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Even a product that solves world hunger needs marketing. No matter how grand or revolutionary your business idea is, burning out is a real possibility if you don’t have the necessary understanding of how your product will fit, survive and grow in its market.
In other words, having that great product is only part of the equation to entrepreneurial success. There’s lots of vital research and understanding that must also be a factor.
The product-market fit is an essential dimension of this research. It helps a business understand how healthy the market it is and to what degree their product or service will satisfy the needs of that market.
Unfortunately, as necessary as this element is, particularly for lean startups, it often goes undefined. This can cause businesses to fall flat for two primary reasons:
To ensure that you don’t fall into one of these devastating pitfalls for startup businesses, here are 5 steps to define your product-market fit and gain a deeper understanding of how to scale and market your products.
Your very first step is to know your target audience. Who is the type of person that will benefit most from this product and be easily enticed to buy it? You likely already have a type of customer in mind. However, this idea isn’t always aligned with reality, at least not fully. The market for your product may be entirely different than expected. Or, it may be larger than you thought, which means there are more potential buyers to learn and understand.
There are a few different ways you can determine your target audience:
● Look at your existing customers; what types of markets do they represent?
● Study your competitors and the audiences they are targeting
● Conduct market research (surveys, one-on-one interviews) with consumers regarding your product
● Pure guesswork and hypothesizing and then testing that theory at market
It’s okay if you don’t get your target audience defined immediately. It can be adjusted in later steps, especially when you have more accurate insights on the competitive landscape.
Once you’ve established (or at least formed a hypothesis regarding) your target audience, you can begin thinking about their needs and how your products can satisfy them. When you can offer a product or service that meets an unsatisfied need, then you have a vibrant market opportunity.
All products will face competition in the market. The level of that competition will impact how difficult it is to find underserved customer needs. Your target audience will ultimately compare and judge your offerings based on what the competition brings to the table.
The best way to identify these unsatisfied needs in the market is to ask. Engage with individuals in your target audience and ask what their points of pain or dissatisfaction are with similar products. How are the other products or companies in the industry performing in terms of meeting customer needs? What can be improved?
These conversations are sure to yield some of the best insights into how your products can deliver the necessary degree of value needed in the market. Remember, there may be instances where customers are too satisfied with their existing solutions to consider yours. Or, the market may simply not be matured enough for the value that your solution brings.
Now that you have a clearer understanding of what is missing from the market, you can begin strategizing how you’ll meet these customer needs better than the alternative solutions. Depending on the competition in your unique space or industry, your target customers may have multiple needs that can be incorporated into your value proposition.
This is the essence of a product-market fit: finding the gap(s) that your company can fill. This ensures that your products have a place in the market to attract the attention of customers. You’ll be able to differentiate yourself from the competition and gain that essential market share that your business needs to survive and grow.
That said, you should focus on only a manageable number of value proposition. There may be lots of gaps in your industry, but trying to fill them all at once will cause you to underdeliver on satisfying those needs.
This is the old adage of, “anything worth doing is worth doing right.” At the end of the day, your customers are going to be much more satisfied if you fill a single need completely, then not meeting expectations on three or four different value propositions.
This is especially true for lean startups that need to carve out a reputation quickly. Be known for doing one thing exceptionally well, and the customers will come. Wavdev stands out by stating they’re “a new way to truly understand your developers”. Pocket Points stands out by stating you can “offer and earn rewards for phone-free time in class and while driving”. As your business grows, you can scale up to capitalize on these other gaps.
Once you have a fully developed value proposition, you also gain a market-ready product. So, it’s time to bring that to buyers. This means readdressing your target audience from step #1, double-checking that it is still the right market for your product (and newly recognized value prop) and then beginning to learn how to pitch to these individuals effectively.
There’s a good chance that there are multiple different types of buyers, industries or uses for your product. Thus, you have to create different buyer personas for each of these unique types of customers because they may each require a different marketing approach. There’s no guarantee that what’s worked with one buyer persona will be as effective with the other audience segments.
Similar to your value proposition, having a narrow focus is also vital with creating and managing your buyer personas. Yes, your product may appeal to a lot of different industries and have different uses, but trying to sell to all of them at once can be extremely difficult, especially for budding startups with limited resources.
Instead, go very deep into a single vertical; become the go-to industry product in that realm. Once you have this established reputation with one industry or buyer persona, it will be easier to move to other spaces. You’ll not only have the word-of-mouth reputation working for you, but you’ll also have a documented, successful sales and marketing process that you can quickly adapt to new domains.
Your product-market fit will always be changing because the market is still moving: customer behaviors, needs and attitudes shift, new products enter the space, competition grows and shrinks, etc. To ensure that you’re always able to adapt to these changes in the landscape, you need to recognize that your product-market fit is dynamic, not static.
There’s a lot of different components that make up the product-market mix, and they can all be tested and improved upon. Trying out various price points or marketing/sales tactics, or even shifting to a new target audience\, can all potentially benefit (or hurt) your business. But, you never know until you do some safe test.
It’s also important to continuously stay engaged with your customers. They are easily your biggest asset when it comes to strengthening your product-market fit and defining your value proposition(s).
To test your market-product fit, you need to have the right metrics. This puts quantitative data behind your success or lack thereof. Data, such as customer churn rates, conversion rates or sales cycle info, can help replace some of the guesswork of your product-market fit with accurate, data-born insights.
Therefore, you should be continuously tracking, testing and measuring the success of your product-market fit, while simultaneously exploring new possibilities to capitalize on.
There’s a lot of moving parts involving your product-market strategy, which means a lot can go wrong if you aren’t careful. Following these steps and continuously working to improve your products to align with the current needs and attitudes of the market will always lead to greater success.
As you continue to test and improve your product-market fit, you may find yourself repeating some of these steps over and over. This is normal and will help fuel your understanding of how to create better product-market fits in the future.
That said, there may be times when your product just isn’t a fit for the market. This can be difficult to stomach, but the sooner you can spot those early warning signs of a lousy product-market fit, the less damaging it will be to get out of that space and on to other, profitable ventures.
Hopefully, these five steps will empower you and your business to find and capitalize on the strategic gaps in your markets.
And if you want to find out more about how Waydev can help you, schedule a demo.