Startup Guide to Find Product-Market Fit


A product-market fit happens when you have a definition of your target market and a product that serves them. The pre-requisite to reaching a product-market fit is understanding your target customer, their pain points, how they feel grappling with the problem, and your approach to solving the problem.

It isn’t uncommon for startups to stay on the lookout for a product-market fit two years into their startup journey, as this is the most challenging phase in a startup’s lifecycle.

David Rusenko, Co-founder of Weebly, discusses finding product-market fit in this video, referenced for this piece.

Not having product-market fit isn’t a roadblock but an opportunity to assess your startup and find the sweet spot where users sign up consistently and stay with you. Product-market fit is a key milestone in any startup’s journey and a place where many startups dwindle.

Let’s explore the process of finding product/market.

Product-Market Fit in the Stages of a Startup

Here are the stages a startup goes through-

  1. Idea
  2. Prototype
  3. Launch
  4. Traction
  5. Monetization
  6. Growth 

The first four stages of getting from idea to traction is the search for product-market fit, while the final two stages are the refinement of the product-market fit. 

Related: 5 Ways to Develop Rapid Digital Prototypes for Your Startup

Product-Market Fit: Where is the Need?

All the hard work in finding product-market fit is around learning a primary customer pain and then coming up with the right solution to approach and solve the problem.

Often, the need isn’t apparent but hidden. Users don’t know what they don’t know. Henry Ford said it best- “If I had asked people what they wanted, they would have said faster horses!” The need for cars was hidden. The pain was in being unable to travel faster. But the solution wasn’t faster horses.

All too often, a need exists in the market without the awareness of people around it. For Weebly, it looked like people wanted to design their own websites at a time when you had to know how to code to build a website. 

The need was for the ability to build a website easily. However, the solution didn’t exist yet, and the need was hidden. Weebly unearthed that need and built a service to enable people to build websites without writing code.

It’s also critical to note that the best companies create a market, such as Airbnb and Dropbox. By definition, market research doesn’t help as people don’t know what they don’t know. So, the key is to find the need first, separate from the solution to approach to solve it.

Another frequent phenomenon is startup founders offer something to a select group of customers but get pulled in a different direction by them. When this happens, it begs attention. The idea isn’t to push people to use your product but to find that pull factor so that they automatically come to it.

Once you unearth the deep need that exists within a market, you can iterate inexpensively to reach the product-market fit stage.

Related: Step-by-Step Roadmap to Developing an MVP

Steps to Achieving Product-Market Fit

  1. Talk to customers. Develop a market thesis. In this step, you don’t try to find a hole in the market. In today’s competitive market, the hole is also overcrowded if it exists at all. Instead, you find out what the minute lack is. Of course, in the case of Weebly, a solution was available for people wanting to set up their websites- to hire a web developer. However, that solution lacked accessibility and ease. Another perspective is when you study the market enough, you can predict where it’s headed. Something with little utility today might become highly valuable tomorrow. For instance, when Trustpilot was born, not a lot of commerce happened online. However, the market was already headed in that direction. So, when e-commerce boomed, Trustpilot was needed to help buyers sort fraudulent online shops from genuine ones.
  2. Listen to customer problems and not solutions. Once you have a market thesis outlining the customer, the approach and the gap, interview customers. However, completely ignore the solutions they propose because they will want a faster horse. What is the underlying job people want to get done?
  3. Rapid prototyping and user testing. Building a fully functional product over and over again is the most expensive way to test your hypothesis. Aim to build a functional prototype that you can quickly get to the users. Don’t worry about scaling the code yet. Initially, the product and the experience must work for users. Build a team that can iterate quickly and repeatedly, meaning don’t outsource prototype development, as it can thwart progress.
  4. Build the solution to their problems. At this stage, you have had several iterations and landed on one most accepted by customers.
  5. Test the solution with customers. Make sure you’re talking to target customers. The most helpful tools to test the solution are customer interviews, UX testing sessions and metrics tracking.
    1. UX testing sessions- Here’s what you need to know about conducting UX tests with users-
      1. Get users to use your product/service in front of you. This way, you can track their body language.
      2. Encourage them to give open and honest feedback.
      3. Ask them to perform a task on your product and refrain from doing or saying anything as they figure it out.
      4. Watch in extreme agony as they struggle to use your product because this tells you how smooth the user experience actually is.
  1. Next, you repeat the entire process until you find product-market fit.

Related: 10 Tips to Improve Your e-Commerce Website Accessibility 

Metrics that Prove Product-Market Fit

Three key metrics that point toward product-market fit are-

  1. Returning usage (1, 3, 7, 30 days retention)- Out of all the people who sign up, how many come back within a day, three days, a week and a month? When users start returning to your product is when they deem it highly useful.
  2. Net Promoter Score (should be > 50)- One question helps determine the NPS primarily- “How likely are you to recommend this product/service to friends and family?” The percentage of users who say they are 9/10 or 10/10 likely are promoters.
  3. Paying customer renewal rates– If you’ve already monetized your product, measure how many customers renew their payments month after month to find out if you’ve achieved product-market fit.

Striking product-market fit is one of the most challenging parts of establishing a successful startup. So, make sure you have the right team and mentors by your side. Learn more about KiwiTech’s startup ecosystem and mentorship program here.

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