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
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.
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.
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.
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.