How to achieve product-market fit before you design anything
$2.26 trillion is spent on software re-work in the U.S. So why do some digital products succeed where others fail? One reason is that products and features are rolled out without testing product-market fit. One way to achieve product-market fit before you design anything is to test early and often with the right audience. In this article, we'll show you how to test for product-market fit to build better and faster.
What's product-market fit?
Product-market fit is a scenario where an organization's target customer is buying, using, and becoming champions for a product in numbers large enough to sustain that product's growth and profitability. It helps organizations limit risk, validate ideas, and build better products.
The term product-market fit is attributed to Benchmark Capital co-founder Andy Racheliff who was influenced by the thinking of fellow entrepreneur Don Valentine. However, the idea was popularized in the 2000s by Marc Andreessen, who describes product market fit as a scenario in which an organization’s target customer is buying, using, and becoming champions for an organization’s product in numbers large enough to sustain that product’s growth and profitability.
Author and product manager Dan Olsen communicates the concept with a pyramid diagram.
The bottom two layers refer to the market in which target customers and their underserved needs make up the foundation. The top three layers of the pyramid refer to the product, with its value proposition, feature set, and user experience.
When the underserved needs of the target customer connect perfectly with the product's value proposition, feature set, and user experience, the product market fit is complete.
Why's product-market fit important?
As a society, we praise organizations, inventors, and creatives for their ability to predict what will be successful. People like Steve Jobs had a sixth sense for the next big thing. Yet, for every successful innovation or new product, thousands of failed ideas fall by the wayside.
While there will always be elements of luck and fortunate timing, product-market fit doesn’t happen by chance. It’s a dance of art and science. As an organization’s research methods improve and become part of its everyday processes, so does its ability to see through the fog of uncertainty and create products that are likely to succeed.
But, no matter what changes the future has in store, one thing will never change: Product market fit will always come from a fundamental need to connect with real people.
Let’s start with the basics.
Organizations are sometimes burned by hubris. They’ll have an idea that looks incredible on paper, get buy-in from their team, and jump to the development stage. The product launches and flops. Why?
Sometimes products are designed to solve problems that was never there in the first place. It was a need that only existed in the mind of the creator.
Other times a product is visionary, but the timing isn’t right for the market to adopt it. The bottom line is that product-market fit must be considered at the earliest possible design and development stage. Otherwise, companies run the risk of building a product that no one needs.
“You can’t grow a product that hasn’t reached product-market fit.” -Arjun Sethi, Senior Director of Product Management, Growth, and Emerging Products at Yahoo
How to achieve product-market fit
If you want to build a product with value, you must first understand who’ll be using that product and why. Ideas are nice to have. But in business, it’s never officially a good idea until the market has validated it. Developing a valuable product or service takes up resources, which is why exploratory research is vital. Growth experiments can help, through the establishment of a systematic and repeatable experimentation process. Before committing to development, companies need confidence they’re solving a problem that genuinely needs a solution.
Related reading: Generative vs. evaluation research
Conduct exploratory research
When exploratory research processes aren’t thorough enough, and insights aren’t clear, companies end up spending millions of dollars building products that are merely “nice to have.” These products take up more resources to explain and sell because users will have to be educated about their need for the product before they’re even ready to consider using or buying.
One of the most foundational exercises at the beginning of discovery or exploratory research phases is phrasing the problem you’re trying to solve from your customer’s perspective. Examples of problems you might hear from customers would be:
- It takes too long to sort through my email.
- It’s too hard to understand all of these legal forms.
- I need to review these complex spreadsheets before noon, but I only have my phone on me.
If the problem can be stated in short, simple terms without referencing your product idea, then you might have a hypothesis worth validating.
The next step is to tie your idea to a real human experience. You want to pinpoint actual people experiencing the problem you want to solve. Search for these people by creating a customer persona based on hypotheses. Ask yourself questions to unearth new ideas. Are they a certain age? Do they work in a certain industry? Do they have a specific skill set or interest?
