Product Market Fit is a measure of how well a product is able to address the specific needs of a target demographic. Keeping that in mind, a good PMF would mean having a product that satisfies a particular need of your desired audience. Another factor that comes into play when identifying a P/M Fit product or service, is that the market should be large enough to sustain modest business.
Fail Fast, But Also Give Your Idea a Chance
As a basic definition, you have P/M fit when people who know they want your product, are happy with what you’re offering. According to Marc Andreessen;
“Product/market fit means being in a good market with a product that can satisfy that market.”
“Good” meaning that the market size is large enough to sustain business.
Practically, product/market fit means having a product that the market really loves and can’t live without. Normally, when a business starts, their market is relatively low, but the business owner still needs to have a realistic vision on business growth and expanding their business to other markets.
Product Market Fit Milestones
In order to identify P/M fit, we have broken down the process into 2 steps. The first step contains all the elements that prove Product Market Fit, and the second step enables us to prove Business viability.
Product Market Fit Metrics
By Product Market Fit we mean that there is space where your product and audience is listening. This is identified based on the following metrics:
- Reach (Impressions) – means that we have identified the right keywords, channels, campaigns and medium to make our message heard by our target audience.
- Visits (Traction) – proves that the message was clear and an audience has connected with it.
- MQL (Qualifying Traction that needs to be further nurtured) –People who visited our website and subscribed to our newsletter, or downloaded our Brochure, or Liked our Facebook page.
Improved Business Viability
Going a step further, we achieve Business viability if the user would pay for the product we’re offering. Identified based on the following metrics:
- SQL – Qualified Sales Traction meaning that user already started the process, but never finished it. For example, this when a user gets the questionnaire, passes the questionnaire but either abandon it or never moves to next level (which is the payment)
- Sales (Completion of payment) – The most critical step of this stage is the UX while checking. However, we should not underestimate the importance of the UX during previous steps of the process (also known as activation process).
Breaking Down Product Market Fit
Achieving Product Market Fit can be interpreted as having the right funnel, and having each step of the funnel fine-tuned so that it is able to effectively convert traffic, making it easier to reach your sales goals.
The Funnel consists of 5 steps or KPI’s that allow us to turn Reach into actual Sales. These KPIs are:
- Reach (which can be Organic, Paid and Social),
- Traffic on the website,
- MQL (Marketing Qualified Leads),
- SQL (Sales Qualified Leads) and finally
- Sales of the service.
For each KPI or step of the funnel, we have Metrics that prove the level of success we have achieved in every step.
We also have specific Criteria which are critical to the Success of every step of the Funnel. These criteria will be turned into the Action Plan for achieving Product Market Fit. We have further defined them for each step of the funnel.