if you haven’t found a product-market fit, there are certain steps you can take, and that’s the focus of this article.
So read on to learn 5 best practices for increasing product-market fit.
1. Clearly Define the Pain Points Your Product Can Meet and Relieve
Defining the pain points your product addresses is the first step in the process. Unfortunately, many businesses simply want to achieve PMF as quickly as possible. However, product-market fit isn’t a natural response to being able to satisfy the needs of your customer base in a specific market.
You must be able to create products that serve a market with a strong enough demand and enough customers who want the solution your product provides.
When conducting this research, you can also look at how other similar products from competitors have performed in the past.
- How successful have they been?
- Are there any current economic or legal restrictions that might hinder the receptivity of your product?
- You might even think about things such as overall staff churn cycles, and more.
The more effort you put into this first step, the less likely you will be to choose a product or market that will hinder your success from the start.
This is worth doing well because there’s nothing worse than investing money, time, and other resources into a product that no one requires or appreciates.
2. Discover Who Suffers Those Pain Points
Your next step in increasing product-market fit is to discover the people who suffer the pain points you identified in the first step.
If you’re not sure about your target buyers, then you should first create buyer personas that clearly reflect your target customer’s pain points, needs, goals, buying decisions, and more. This will help you save money in the long-term and ensure better product-market fit.
Here’s an example of a buyer persona that includes everything from the user’s bio and personality to their goals, motivations, and frustrations.
Make sure your company value proposition is aligned with the ideas that are expressed by those customers you want to sell to.
Keep in mind that consumer attention is just a small part of the customer’s buying process and that buyers generally need more from products in order to feel incentivized to follow through with the purchase.
Also, there is a gap between “visionary early adopters” (the people who create the product and the ones who provide feedback and opinions in the beginning stages of the product-market fit process) and the “mainstream market” (the people who are meant to buy the product).
If you don’t conduct enough research on your target audience’s pain points, you will likely build a product that is based on the feedback from visionary early adopters instead of the people who actually share an acute pain that could be solved by your problem.
So, you must be clear about WHO needs your solution. You must appeal to a specific segment of the market with common goals.
3. Categorize Individuals by Other Qualitative Characteristics They Share
Once you know who suffers from the pain points addressed by your product, it’s time to categorize those individuals by other qualitative characteristics they share.
Qualitative research is all about collecting and analyzing non-numerical data so you can understand the opinions, concepts, or experiences of your customers.
You can collect this type of data through the use of:
- First-hand observation
Most importantly, much of your data will come from analytics dashboards native to the social media, website builder, email marketing tool, or other digital platforms you’re using to reach your target audience.
With this information, you’ll be able to get a closer look and know more about people’s behavior, beliefs, attitudes, experiences, and interactions.
Remember, for customers to easily buy your product, they must be convinced that it will be useful to them in some meaningful way.
In other words, your product needs to provide a solution that your target customer can easily buy.
By assessing qualitative data, you’ll be able to answer questions about whether or not your product resolves a significant (or urgent) enough problem for the individuals you are targeting, and how to provide more value to customers so you can more accurately determine how high a demand your product will potentially have.
4. Design Campaigns for Target Audiences As a Segmented Market
Step number 4 in the process involves designing campaigns for your target audiences as a segmented market.
Your product needs to have a defined client buying process. When a prospect shows interest in your product, this process dictates that they will likely want to research similar alternatives for the product.
They’ll read reviews from other customers, test out alternatives, or consult with other decision-makers, especially those in the B2B SaaS space).
The image below shows the 5 stages of the customer buying process:
If your marketing and sales campaigns don’t foresee the process each prospect goes through when trying to decide whether or not to purchase your product, you will likely lose out on a lot of sales.
The good news is that you can design effective campaigns that are super targeted at your ideal customer who makes up that segment of the market. For example, you can use product demo videos to convert customers in a consideration stage. The product demonstration can further nudge them down into your marketing funnel.
This way, you are more likely to get conversions and increase your sales by matching the right message to the right customer at the right time (that is, at the right stage of their buyer’s journey).
All of this depends a lot on having sufficient data on these four important factors:
- Who is your target customer?
- What are their pain points?
- What is their purchasing behavior?
- What process do they go through when deciding whether or not to make a purchase?
5. Increase Demand Within These Segmented Markets
If your product doesn’t have a big enough market need, then you don’t have product-market fit.
But, once you follow the steps above, you can increase demand within the segmented markets using a variety of digital marketing strategies such as:
- Social media marketing campaigns
- Email marketing campaigns
- SEO-generated content
- The use of online course platforms
- Hosting a podcast
- Streaming live on-site, social media, or other channels
… and various other strategies.
When you can achieve a good product-marketet fit, you have taken the first step toward adapting your business processes to align with your target customers and generate brand loyalty and brand ambassadors in the long term.
On the other hand, ignoring a lack of PMF can result in devastating effects on the growth of your business.
You will likely be missing out on a lot of eager consumers who want to purchase a product such as the one you offer simply because you are focused on the wrong segment of the market.
You will continue to experience the telltale signs of bad product-market fit, including:
Poor customer reviews
… and so on.
That’s why choosing a profitable market with a high enough demand for your solution and increasing demand within those segmented markets is the biggest factor in achieving good PMF.
If you don’t have a product-market fit, use this article as your resource to get started increasing PMF right now.
And remember, this isn’t a one-time event, and neither is it a one-size-fits-all process. It’s an iterative process that requires continual collaboration between the different teams of a business, including leadership, product, marketing, services, and sales.
With the right process, you’ll be able to validate your business idea or product before it’s officially launched into the market so you can sell your product to the right audience who find value in it, allowing you to grow and scale your business.
Has this article helped you understand the importance of good product-market fit and how you can achieve it in your business? Let us know below!