How to know if you are achieving Product Market Fit
Have been talking a lot about product market fit (PMF) in varied industries and there are some clear signs of where/when it’s happening. One of the best approaches I have found is asking your users — How would you feel if you could no longer use the product? (From Dropbox founder, Sean Ellie). And then measure the percent who respond Very disappointed. Anything more than 40% is a great thing. The other two answer choices are: Not disappointed and Somewhat disappointed. Track these numbers very carefully.
Overall, there can be two kinds of PMF — Product-Buyer Fit and Product-User Fit. There are situations where buyers are not the users and a firm need to take care of needs of both of these — CRM/ERP enterprise buyers, cybersecurity and CISO/CIOs.
Key to Product buyer fit (PBF) is to reduce to decision fatigue (Does your solution stand out amongst a plethora of solutions and does it solve multiple pain points?), to ensure that buyers rate the pain you are addressing and your solution as 8 or 9+ on a scale of 1–10 and the buyers become more engaged and more excited as you step into your demo during a sales meeting.
For enterprise solutions, PBF is the first step to start selling your products, but product user fit (PUF) is what will determine the upsells and churn levels. There is evidence of PUF when:
· The current users tell their friends and colleagues about it and offer to help get others on board (Very, very crucial).
· The users are using your product as often as you intend them to, getting the value from it , having the experience you expected, and having the impact they want.
One of the best ways to iterate fast while increasing that PMF is to spend as much time as possible with your users and then build/not build from insights generated from the interactions with the end users. What not to do is an important insight that a product manager needs to generate as fast as they can.
Overall, ask these questions — Are your users getting dependent on your product? Are they referring it to their friends? Are your referrals increasing? Are you iterating fast enough to incorporate features that users/buyers need and removing features that they don’t need?
An increasing trend point towards possible PMF. Now what these numbers are is a question to ponder.