The term “product-market fit” has become a bit of an obscure moniker in the product world. It has become the end goal we all want to hit - the line by which we define ourselves as successful. What many don’t realise though, is that product-market fit isn’t a static point in time - it is ever-evolving and changing.
With this in mind, one almost has to ask: do you really have a product-market fit?
Let’s take a look at what PMF really means and how you can work with it in order to build successful products.
Defining your market
The biggest challenge when building a product and business is to define who your market actually is, and when the time actually is to move into a new one.
You may be experiencing some of the following:
- Lead generation is hard.
- Inbound leads are difficult to acquire.
- Conversion rate in the market is low
- People in your market have no idea who you are.
If that is the case, let’s face the inevitable: you do not have a strong product-market fit.
Ambition often comes to the detriment of customer value - and our ambition to expand our market share more often than not results in over-bloated products that spin out of control and stop serving anyone.
It’s not all doom and gloom though, this is an opportunity to take a step back and reassess. Now is the time to niche down and do one thing right instead of trying to do it all.
So how do we do that? Simple. Start by outlining who you are going after and why. Focus on your current market to close the product momentum gap. Do you truly understand the context in which they find your product useful?
Closing the Product Momentum Gap
Context is important. This is why I often like to refer to product-market fit as product-context fit.
There is a specific context in which your product is providing value, but if the context changes - what then?
It is important not to mix up early sales with having hit the PMF goal post. In his book Crossing the Chasm, Geoffrey A. Moore describes exactly this. The chasm exists because after a certain point of selling a product to early adopters, sales reaches a plateau, and the next stage is expanded growth. Moore explains this is the fundamental issue entrepreneurs and product managers face when trying to cross the chasm; the fact that while early adopters are fine with incomplete features and early stage technologies in general, the early majority is pragmatic and will only accept the product once it solves a real problem.
Let’s take Peloton as an example.
They had tremendous success with early adopters within a given context: there was a pandemic and everyone was on lockdown. People needed a way to exercise and stay connected, and Peloton was able to satisfy a need for a moment in time.
Once the lockdown rules were lifted though, the company saw a steep decline in revenue. Why? Because they no longer satisfy a need, and the context in which they provide value is gone.
A customer looking to drop weight can easily get a foldable exercise bike for the winter season at only £135 - as opposed to the £1300 Peloton quotes. Another context is cycling enthusiasts might overlook the Peloton in favour of more realistic trainers.
The big question here is, did Peloton ever really have a strong product-market fit? The likelihood is not.
While they had success for a short while, they weren’t able to close the product momentum gap outside of a given context in order to scale.
You are not your market
The last big trap in the PMF goal post-race is continuing to function under the belief that you are your market. This is generally a really hard lesson for a founder or c-level executive to take in, because for a while it may have been true.
Sometimes great products are built because the founder had a problem and they managed to solve it. That is sometimes a great way to discover an opportunity, but an opportunity does not scale solely on one’s own experiences.
The truth that we all need to take in is that as teams scale and grow, the c-suite has less and less exposure to customers, markets, and contexts. This means that whatever they knew at the time is invalid, because they are no longer exposed to everyday practice.
This is where as leaders we need to trust our teams. From product to sales, they are the ones that have conversations day in and day out. They understand problems better than we do, so even when we have a “gut feel” about some things, that cannot override evidence.
What happens next?
It’s time to talk about value!
Focusing on customer value is how you can hit hypergrowth. Define it, build for it, and measure it.
If you need a little help, check out our posts on the product VCP, or read our white paper Product Market Fit is Dead.
If you would like hands-on help, check out our Momentum Strategy program.