Achieving product-market fit means you have a strong value proposition, people find out about your store by word of mouth, you have a steady stream of customers and sales, and your product solves a problem within a larger, lucrative market.
Here, we’ll cover what product-market fit is, how to prove your product concept, and how to use marketing and customer feedback to determine product-market fit.
What is product-market fit?
Product-market fit is the degree to which a product meets the needs of a given market. It is a measure of how well a product satisfies its intended purpose and solves customer’s problems. Product-market fit can be achieved through a combination of innovation, market understanding, customer feedback, and product marketing.
Examples of product-market fit
HATCH
When HATCH founder Ariane Goldman was pregnant with her first child and searching for stylish maternity clothes, she came to a shocking realization: There were none. “There was nothing speaking to pregnant women and it just dawned on me that if I was looking for a solution or even a brand that could be my friend through this unknown next step, that other women must have been looking for the same solutions,” she says on Shopify Masters.
Ariane knew maternity wear was a good market—“There’s an incoming freshman class of new pregnant women every single [year],” she says—but she also noticed that the market wasn’t saturated. The available maternity options seemed to lag behind the reality that pregnant women were spending more time in public and would need clothing to match.
Hero Packaging
Anaita Sakar, cofounder of Hero Packaging, found product-market fit for her compostable shipping bags by being her own customer. The idea for a new type of packaging occurred when she was packing orders for her previous business.
“I just wanted to use packaging that was better for the environment,” Anaita says on Shopify Masters. But the existing options weren’t cutting it. “Boxes were way too expensive to ship,” she says. “I looked into paper, and it was great—it was recyclable and compostable—but not waterproof.” That’s when she got the idea for a waterproof, plastic-like mailer that would be compostable.
To validate her idea, Anaita asked other small business owners if they would be interested in switching to this type of packaging. “It was a resounding yes,” she says.
To further test the market before launching the product, Hero used search engine marketing: “We targeted people on Google, so anyone that was typing in ‘sustainable packaging,’ we were hitting them with this landing page and they would get a free sample,” Anaita says. “We thought we were going to get about 30 or 40 sign-ups to get some free samples of eco-friendly packaging, and in a week we got a thousand people. And that was the first sign that people were interested in this.” That exercise showed Hero’s founders there was already a sizable audience looking for a solution their product solved.
A large and growing market of ecommerce businesses that need shipping materials plus increasing concern among consumers regarding the waste equaled product-market fit for Hero’s compostable bags.
Heyday Canning Co.
Heyday Canning Co., which makes canned flavored beans, found its product-market fit by reinvigorating what cofounder Kat Kavner calls “a sleepy category”—canned foods.
“Maybe I’m biased here, but I’m kind of a proponent of looking at the boring, very unsexy categories and stopping to think about why those categories have been overlooked for so long,” Kat says on Shopify Masters. Kat and her cofounder, Jaime Lynne Tulley, had a hunch that the canned-food industry was ready for a rebrand.
“There seemed to be an opportunity to take all of the good stuff about canned food—how convenient it is, being shelf-stable—and create food for today’s consumer, who knows great food and really values great flavor and premium quality and doesn’t always have the time to cook completely from scratch,” Kat says. Before diving into product development, Kat and Jaime validated their hypothesis by researching the existing products in the category.
“We saw very clearly what we expected to be true, that there was this big hole in the category and that there was no startup brand that was really pushing the limits to try to reimagine what canned food could be,” Kat says. Having done their market research and identified the opportunity within their category, Heyday’s founders realized they had found product-market fit.
Parade
Sustainable underwear brand Parade is a good example of how a great product idea and a strong market can work together to build a successful business.
The underwear market is always going to be around. And it has extensive fundamental issues—many companies don’t make underwear in plus sizes, and they tend to use packaging and materials that are bad for the environment, to name a few.
Parade identified those issues and uses its products to solve pain points for its customers. Its underwear comes in sizes from XS to 3XL, is made in sustainable fabrics, and ships in sustainable packaging.
Parade’s founder identified a great market and delivered a product that aims to solve a few fundamental needs. In doing so, Parade has reached a devoted customer base that has fueled its success.
Why is it important to achieve product-market fit?
The reason it’s important for you to find product-market fit for your business is that it’s an early indicator of success. Businesses that achieve product-market fit can use organic marketing or word of mouth to increase their customer base and sales.
Businesses that don’t achieve product-market fit need to rely heavily on paid advertising (which costs a lot of money), and can easily get stuck in a cycle of slow or limited growth.
How to find product-market fit
- Start with a simple visualization exercise
- Understand the importance of a good market vs. a good product
- Prove your product concept
- Use customer feedback to mold your product to fit the market
- Properly position your product to achieve product-market fit
- Leave room for change
Finding product-market fit is a process, and it’s not always clear where to start. That’s why we chatted with expert Andrew Chen, general partner at Andreessen Horowitz, and author of The Cold Start Problem, to get his take on how to find product-market fit. Here are his suggestions for finding product-market fit:
1. Start with a simple visualization exercise
To better understand how achieving product-market fit works, Andrew recommends imagining a simple coffee cup.
