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Product Market Fit: How It Works For Startups

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product market fit

Product market fit is a term commonly used in the startup world. It represents the relationship between a company, its customers, and its products or services.

This concept is crucial for any business. In this post, you will learn what product market fit is, why it’s essential, and how to measure it yourself.

Defining the Product Market Fit

Product Market fit describes when a new product or service is broadly accepted. In recent years, most startup communities have received lean startup methods from individuals like Steve Blank and Eric Ries.

Using the Lean Startup Methodology

The lean startup methodology is based on a radically different approach to business. In other words, startups need a strategy that is different from that of mature companies. It has to validate the educated guesses it is making.

A startup has to develop a minimum viable product and ‘exit the office” to meet its current and future clientele. This way, a young company learns there is an actual demand for its product or service.


To improve your product, it is essential to collect customer feedback.

During the initial phase, you may need to make several changes to your product based on this feedback. These changes could be minor adjustments or complete pivots. This is particularly crucial if your product, application or service is not meeting the target market’s requirements.

Depending on the feedback, you’ll be able to tweak the product correctly or even revamp the whole ordeal, all to meet the needs of the first market segment you’ve targeted.

Once you have sufficient actual users, such as those who have purchased and used your product or service regularly, you will have ample evidence of a demand for what you have developed in the target market.

Calculating the Product Market Fit

In essence, you can calculate product market fit with customer surveys that explore what part of your users believe your new service/product is a must-have. However, it’s often the case that product/market fit is less about theoretical figures and percentages and more about detailed and tangible knowledge of:

  • Who are your consumers?
  • What do they need?
  • How do they think/feel about your product/service?

Do you have organic growth? Is your product so good there’s word-of-mouth around it? Are individuals really willing to pay for it? If the answer is yes, then you have a product/market fit.

Referral marketing

Referral marketing can be a crucial factor in achieving product/market fit. The product may only cater to a small portion of the market during a startup’s initial stages. However, as the business expands, the understanding of the problem that the product solves will also increase.

Additionally, this knowledge may lead to a change in the customer profile. To gain a broader understanding of the market, it is essential to establish and maintain a relationship with your specific target audience. The best way to do this is by communicating with them directly.

Customer Relationship

To build a relationship with potential customers, offer valuable content, engage in meaningful conversations, and create trust by being transparent and honest.

Personalize interactions, listen to their needs and provide tailored solutions. Consistently follow up and demonstrate reliability.

Seek to really get to know your target audience with the following questions.

  • Those on your customer backstory — Who are they? What is their job? What is their typical workday?
  • What is your customer trying to solve? What are their pain points? What activities do they employ to solve them? What solutions have they used?
  • How may your service aid them? Where have they heard about your product? How are they using it?

Alternative data collection methods include online forms and surveys, social media, email marketing and promotions.

In-store offers work well, too, as your team of frontline staff can really get to know your customers. This, in turn, will further your knowledge of what your target market and customers want.

Why Do You Need Product Market Fit?

Achieving product/market fit is essential because, without it, you won’t know if your product addresses a significant problem for a sizable customer base. Without this understanding, you risk wasting resources on a product that may not succeed in the market.

Furthermore, rushing into scaling before achieving product market fit can waste money on sales and marketing efforts that may not bring in revenue. Premature scaling is often a critical factor in the failure of many new businesses.

Summing Up

The success of a product relies heavily on how well it caters to the market’s needs and desires. If a product can address real-world problems and resonate with customers, it is more likely to generate demand and achieve success. This results in higher customer satisfaction and increased sales, contributing to a business’s long-term growth and sustainability.

A good product-market fit allows businesses to fine-tune their marketing strategies, allocate resources wisely, and maintain a competitive edge in their industry. Product-market fit is crucial in ensuring a business’s long-term success and survival.