Hacking Product/Market Fit
There are dozens of reasons for which your startup can fail - poor timing, cofounder feuds, lack of runway, and technology challenges to name a few. But did you know that the single biggest risk to your startup is that nobody wants your product? According to CB Insights, 42% of startups fail because of “No Market Need”.
Most startups aren't necessarily bad ideas, most are just mediocre ideas targeting markets that are too broad. The issue at hand is product/market fit - or the degree to which your product satisfies the needs of a particular market. Most founders only know how to recognize the signs of product/market fit once they've gone through the lengthy and expensive process of building and marketing their product. Founders need to realize that they can gauge product/market fit early on, even before they've built a product. Using predicted product/market fit metrics will ensure that founders don't waste time and resources.
To ensure your startup isn't building the wrong product, use Venture Validator's formula for increasing product/market fit. This process can be used as a shortcut for startups looking to know what features they should build and who they should focus their marketing efforts on.
- Create a Product Description following this 8-part formula
- Create Target Market Screening Questions following this 3-part formula
- Find 25-100 potential customers who pass your screening questions
- Pitch your product description then ask them this question:
“On a scale of 1-10, what is the WOW! Factor for this product?” 1 = Meh, that's boring
10 = Wow! Here's my credit card, I want to buy that right now!
The average score you get is a reflection of your level of predicted product/market fit.
Startups that score under 5 will always fail in the marketplace. They have no product/market fit. Usually, it's best to let these startups die. To be resurrected, they need either major feature changes or major target market changes.
Startups that score 5-7.5 are too mediocre to achieve viral growth. They often need to refine product features and narrow the target market. Entrepreneurs should tinker with changes and retest the idea until they score at least a 7.5.
Startups that score over 7.5 have predicted product/market fit. This means they've accurately targeted their market AND they've identified the right product feature set. Now, it's time to go build an MVP.
Identifying Early Adopters
Do you struggle to define your early adopters? While testing for the WOW factor, pay attention to customers with an 8, 9, or 10. These are the people in your “love group”. Find out what they have in common and you'll have a better understanding of who your early adopters are.
Once you have identified who your early adopters truly are, you can focus your product features on them. Doubling down on the value propositions that draw the love group to your product will create brand champions.
Make Pivots Early
The good news is that your score is not static. You can test variations of product and market until you find something that works. When you put a rigorous structure behind how you collect hypothetical survey/interview data, you can avoid the cost of building the wrong MVP and marketing it to the wrong customer.
If you have a startup idea but don't know if it's worth pursuing or if you've been pursuing a startup idea and want to increase traction, use our resources to get the right customer insights. The road to true product/market fit is a long one - it's important that you know you're going in the right direction. Learn how to grow your business using Startup Stack today.