A coffee cup is an item that’s achieved product-market fit because it’s in a well-defined, existing product category. You know the features that people expect and want, and the problem you have to wrestle with are differentiation and distribution, not product-market fit.
With unique product ideas, it takes longer to find the exact version of the product that gets you to product-market fit. As you begin the process of finding product-market fit, Andrew suggests that you simplify your product idea, compare that version with your current plan, and find a version that exists between the two that your target audience will understand.
“The difficulty of product-market fit exists on a spectrum—with maximum-difficulty products that are completely new at one extreme, and undifferentiated-but-well-understood products on the other,” Andrew says.
Compare your product idea to a coffee cup—can you identify the key features or benefits of your new product just as readily as you can those of a coffee cup? If not, you may need to pare down your product or messaging.
2. Understand the importance of a good market vs. a good product
Finding product-market fit often means identifying a good market (one that is large and has demand) and molding your product to fit the needs of that market. You could build the best product that solves multiple pain points for customers—but if there’s no market to support it, or the market is weak, your product will fail.
Regarding this point, Elad Burko, founder and CEO of accessory business Paperwallet, says it’s essential to use the market as a way to shape and develop your product. “You mold your product to fit a market by listening to the market,” he says. “Listen to your customers. Take your product to the customer, try to sell it to them. Understand what’s important to them, what’s not important to them. … If there are features in your product that the customer doesn’t care about, get rid of them.”
3. Prove your product concept
So you have a product idea. Before developing a minimum viable product (MVP) that you can share with your audience, Andrew recommends asking some tough questions. “How do you pick a set of features that give the proper ‘twist’ that exists between two extremes?” he asks. “How do you dial down your fancy new concept and take a few small steps—but not all the way—toward something that consumers already understand?”
After you consider those questions and create the first iteration or MVP of your product, the next step to achieving product-market fit is to actually prove that your product is something customers want to buy. Sounds simple, but until you get your first few sales, you won’t be able to get feedback, which limits your ability to know how you’re doing or what changes you can make to improve.
Nimi Kular, cofounder of Jaswant’s Kitchen, a business that sells all-natural Indian seasonings, says the best way to validate your product is to start making sales. “Market research, surveys, and feedback from friends and family can point you in the right direction,” says Nimi, “but real product validation only happens when money changes hands. For us, that happened at the first few shows we went to, where complete strangers bought our product. That’s when we knew we were fulfilling a genuine need with a product people would pay for.”
Real sales aren’t the only way to prove that a product will be lucrative, though. Here are a few other ways to do it:
Use crowdfunding to establish proof of concept
Crowdfunding sites provide a built-in audience already interested in supporting new product ideas. It creates a low barrier to entry to try out your idea and see how the market responds.
Elad recommends putting up your products on Kickstarter to test your market. Even if your product fails this time, you’ll gain a loyal base of backers to help you get it right—which may just mean changing up your marketing messaging.
“It was an amazing way to connect to people who are passionate about what you’re doing with your product,” says Elad. This includes people who are “willing to give you the feedback that you need, be it positive or negative. You interact with them so that you can grow so that you can improve. And that’s invaluable to a business.”
Validate product ideas with organic marketing
The founders of Pantee, a sustainable fashion brand that upcycles deadstock t-shirts into underwear, used Instagram to validate product ideas at the very beginning.
When Pantee had around 400 Instagram followers, the founders sent out direct messages via Typeform that asked questions about favorite underwear styles, how much people were willing to pay for underwear, and how they felt about sustainability. The 200 responses they received helped drive product decisions, as the team was still developing samples.
Cofounder Amanda McCourt says that she used Instagram to do “a lot of community engagement. We didn’t just post one thing, we actually engaged with our audience. We spoke to them, listened to what they’re talking about, and what they liked. We did a lot of that and it really has paid off.”
Using organic marketing channels is free, and it’s a great way to start building an engaged audience early on. If you’re developing a new product for an existing business, get feedback on your new product idea from your social media followers by posting polls and asking open-ended questions. If you’re starting a new business, consider creating an account on whichever channel feels better for your brand before your products (or even your official website) is ready. It’ll give you a direct line to your target customer base who will be most likely to purchase your products in the future.
Analyze product effectiveness with jobs to be done
Use the jobs-to-be-done framework to better understand if your product solves a problem for your customers. Think about it this way: Customers “hire” your product to do a job. You might hire a leash to keep your dog close on walks, or hire an umbrella to keep you dry in the rain. These products fulfill a need.
It’s less about what you purchase a product to do (I’m going to use this hammer to put a nail in the wall) and more about the result (I’m hiring this hammer to help me put up this piece of art).
What “job” does your product idea do? Without a clear answer, it will be hard to find product-market fit.
