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What Is Product‑Market Fit?

How do you know if there’s market demand for your idea? There are multiple signs to help you to identify product market fit.

Achieving product-market fit is key to a successful business. It means that there’s market demand for what you’re selling, and people are willing to pay for it because it’s better than the alternatives.

But how do you figure out if your product or idea has achieved market fit?

Defining product-market fit

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Graphic: Don’t be afraid to move away from your original idea when you see a better opportunity.

"Product-market fit," writes startup coach and investor Marc Andreessen, "means being in a good market with a product that can satisfy that market." When an entrepreneur identifies a need in the market and builds a solution that customers want to buy, that's product-market fit.

This concept might seem obvious, but it’s important to make sure there are enough people who want what your business offers and to define your value proposition accordingly. Product-market fit can matter more to the future of your business than creative ideas, masterful teams, or any other factor, and is critical to take into consideration when you build the product. For any business to survive, there must be people who will buy what it sells.

Product-market fit is the result of a deep understanding of who your customers are and their opinions of your brand and product. To know if you've achieved product-market fit, ask yourself whether you've met these criteria:

  • Is the product creating organic growth?
  • Are people spreading the word about your product on their own?
  • Do people think it is worthwhile to spend money to get your product?

You've heard the expression, "It's not about reaching the goal, it's about the journey you take to reach it." Product/market fit is achieved through a journey of gaining customers through word-of-mouth promotion. Long before you're ready to scale up your production, you must find out whether your product can serve as a solution to your target audience. If your minimum value proposition (MVP) fulfills a need, then you are on your way to product-market fit.

The idea is to find a good product-market fit so you can take that initial adoption and scale it up. To do this, you must constantly evolve with your customers and periodically reevaluate their needs. Since you will gain more knowledge and experience resolving the customer's needs as you build customer relationships, you will also gain a better understanding of how you can help them.

Why is product-market fit important

Why is gaining product-market fit important? Venture capitalists often require evidence of product-market fit before they're willing to invest.

It's really quite simple. Unless you have a product that enough customers will buy for a sustainable profit, your company can't grow. You need to be sure that you have a product-market fit before you move on to strategic plans to grow your business and scale up the production of your product. Benefits of achieving product-market fit include:

  • Growing your company at a fast rate
  • Acquiring consumers at a low cost: Companies with product-market fit receive organic and non-paid growth.
  • Keeping consumers loyal and happy: Retain consumers by knowing who is happy with your product and why. Satisfy your consumers and entice them to buy by determining what product features are most valued.
  • Ability to scale easily when needed: By clearly understanding what you provide to consumers, your company will experience less growing pains and be able to build upon its already well-oiled system.

Examples of product-market fit

Some companies have done such an exemplary job creating a product to fit the market that their successes can serve as models before you launch your product, within your product process or customer development efforts.


The entertainment media company first gained traction in the early 2000s. Movie watchers were starting to get tired of paying late fees from brick-and-mortar DVD rental stores. So Netflix sent them DVDs by mail as part of a subscription service, letting people keep a disc as long as they wanted.

But if Netflix had remained a DVD-by-mail operation, it would have faded out when DVD players did. Instead, Netflix positioned itself as the easier, cheaper alternative to whatever currently dominates the entertainment market: brick-and-mortar rentals, DVDs, or traditional television. Netflix alters its product every time the market need changes, maintaining its fit.

Netflix’s success is a great reminder to stay flexible in changing markets and keep an eye on the future.


In the early days, Google competed with lots of other search engines for market share. Like the other players in its market, they made money by offering ad spots next to search results. But in 2003, they jumped ahead of the competition when they introduced a new concept, AdSense.

Google’s leaders realized that businesses would pay to display their ads beyond the search page, and they developed AdSense to meet that demand. AdSense used new technology to scan webpages and automatically display relevant ads. For example, if you had a business that sold suitcases, you could pay for AdSense to automatically display your ads on travel websites.

By 2017, AdSense's 11 million users were paying Google $95 billion a year. Google identified a need no other search engine was meeting, and then met it.

You can apply Google’s AdSense approach to your business, too. To set yourself apart from competitors, take the time to find things that your competitors aren’t doing and adapt to fill unmet needs.


Slack, an instant messaging platform often used for workplace communication, started out as a completely different business idea. The founders were in the process of developing a role-playing video game, and Slack was something they had quickly hacked together as an internal communication tool for the team.

The team soon realized that the market had plenty of role-playing games, but there was nothing out there quite like Slack. So, they pivoted away from game creation. Today, 10 million people use the product.

Slack’s quick turnaround proves that changing your focus towards a better product-market fit can be worth your time. Don’t be afraid to move away from your original idea when you see a better opportunity.

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Graphic: Don’t be afraid to move away from your original idea when you see a better opportunity.

How to achieve product-market fit

You can create product-market fit in lots of different ways. You can adapt your core product to new markets, identify a strong market demand, repurpose or reorganize old ideas, go to where the market is, or even create an entirely new service.

It’s important to remember that fit is not binary. Product-market fit doesn't look the same from business to business, customer retention curves are also different. However, there are some established processes you can follow to help you achieve it while developing a minimum viable product prototype.

Dan Olsen, Lean Startup consultant and author of The Lean Product Playbook, offers six steps for a lean product process:

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Graphic: 6 steps to achieve product-market fit: Determine your target customer; Identify underserved customer needs; Define your value proposition; Specify your Minimum Viable Product (MVP) feature set; Create your MVP prototype; and Test your MVP with customers

1. Determine your target customer. Who do you think will buy your offering? How will it meet their needs? You might not know exactly who your target customer is at first, but you can find out through market research. And by using that research to create customer personas, which are fictional versions of those real people, you can envision your target customer and create stuff for them.

