Our Experience & Best Practices of Finding Product-Market Fit

Our Experience & Best Practices of Defining Product-Market Fit

Before we start, I should answer the question: “Who am I and why am I telling you about finding the PMF?” 

I’m the Co-Founder of Struser, a user story writing tool. We’ve tried to achieve the PMF for our product. And spoiler: we failed. 

We first designed Struser to use within the Jellyfish.tech company. After releasing an MVP, we decided to share our product with the world. And while working on it, we’ve gone through all the stages the startups face, including searching for the PMF.

Value of Product-Market Fit for Startups

Product-market fit (PMF) is the level of match between what your prospects want and what your product can provide.

Determining the product-market fit is one of the significant startup goals. The problem is that it’s also one of the most complex and hard-to-measure concepts.

Besides, the concept of PMF works not only for early startup stages (MVP). Any entrepreneur should periodically ask if their product/service satisfies the current customer demand and adjust the strategy if not.

In general, a startup with its product goes through three stages as follows:

The first stage implies searching for a problem that you could solve using your future product. For us, it was the automation of the user stories writing for the developers and inexperienced project managers.

The second stage is to align your product idea and the market you’ll be selling to. 

Defining the target audience for your product is an essential step here. Then you should do the research to find out which problems your future users are facing daily, coming up with the specific product features to solve these problems.

My main idea here is “you should always stay flexible”, as even at this stage of the product development, room for pivoting should be left. 

I witnessed the situations when a company thought their solution is about time management and productivity for the C-level males (the main focus was on adding and tracking the current tasks), but they turned out to be delegating this part of their responsibilities to the employees. So, this solution happened to finally fit the working moms.

The next step will be making assumptions about how likely your customers will be to use the product and verifying these assumptions.

If you’re not satisfied with the results, you should pivot your product adding, removing, or modifying the features applying the data you’ve got. Alternatively, you could review the pricing policy, target audience, or product differentiation strategy.

Creating the product, we did our best to define our target audience, its needs, and pain points. Unfortunately, we foundered due to the lack of experience. 

How to Identify a Product-Market Fit?

Start With a Hypothesis

In fact, searching for the product-market fit is similar to the research the scientists do. You form a hypothesis, verify it, and estimate the results. If they’re satisfying, you’ll go to the next level. If no, you’ll repeat.

Let’s start with market research for identifying your target audience. 

After shaping the idea of who your future customers are, find out what they think by doing the research and taking customer development interviews.

Gathering the information for the interviews:

• Search for customer’s pain points in niche online forums
• See what your prospects ask and answer on Quora
• Check your prospects’ social networks to see what they’re interested in, and what problems they have.

Checking your assumptions with real people: 

• Interview potential customers by phone, via social networks, in hangouts, using the google questionnaires. Find the right format for your audience and your question types.
• Face-to-face conversations. Sometimes, a face-to-face informal friendly conversation with your potential can do more than dozens of questionnaires, so try to establish relationships with your future customers. Besides, you can customize your interview context depending on the type of your product, its features, and purpose.

I chanced to observe the R&D company’s customer interview for a smart home device. First, they paid for these interviews, as it took up to 3-4 hours. Second, they talk to their prospectives at home watching their routine together with asking questions. Brilliant! 

So, if you’re into a running app creation, for example, I bet your perfect customer interview will be during jogging with your future customer. 

Drawing up the right questions is probably one of the hardest parts of the process.

Although there will always be industry- and product-specific questions, let me give you a hint where to start.

Generally, you should ask about:

• People’s background
• Their routine day, the challenges and frustrations they face.
• How much would people pay for your product and would they pay at all.

The last question came up directly during doing product discovery for Struser. As the practice’s shown, asking “Will the product help you to resolve the issues” isn’t accurate enough, as most people will answer “yes” even without intending to really use your product.

I’ve created the list of questions for a product-market fit identification that you can easily customize & apply in practice. Go to our blog post about defining PMF and fill in the form so that I could reach out to send you the pdf. 

Define Your Value Proposition

This is about defining which customer pain points will your product address and solve better than your competitors. At this stage, you should differentiate yourself from similar products or services and decide on the unique features to offer to your prospects.

In fact, you should aim at providing a solution to the challenges you’ve figured out during the customer interviews. And the below-mentioned approach will help you do it in a more meaningful way.

You can use the Canvas Business Model template to visualize the results of your research:

Build an MVP to Test the Product-Market Fit

A minimum viable product only contains the core features that you’ll show to the early customers for getting and processing their feedback.

So, you should first decide on the features your product can’t do without and keep it simple.

