Why is product-market fit important?

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Before you develop a business strategy by adding users or upselling to other products, you need to make sure there is a market full of people who are actually willing to buy your main product. Also, in order to convince capital investors to bet on your startup, you need to prove that you can tap into a viable market that is large enough to sustain the growth of your business in the long term.


That’s why you must conduct in-depth market research and identify the market that has a demand for your solution. If you don’t find the right market, your product won’t reach the people who need it and won’t sell.

Additionally, when you offer a product that meets a public need, your product will naturally spread through word of mouth and your users will gradually increase. This means that you have to spend less resources on marketing/sales and can acquire leads organically. However, you must build a positive relationship with your customers and turn them into loyal fans to have this effect.

How to measure product-market fit
 

User Survey
If customers are asked, “How would you feel if this product was no longer available?” and more than 40% answer “Very disappointed,” then you have strong product-market fit.

However, this survey relies on user subjectivity and may be biased. While informative, these results alone cannot be used to make judgments. To obtain more accurate data, we recommend combining it with other methods. 

Net Promoter Score (NPS)
Net Promoter Score (NPS) is a metric that indicates customer loyalty. NPS is measured with a single question in a survey format: “Would you recommend this product to a friend or colleague?” Respondents answer on a scale of 0 to 10 how likely they are to recommend it.

 

Scores of 9 to 10 are classified as promoters, 7 to 8 as passives, and 0 to 6 as detractors. You can determine your product-market fit based on the NPS score, which is calculated by subtracting the rate of detractors from the rate of promoters.

 

Online Reviews
The number of online reviews and mentions is also used to measure product-market fit. You can find this out simply by searching your brand name and services on Google and social media.

It’s also a good idea to implement an invite-a-friend feature to measure whether friends recommend your service.

 

Engagement Rings
Engagement, or the number of users who are actually using your system, is also a useful metric. Because different products are used in different ways (daily, a few times a month, etc.), it’s important to measure cambodia telegram number database user engagement against your own product. Note that engagement should be judged against competitor products and industry averages.

 

reserve
If you are sure that you have product-market fit, you must also have a good customer retention rate. Compare this with other companies’ products and the industry average as well.

Summariz
Product-market fit is a vital component of startups, and it is said that without it, new businesses cannot succeed. We encourage you to measure product-market fit when starting a new business by following the methods we have introduced today.

 

Even if you don’t plan to start a new business, since the market is always evolving, you must continue to check your product-market fit for your product to confirm that there is still a considerable demand for your product. Always keep an eye on market trends and create a system to measure your PMF.