Most business owners understand that demand for their product needs to exist if the company is going to be successful – but they underestimate just how important PMF is, or calculate it the wrong way. Correctly calculating PMF can give you better perspective on your product’s fit in the industry, your customer perceptions, and even the best directions for your company to follow in the future.
Finding the right product market fit is critical for a startup's survival. The lean startup methodology has popularized early customer feedback and validated learning as a means to achieving this fit. But not all customers are created equal, nor should they be given equal weight in your quest to achieve product market fit. In fact, some of them can even have a negative impact on how you perceive the market, your product and yourself - if you let them.
How to find the right market for your startup? You may use the traditional PMF pyramid or the Superhuman product-market fit process. Startups often look everywhere for their first customers. They think that any customer is better than no customer at all. But this can be a very risky proposition as these "so-called" early adopters can often give startups false hope and a false positive for product market fit. So, let's have a look at the 10 biggest mistakes companies make with product market fit.
The High-Level View of PMF
In case you aren’t familiar, product market fit refers to a given product’s appropriateness for a target audience. Product market fit is different from product solution fit. Let’s say you’re targeting middle-aged men living in the suburbs and you’ve designed a product specifically for them. Do middle-aged men living in suburbs typically want to buy this product? Do they think it’s a fair price? Is it something they want or need? How do they see it compared to other competing products on the market? If they’ve bought it in the past, will they be likely to buy it in the future?
The better your PMF is, the more positive the answers to these questions will be. A perfect market fit would have the majority of people in your target audience desiring your product and continuing to like it as they use it regularly.
The Biggest Mistakes to Avoid
Measuring PMF can be tricky, especially if you don’t have much experience, but it’s important to avoid these critical mistakes in your journey:
1. Treating PMF like a Holy Grail
The truth is, product market fit is an important element for startup companies when aiming for successful fundraising efforts; however, it can be described and measured in many different ways. PMF is an important metric for your business, but it’s not the only metric that matters. Your product may be a good fit for the market, but if it’s too costly to develop, if your competitors are responsible for increasing customer attrition, or if you have operational issues, it may not matter. Don’t assume that a good PMF is all you need to run a successful business.2. Considering PMF only as an objective metric
The best PMF calculating tools can help you objectively quantify and analyze your PMF. But market fit isn’t just something to measure on a scale of 1 to 10. It’s also important to figure out how your target demographics feel about your brand and your product on a subjective level. When people understand and use your product as it is intended to, that they recognize the value of the product - then that’s considered a big win. Eventually, when they begin to express their satisfaction and positive product experience with the community, then you have product market fit on your hands.3. Targeting the wrong audience
Who is your product a fit for, exactly? Most brands approach PMF with an audience or audience segment in mind, but there’s a chance that you’re designing and testing for the wrong audience. Consider multiple market segments and keep an open mind until you’ve nailed your targeting.
4. Testing a product prematurely
It’s a good thing to evaluate PMF in the earliest stages of your product’s development. The information can guide how your product evolves. However, if you end up testing too early, you might not have enough relevant information to guide your journey; make sure you have a solid idea first.5. Using only one measurement
There are several metrics embroiled in the discussion on PMF. For example, you’ll want to consider total sales, customer retention, and possibly even behavioral metrics to determine how your customers use your product. Do whatever is needed to get to a product market fit. The product life cycle model can help marketers defining PMF. This may include testing out different people testing the product, re-evaluating your product, moving around different markets, knowing when to say no (in features) and when to say yes if it adds value to the product. You can also consider raising that venture capital - if you deem it required based on analysing the results of your testing.6. Too small a sample size
If a startup uses a small sample size or a limited scope by sampling only to customers that the company knows will love their product - this can lead to “false positive” results. In addition, if a product is discounted, the customer acquisition cost must increase and in return, the lifetime value of that customer will decrease. If not, the use of these metrics defeats the purpose of sampling. Although false positives may potentially help increase the chances of closing deals with investors, they can also potentially hinder a startup from growing effectively. Statisticians know that sample size is vital if you want your metrics to be reliable. If you test with a group of customers that’s too small, you’re not going to get reliable data that’s reflective of your larger population.
7. Too large a sample size
On the flip side, it’s also possible to have a sample size that’s too large. During the early stages of building product market fit, there is a lot of tweaking that need to be done to get customer satisfaction from the product/s a company is sampling. And with customer satisfaction comes eventual growth and further refining to attract more and customer retention. But if you send a survey to too many people, you won’t have a meaningful improvement in your takeaways, but you’ll end up spending more time and money reviewing the information.8. Ignoring the competition
Your product, in a vacuum, might be a great fit for your target audience. But how does it stack up to your competitors’ products? Competitive context is important, especially if you’re losing customers to your top competitors. PMF means that you’ve found a product and a market that will want it. However, if that market is relatively small, inexpensive, or fading - then you don’t have the advantage of longevity. The key is not just finding a market, but finding a great market.9. A lack of iterative testing
A quick tip to know when PMF is happening: customers are starting to purchase the product just as fast as you are able to make it. Or, usage is increasing just as you are increasing servers. PMF is at its best when it’s the subject of iterative testing. It’s not enough to take a snapshot of market fit and assume it remains stagnant; because your product and customer attitudes change over time, it’s important to keep measuring it consistently.10. Using the wrong tools
TIn the early stages of running the company, some startups are often too concerned with growth right away. This leads them to use whatever tools available to do so, including prematurely discounting on their product. Although this may result in some amount of growth, just about everyone in the competition can do the same. Additionally, using this tactic early on can give a false sense of strong product market fit, when in reality, it is inorganic growth that becomes an issue when the company starts scaling. The best PMF tools make it easy, convenient, and intuitive to plan and execute surveys – and form actionable conclusions from the data. The wrong tools will waste your time, waste your money, and decrease your morale in the process.Path to A Smart Product Market Fit
Product management consulting is key to product development success. Getting outside help from experts in their fields can help you make a mark in your industry.Whether you’re writing a business plan for a business that doesn’t exist yet or you’re putting the finishing touches on a product you’ve been marketing for years, PMF can help you serve your customers better. This is an efficient method to analyze your value to the market and establish your product positioning. You can extract your data and use them as leverage to scale by asking your users to share or refer other people to use and buy your product. Make sure to use the right tools and continuously improve your approach to increase your accuracy and improve your understanding. Growth Hackers is a growth hacking, inbound and outbound marketing agency helping startups, entrepreneurs, and business owners with branding, digital marketing, and growth hacking. Contact Growth Hackers today if you want to use growth hacking techniques for your product market fit and propel your company.
Alex Sanders
I am a passionate and experienced writer with a focus on business, finance, politics, technology, and law. I am extremely passionate about entrepreneurship and digital trends. I received my bachelor of science in business management from the University of Michigan.