Put aside the fancy designs and complex animations (only if they aren’t the core features). You can also do without complex UI/UX research relying on the best industry practices using the Angular Material design. And only after releasing either a prototype or MVP you could see where the users click and how do they behave to create the best possible experience.

We have built an MVP of the automated tool for user story writing to finally understand the audience we’ve targeted doesn’t actually need it. We’ve could have spent much more budget and human resource on the product development but for the rule of our product owner: 

“Don’t make considerable investments in a product until you find customers who will be ready to pay at least $5 for using it”. 

In our case, there were not so many users ready to pay for the product as it is. That’s why we strongly encourage our customers to keep the MVP as simple as possible to save the budget in case the product doesn’t work for your customers. Besides, we offer a few tricks to speed up the development process:

• API that covers the typical application functionality (create/read/update/delete) automatically.
• Starter development kit (SDK), built and customized by our team, that actually contains the parts of the code able to cover the frequently used features.
• Angular Material or React Material-UI for building the UI/UX using the best practices of material design allows you to do without designer services.

As of now, the Jellyfish.tech team can cover non-essential functionality quickly thanks to our pre-built templates, and only spend time on building the core value features. This approach saves time considerably, allowing verifying a business idea without paying an arm and a leg.

Show MVP to Your Target Group and “Measure” the Product-Market Fit

During this stage, you’re getting back to talking to your customers after they have tested the product.

• Collect the feedback of your first users
• watch their reaction to your minimum viable product
• ask open-ended questions
• learn about the challenges they’ve faced using your product
• A/B test your features to find out what works better for your customers.

Your customers could say they’d rather add or remove a particular feature or change the interface. It’s okay, keep iterating and A/B testing to evaluate the efficiency of your changes until you achieve the desired result.

Getting closer to your dream product, you can also divide the customers into groups depending on the usage frequency and users’ types (if your product implies different pricing plans).

Of course, you can’t apply the exact math formula to measure a PMF. As a founder, you can only collect and make use of product data like you gather the puzzle pieces to get a bigger picture.

There are several key indicators worth your attention:

• Number of users/purchases.
• Users retention.
• Growth engines.
• Number of referrals.
• Social media mentions.
• User feedback.

Be ready for pivoting your product.

Iterate if Nothing Has Worked Out

If after a few iterations nothing works, you just have to step back and rethink your hypotheses. Maybe, a good pivot will be an answer. Starting over again doesn’t mean you’ve failed, as you’ve gotten the precious information at the previous stages. Use it to think over your target audience, key features, or product positioning.

Follow the lead of the industry giants that become famous after pivoting:

YouTube. The famous video sharing platform started as a dating platform. Meeting no demands, they decided to pivot enabling people to upload videos.

Pinterest. Being a mobile commerce app in far 2009 called Tote, they aimed at increasing the local shopping efficiency. When it hadn’t worked out, they rebranded the platform focusing on visuals.

Shopify. The founders were seeking to launch an online shop but no e-commerce platform satisfied them. So they had to invent their own — Shopify. Although their shop had barely become popular, they achieved fantastic success selling their e-commerce product.

Move On to the Next Stage if Your Product Has Resonated

Besides, keep in mind that even achieving a product-market fit doesn’t mean you don’t pivot along the way. Every company pivots, this is only about the scale. Some need the small pivots, not let’s throw out everything we’ve done and start from scratch type pivots. Some need to improve a feature to fit their audience. Some need a new audience.

Key Takeaways

★ Become a researcher using a formula “hypothesis ➝ verification ➝ iteration/moving on”

★ Learn the A-Z of your industry/niche

★ Keep constant contact with your potential customers

★ Don’t invest much in MVP

★ A/B test your features

★ Pivot doesn’t mean failure, it’s another step towards the product’s success (or not) 

Finding the PMF is considered a huge milestone for startups. Yes, it’s a large and complex process that partly determines your product’s success.

Besides,  you shouldn’t get obsessed with only this activity. Even if you’re still struggling to find a fit or pivoting after the unsuccessful attempt, it’s not the end of the world. In my book, the essential part of the process is to deeply care about the product, define and track the important metrics, talk to your customers, stay open and responsive to constructive criticism.

Technically, there are companies that have gone public without having a product-market fit. Uber is a good example. Or Quora with the “300 million monthly active users” that yet has achieved product-market fit. Ask the Quora founders do they really care and how much money do they make.

I know how challenging going through all these stages is. So let me remind you that you can’t reach 100% PMF, but you definitely can create a product your customers will love.