4. Use customer feedback to mold your product to fit the market
Creating an open feedback loop with your customers, especially at the beginning, is key to developing something your target audience will love early on. Those early customers are more likely to be invested in your product, more likely to stick with it while you work out the kinks, and more likely to provide honest feedback. They are the best people to lean on as you grow your business, so giving them an easy way to provide that feedback will make the process easier for everyone.
Aaron Luo, CEO and cofounder of sport bag and accessory company Caraa, remembers his first 20 customers because of the amazing feedback they gave. The key was being transparent with those customers upfront that Caraa was a new business and that it wanted feedback, Aaron says on Shopify Masters. Aaron basically told customers, “Listen, we are an emerging brand. This is our story. This is what we’re trying to fix in the market space, and here are our products, and we welcome any feedback.”
5. Properly position your product to achieve product-market fit
Customer feedback also plays an essential role in the way you position your product. You could have a great product and a great market, but if your marketing messaging is off, sales will be as well.
Ultimately, you need to understand your target audience and the problem they need to solve. Elad shares a good example of this on Shopify Masters: The message is not “This wallet is made of paper yet doesn’t rip.” It’s “This wallet is low-profile, durable, water-resistant, and will last a long time.” In this example, the first message doesn’t actually offer a solution to a problem. The second message speaks to common issues customers might have with their current wallet.
There are multiple ways to get feedback on your marketing messaging. Here are a few options you can try:
- Meet potential customers in person. Bring your product to farmers markets, trade shows, or other in-person events, and get feedback on how you’re presenting your products. Getting a lot or even a little interest is a great way to understand how you’re doing.
- Use social media channels to gauge reception. Establishing a loyal customer base organically is a great way to get product feedback, but it’s also a free way to see how people respond to your product positioning, too.
- A/B test different messaging on paid channels. Paid advertising allows you to test different types of messaging against each other to better understand what resonates with your target market.
- Give samples to your employees. If your employees, coworkers, or friends are part of your target market, you can give them samples of your new product and ask what they think. If the language they use to describe the product doesn’t match up with your messaging, you may need to tweak it.
6. Leave room for change
Even as you find product-market fit, what your customers need and the larger market is always going to be evolving. So, it’s important to keep those feedback loops open and to continue iterating on your product and messaging over time. That way, you’ll keep product-market fit even as the market changes or as your customers want different things.
“I always want to make sure that we refresh and stay consistent with language that’s really competitive,” says Roxana Ontiveros, product marketing lead at Topicals. There are a few different ways to keep the same product, but tweak the positioning: “Maybe we need to update claims testing or maybe we need to do repackaging or really work on optimizing our product pages.”
How to measure product-market fit
User feedback
“You know you’ve positioned the product correctly when [your audience] can clearly identify the problem that you’ve solved,” Roxana says. At Topicals, this might mean consumer perception studies that ask participants to evaluate how their skin feels after testing a product.
For example, the results of a consumer study for Topicals’ Faded Serum showed that 96% of participants found that dark spots and hyperpigmentation were less visible after four weeks of use. If only a small number of participants found the serum faded their dark spots, the product would not have achieved market fit.
Other ways to gather feedback include surveys, user testing, social listening, and reading reviews. If your customers are talking about your product in the way you envisioned, you have achieved product-market fit.
Conversion rate
Roxana says a good measure of successful product marketing for an ecommerce business is the conversion rate of your product description page. “How many people are going to your product page, reading it, and then actually buying the product? That’s a good indicator as to what’s a success.”
Your product page should contain all of the messaging you’ve created to show your target audience that your product is the solution to their problem. If your PDP conversion rate is high, your messaging, product, and audience are aligned; if not, something may be off.
Net Promoter Score
A Net Promoter Score (NPS) measures customer satisfaction by asking the question: “On a scale of 0 to 10, how likely are you to recommend us to a friend?” While customer satisfaction isn’t necessarily the same thing as product-market fit, it can be a helpful metric in conjunction with other indicators.
Sales
Ultimately, the best gauge of whether you’ve found product-market fit is whether or not people are buying your product. If your sales fall short of your benchmarks, you may need to reevaluate your target audience and/or messaging.
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Product-market fit FAQ
What is a good product-market fit score?
The answer to this question depends on the specific product and market in question. Generally speaking, a Net Promoter Score of 6 or higher is considered to be good and indicates a degree of product-market fit, but this is not a hard and fast rule.
What is an example of product-market fit?
One example of a product that has achieved product-market fit is the classic coffee cup. A coffee cup is an item that’s achieved product-market fit because it’s in a well-defined, existing product category. It’s clear which core features people expect and want.
How do you know if your product hasn’t achieved product-market fit?
You’ll know your product has not achieved product-market fit if it’s not selling. To prevent this, spend plenty of time in the research phase before rolling out your product. Conduct interviews with potential customers, use market research, and use competitor analysis to gauge your potential for success.