As you find actual people experiencing the problem, use what you learn from them to complete your customer personas with tangible human insight.
Check out test templates for the discovery phase:
- Needs and frustrations discovery
- Persona characteristics
- Feature prioritization
- Inflation and customer perception testing
- Diverse and inclusive perspectives
See how Notre Dame’s IDEA Center measures product-market fit by testing with niche audiences.
3 things to learn about your users to ensure product-market fit
Once you’ve found your target customer, you want first to look at how they’re currently solving the problem.
1. How are people attempting to solve the problem?
In your market research, ask your audience to complete the problematic task(s) as they naturally would. Observe how they approach the problem, listen to how they describe their process, and notice what tools they use to get it done.
- Do they have a favorite website or app that helps them do what they need to do?
- Do they need to use physical items to complete their objective?
- Do they spend a lot of time doing boring or repetitive actions?
This question helps you determine whether the problem is a problem, and it’ll help you determine whether your solution is viable. If people are hacking together their solution or wasting time repeating the same tasks repeatedly, then it’s clear that the problem is real.
Remember, people are creatures of habit. If their current process is good enough, they’ll be less likely to adopt an unfamiliar, new product or technology. If their current process is difficult or frustrating, and you help them realize how frustrating it is, they’ll be much more open to your solution.
This crucial first step ensures that every stone is turned over in the research process. Seeing users go through their current solution can often spawn new ideas, features, or answers to the problem. In addition, it may challenge your product team’s assumptions, which is always welcome.
Related reading: Working backwards to solve customer problems
2. What frustrates them about their current process?
Sometimes, users’ explanations of a problem differ from what their behaviors suggest. It’s always helpful to hear users describe, in their own words, what they like and dislike about an experience. Note anything they complain about, including the time it takes, the number of options they have, and any roadblocks or unwieldy interface elements they come across.
As users describe the problem, don’t hesitate to ask them why it’s frustrating. However, always do your best to avoid asking leading questions to users that might skew their answers toward false verification of your hypothesis. Instead, keep questions fair and let people describe the issue in their way.
A simple but compelling question might be: “If you had a magic wand, how would you improve or change this product or experience?” Ask whether they could complete their task and how easy or difficult it was. Watch for any places where they sigh, groan, or hesitate.
Oftentimes contributors won’t immediately identify what’s frustrating them—they’ll know that they’re having a hard time. So it’s up to you to pay attention and figure out what’s causing the negative experience and how to improve upon it in a way that would be valuable to them.
Once you pinpoint your target customer’s frustration, you’ll more easily be able to prioritize what you need to focus on to alleviate it. Your users will probably have complaints you haven’t even thought of.
3. What other activities go hand-in-hand with this problem?
Once your participants have completed the experience in question, you might ask them: “What would you do next?”
For example, if the users have been trying to find a cross-country flight, their next steps might include booking a rental car, making a hotel reservation, or adding travel dates to their calendars. In addition, you cover that your users like to forward their travel information to their family immediately after booking the ticket or set up their out-of-office memo on their email right away before they forget.
Ultimately, this type of questioning helps you uncover opportunities to save your users time by either helping them complete multiple activities at once or leading them intuitively onto the following action. Often, these thoughtful touches can make a product stick out in a user’s mind after they’ve completed the experience.
Of course, your product doesn’t need to do everything, but collecting this information will help you understand your target customer’s mindset and the path they take to solve their problem. That extra consideration is how you design products and experiences with customer empathy.
How product-market fit manages risk
Doing your research upfront will save you from designing products that no one needs and will keep your team focused on projects that can move the needle. You’ll find opportunities for your product to solve problems—often in ways you hadn’t originally imagined. By focusing on product-market fit, companies can mitigate risk, remove guesswork, and avoid common mistakes when forced to return to the drawing board.
If your product can solve a real need and do it easier, faster, cheaper, or better than the alternatives, you’re on track for product market fit.