3 Steps to Determine Product-Market Fit
For entrepreneurs to succeed, they need to figure out consumers' needs and develop a product to solve these issues. Here are a few steps to help you determine product-market fit.
By Will Caldwell •
Opinions expressed by Entrepreneur contributors are their own.
Product-market fit is the golden rule for any startup – entrepreneurs need it or their concept will fail. However, defining product-market fit can be challenging for some startups, as it takes time and requires a deep understanding of your target market.
From my experience over the past two years building my startup Dizzle, a mobile app for real-estate agents, I have developed several variations of my product in hopes of mastering the product-market fit. It was a bit of a challenging time, as I continually found myself exhaustively explaining how the product worked. I finally decided instead of having all these bells and whistles, I would focus on the sole feature that provided the most value and utility to my target market. With this new strategy, I was able to approach the product-market fit questions a bit differently. I started handing my product to my clients and asked them to explain it to me. Once my target customer was able to explain the exact value proposition of my product back to me (and was willing to pay for it), I believed I finally nailed the product-market fit conundrum.
Related: The Golden Rule of Starting Up: Product-Market Fit
I realized providing value is the name of the game, and it is critical for the market you are trying to serve that they understand your value proposition instantly. The quicker your customer can understand the value, the more you know your product has achieved product-market fit.
For those looking to achieve product-market fit quickly, here are three tips:
1. Understand your customers' current needs and foresee future ones. Learning the needs of your customer takes time and experience. If you don't know your customer, you won't have much luck figuring out the product-market fit. To get a better understanding of your target demographic, you should spend time with your customers, write for industry news outlets, attend industry tradeshows, and find a mentor in the market to help you learn the ropes. Doing so allows you to gain invaluable connections and gain an inherent sense of the industry needs. Developing a deep understanding of the problems facing your customers enables you to relate to them better and ultimately helps builds trust and credibility.
2. Focus on one significant value proposition. Narrowing your feature set down to the one feature that is a game changer is difficult, but it an absolute necessity. To determine which feature you should initially focus on spend time with customers, analyze major emerging trends in the industry, and examine areas where competitors fail to solve problems. The ancillary features can come later as your customers will be willing to wait if your product solves one major pain point they are facing.
Related: Last Things First: 4 Secrets to Acing Your Product Development Process
3. Build credibility. The best way to build credibility is to offer up a story. Customers want to know how your product or service is going to make sense for them, and the easiest way to do this is to inject their needs into your brand's story.
For instance, I grew up in the real-estate industry, and my mom was tired of clients relentlessly contacting her for a local handyman recommendation. We figured it was easier to say "download my app" instead of texting this info back and forth multiple times a day. Turns out there were a lot of other agents facing this problem -- setting the foundation for Dizzle to grow.
