There are a lot of products with no customers created every year in the global markets. But your product isn’t always the problem. Do you believe in its value, but have a hard time selling it? You might be talking to the wrong customers.
Since the term product/market fit was defined, it was clear that is exactly what most companies struggle with the most. That’s because it’s not so easy to achieve.
Some companies don’t reach out beyond their local/initial market and focus only on developing the product. Which could be a big mistake, because talking to customers from new markets is a great test of your offer.
And it’s part of the process of achieving product/market fit.
Short definition of product market fit
The best, most quoted definition comes from Marc Andreessen:
“Product/market fit means being in a good market with a product that can satisfy that market.”
So to achieve product/market fit means to build a product that satisfies your target market.
This means you can grow your product and company in a scalable way. You satisfy customer needs and have room to grow your business because many more customers have those needs.
The problem is that customer needs are hard to pin-point.
How badly can selling a good product in a bad market hurt your company? – analysis
Companies can run out of money before they manage to satisfy customer needs. Either because their product isn’t refined, or the market isn’t right for them.
So failure typically means that there is no market for your product in its current form.
But what if you have valid reasons to believe that your product is valuable?
Marc Andreessen describes the consequences of offering a great product in a bad market in one of his Linkedin Pulse articles:
“in a terrible market, you can have the best product in the world and an absolutely killer team, and it doesn’t matter — you’re going to fail.”
But no-one forces you to stay in a terrible market. You might be focusing on your local market, or on a specific group of customers that aren’t buying into your offer.
This might lead to decisions that will hurt your cash-flow significantly – like needlessly devoting most of your budget to rebuild the product.
Whereas the solution could be finding a new market. You won’t know until you gather new information. In his AMA on GrowthHackers.com Steve Blank, creator of the Lean Startup movement, wrote that his one piece of advice for founders is:
“There are no facts inside the building, so get the heck outside.”
To get new information and see if there’s a better market for you, you have to reach out beyond your company, beyond your known network.
How we found product/market fit in 3 years
We’ve been testing various customer groups in over 3 years of being on the market. At first we reached out to companies beyond the local Polish market with cold email campaigns.
Through talking with potential customers from various markets, we found a market of small companies to focus on. But with time, we’ve learned that companies in the market couldn’t spend their budget, despite seeing the value of the product.
That told us to explore new markets, essentially targeting new companies in cold email campaigns, based on specific criteria we’d define for companies belonging to a better market.
Communicating with customers in multiple markets was a good test of our offer. It gave us an opportunity to gather plenty of feedback, and find the right customers faster.
And in cold emailing the response is pretty immediate – if no-one responds from 300 contacts in our campaign, we can approach a different market to test our offer there.
This example goes to show that achieving product/market fit is a cycle. An optimization cycle that happens throughout your company’s life.
The table below represents leads from cold email campaigns that we’ve generated this year. The number of generated leads is probably the best indicator of your target market’s interest.
From June to August we were testing a previously unentered market, and we failed there. But we were able to get back to our best numbers in just 2 months, by redirecting campaigns to previous target market and experimenting.
The cyclical nature of this process is important to remember. Unicorn startups have constant growth from launch day, but most small and medium businesses outside of Silicon Valley have to take the time to find the best market for their product.
For you customers, product market fit means that your product fully satisfies their need, and that there’s much more potential customers that have that need.
If you have reasons to believe that your product is valuable and still can’t sell it, you might be in the wrong market – reach out beyond your local/initial market and approach different customers.
Achieving product/market fit is a cycle of optimization, and most small and medium businesses have to take the time and responsibility for finding the best market for their product. A good way to find it is to explore new markets with your offer.