Product Market Fit – Growth Hacking
As long as sales have existed, businesses have striven for that sweet spot in which businesses, their products, and their customers are all in perfect rhythm. In 2007, a term emerged to describe this blissful state: product market fit.
How exactly can your company achieve a level of product market fit? And why is reaching that point so crucial to growth hacking and exponential scaling? Read on for everything you need to know.
First of All, What is Growth Hacking?
Another term that frequently gets tossed around in association with product market fit is growth hacking. Simply put, a growth hacker is a digital marketer who doesn’t clock out when the advertising work is complete, but rather plays an active role in facilitating every aspect of a company’s efforts, including:
- Product design
- Sales
- Market research
Staying involved in every phase of the final product launch helps ensure that everyone at the company is on the same page. This is the first step toward designing a product that puts your customers in perfect sync with you.
The Value Hypothesis
The quest for product market fit begins with your company determining the “value hypothesis” associated with your product.
In other words, you and your team members must ask yourselves this million-dollar question: what is it about the product you’re offering that consumers will want to seek out?
Keep in mind that the value hypothesis is an educated guess, which means it’s OK for it to evolve throughout the marketing process. And in some cases, it’s actually advisable to adjust it.
Next, Onto the Marketplace
Once you’ve nailed down your value hypothesis, it’s time to introduce yourself to potential customers.
Be sure to choose carefully when deciding which marketplace your company should enter. No matter how amazing your product is, you’ll only be able to tread water for so long in a small, cheap, or shrinking marketplace. Look to establish yourself in a booming marketplace with a large audience and high potential for growth.
Resonating with Your Customers
Though putting yourself in a growing marketplace will set your company up for success, it doesn’t guarantee it. You can’t expect to reel in sales without having a solid understanding of your target audience first.
The key to resonating with your potential customers is conducting diligent research on your ideal marketplace. This will give you invaluable insight that enables you to answer critical questions such as:
- Who Exactly is Your Target Audience? – Sometimes a helpful way of answering this is to create a marketing persona. For example, think of your entire target audience as an individual, and give this hypothetical person a catchy name based on their profession (say “Danielle Doctor”). From there, pose specific questions about Danielle. How old is she? What’s her annual income? Does she live in a suburb or city? Apartment or house?
Consider the firmographics associated with your target persona’s workplace as well. Where does Danielle work? How big is the company? Where does this company rank within their industry? What kind of products are already in use there?
- What is Your Target Audience’s Specific Need? – Once you have a firm grasp of your target persona and their workplace, think about what a day in the life is like for them. What are Danielle’s daily goals? What are her pain points, i.e. the most common roadblocks that interfere with her ability to achieve these goals?
Understanding your target persona’s motivations and obstacles will bring you one step closer to being able to tailor your product to meet that need. Speaking of which…
- What is Your Company’s Value Proposition? – “Value proposition” is a fancy marketing term that answers the ultimate question of “how do we design and create an amazing product that meets our customers’ specific needs in ways that none of our competitors can match and leaves consumers screaming for more?”
A Quick Note on Target Audience vs. Target Market
Oftentimes, the terms “target audience” and “target market” are used interchangeably. But it’s important to note the difference:
- The target audience is the demographic that you predict will purchase the product
- The target market is the demographic that you predict will use the product
Consumers usually purchase products to use for their own benefit, which renders the confusion harmless. But if you sell a product such as children’s toys, that’s a horse of a different color. In that case, your target market is children, but your target audience is their parents.
Why it’s Crucial to Connect with Your Customers
Connecting with your customers is an essential step toward achieving product market fit for a few reasons.
One is obvious: customers are the ones pulling out the plastic to purchase your product. But in addition to having checkbooks, consumers also have the ability to share their user experiences with their friends. With 42% of the global population using social media, word of mouth is spreading at a lightning-quick rate. Now, more than ever, you need to get in the customer’s good graces in a hurry.
If the vast majority of your customers are unimpressed by your product and announce their discontent on social media, you’re toast. But if your customers relay overwhelmingly positive experiences to their friends, and you’re able to replicate those same results for each new curious consumer, you set off a viral chain reaction in which your customers are practically selling your product for you.
Bottom Line: Your Product Must be Irreplaceable
To keep attracting new customers and earn brand loyalty among your current consumer base, your product must be irreplaceable.
Ask yourself how consumers would react if your company disappeared tomorrow. Would they be devastated? Or would they merely say “hmm, that’s strange that they disappeared, but this alternate is just as good.”
If your answer was the latter option, you need to rethink your position.
Keys to Designing a Winning Product
Rome wasn’t built in a day, and products that fly off the shelves aren’t designed overnight.
The process of creating a product primed for product market fit is an involved one that requires several phases of trial and error, including:
Minimum Viable Product Testing
A minimum viable product is one that is used for beta testing that is far from being the final product. It has just enough of the requisite features to give small sample audiences an idea of what to expect.
The testing of a minimum viable product has two stages:
- A survey, during which you show a select group of survey participants photos of the minimum viable product, describe how it would work, and make a note of the participants’ reaction
- Limited release of the minimum viable product, during which a limited number of consumers try the product out and then report back with their thoughts on what they like and what they feel could be improved
From there, you can use your customers’ input to inform your decision on whether or not you’re ready to release the real thing into the marketplace or go back to the drawing board.
Listen to Customer Feedback. And Don’t Be Afraid of it!
After you’ve released your final product, the trial and error process is far from over. Designing an irreplaceable product isn’t a college exam that you hand in and then just hope for the best. It’s a thesis paper that you retool through several rounds of feedback until you get it just right. Pay close attention to revealing insight and audience metrics such as:
- Consumer reviews
- Audience engagement on social media
- Conversion rate of your marketing campaign
- Monthly active users, i.e. the percentage of consumers who continue to use your product long after their original acquisition of it
- Purchase frequency, or how often a customer comes back for more
- And of course, your bottom line, and how it compares to your projected numbers
Receiving feedback from customers can be extremely daunting. Sometimes, it reveals that you need to crumble up months of hard work and yell “Kobe!” as you chuck it in the trash bin. It may even clarify the hard truth that—gasp!—you’re in the wrong marketplace entirely.
If your customer feedback mandates a sea change, don’t panic. Product market fit may be a state of smooth sailing, but the waters leading up are choppy for many. Twitter and Instagram are just two examples among countless companies that completely missed the mark in the initial stages before making radical changes en route to product market fit.
Conclusion
In short, you’ll know you’ve hit product market fit when customers are as passionate about your product as you are, and you’re able to sit back and watch these customers do your advertising for you.
Many desire it, few achieve it. But if you mold yourself into a growth hacker who seeks out the marketplace best suited for your product, takes the time to research and understand your target audience’s pain points, and allows their feedback to be the driving force fueling your work, you’re well on your way.
Resources:
1) “Product/Market Fit: What it Really Means, How to Measure it, and Where to Find it” by Eric Jorgenson
2) “How to Achieve Product-Market Fit” by Hailey Leibson
3) “When has a Consumer Startup Hit Product Market Fit?” by Andrew Chen
https://andrewchen.co/when-has-a-consumer-startup-hit-productmarket-fit/