2. Identify underserved customer needs. It's hard to sell a product or service in a market full of existing solutions that people are already happy with. A better option is to find what they’re unhappy with. What pain does your target customer have? How can you help them solve it?

3. Define your value proposition. How will your product meet your customer's needs better than any of the alternatives currently available? Will it offer better quality? A more affordable price? More exciting packaging? New services?

4. Specify your Minimum Viable Product (MVP) feature set. Identify the minimum features you want to include on your first product rollout. Keep it simple and doable.

5. Create your MVP prototype. Don’t worry about actually creating your full concept—instead, just create a bare-bones product. You can iterate on that after you get customer feedback.

6. Test your MVP with customers. Show your product to a select group of your potential customers. Get feedback from customers. Let them learn about it and try it out for themselves. Ask them what they like about it and what they don't. What would they prefer to see instead? Stay open and flexible to feedback so you can revise your idea to accurately fit your customers’ wants and needs.

After following these steps, you should have a pretty good idea of how the market will react to your product. Before launching, make sure to implement any important customer feedback. You may want to change certain features of your MVP, consider a new target market, or even redefine your value proposition.

How to measure product-market fit

Measuring product-market fit isn’t an exact science, but there are ways to assess whether or not you’re on track:

  • How quickly do customers make up their minds about a purchase?
  • Are reviewers mentioning your product to family, friends, or social media connections?
  • What is your customer retention rate?
  • Are customers interacting with your marketing efforts?
  • How many customers have unsubscribed or stopped using your product?

All of these are useful, data-based indicators of how well your product is finding its way into the marketplace. You can use this information to improve, adapt, and market your products.

Whether you achieve product-market fit or find that you need to rethink your current offerings, ongoing research is essential. As your business grows and shifts, be sure to continually take a look at what the market demands so you can create the right fit.

Product-market fit can be elusive. One of the reasons why is that measuring product-market fit can look quite different depending on the product itself, your industry, and the type of business you are in. Products that attract your target consumer may not offer the same achievement to another company.

To create sustained profits, companies should not only understand what their consumers want but also continue to improve and cater their products to them.

What happens after product-market fit?

Once your company has reached product-market fit, it's time to take a look at your marketing analytics and customer feedback. You can use this data to inform your marketing strategies, scaling up your sales and revenue.

Marketing analytics to study

Customer retention

Your goal is not only to increase your customer base but also to retain existing customers by encouraging repeat purchases or upgrades.

If your customers continue to appreciate your product, they will likely recommend it to people they know. Word-of-mouth is one of the most effective forms of marketing because trust is already built into the relationship between both parties.

Additionally, continuing to please your current customers keeps them happy with their purchases. A good brand-customer relationship can help your business in several ways, including easily getting solid feedback on how to improve your product for future development.

Growth rate

Once you've achieved product-market fit, it is time to scale up your sales. That doesn't happen in a vacuum. It's important to make sure that your company stays profitable and grows in revenues, dividends, and sales. Maintaining the position of product-market fit for an extended period will give you a foundation to build upon. To stay on track, monitor revenue and profits on a periodic basis.

Market share

As you scale up your production, marketing, and sales, another factor to keep an eye on is market share. What percentage of the market does your business have? What share of the market do your competitors have?

Market share is a difficult metric to measure because you likely can't get data from your competitors. However, it can be estimated using your own periodic reports and market research on your competition. This will help you judge your overall performance in the last period compared to the rest of the market.

Customer feedback and engagement

A large part of achieving product-market fit is interaction and feedback from customers. Pre-product-market fit, you should be focusing on qualitative feedback to help you improve the product. Once you've reached product-market fit, your focus should change to engagement. Throughout this process, evaluating your success should be data-driven. Your data will inform you of whether you are continuing to engage your target audience while scaling up.

It can be challenging to maintain focus on customer engagement. As you grow your customer base, your teams will be working to fulfill increased demands and accelerated production levels, looking for ways to improve products. This leaves little time for gathering in-depth feedback from users.

To alleviate this problem, customer support inboxes and product analytics are often used to measure how well a product is doing, and where customers would like to see improvements. It's important to continue seeking qualitative feedback to add depth to the analytics you are monitoring. Qualitative feedback can also help prioritize development tasks and keep teams energized and focused. Key metrics to watch are new user adoption and active usage.

Moving from early adopters to the rest of the market

It's important to keep in mind that your original customers who bring you to product-market fit are early adopters. These are the folks who are always first to try new products. Most people, however, need more reasons to try your product. Therefore, your marketing strategies should include content that gives potential customers reasons to make the effort to try your product.

Product-market fit FAQ:

How long does it take to achieve product/market fit? There is no set amount of time to achieve product/market fit. Everything depends on how quickly you can successfully complete your market research and provide value to your target market so that you reach sustained profits. Most business experts recommend a timeline of a maximum of two years to reach product/market fit.

What is product/market matching?

Product/market matching is the process of finding the right partnership of product and value proposition to please your target customer base. Before you get started, you should know which possible products can be sold to a target audience who will be most likely to buy them.

Who is responsible for product-market fit?

The responsibility for product-market fit lies with any team that interacts with the product or service and the customer. This includes product development, marketing, production, testing, and sales, which all contribute to creating and fulfilling the value proposition for the customer.

Final Notes

Product/market fit is a process that incorporates a business' goals for driving sales with the target audience's engagement and feedback to help the company improve the product. Reaching product/market fit takes a team of dedicated people working together throughout the process.

Mailchimp offers a range of services that can help you achieve product-market fit. Learn your consumers' preferences through surveys, find the best product marketing, and diversify your marketing channels with the help of Mailchimp. Visit Mailchimp's Help Center to get your questions answered today.

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