Product-Market Fit is a relatively recent concept that has proven to be quite important, especially when bringing a new product to market. A core component of product research, Product-Market Fit is essential for understanding where a particular product will fit into a market and whether there is sufficient market demand.
The key to achieving Product-Market Fit is a thorough knowledge of the market and your customers. And the best way to gather this information is through surveys.
Product-Market Fit is a product's ability to satisfy a market's needs. In other words, you’ve achieved Product-Market Fit if you have thoroughly evaluated your target customers and provided them with the precise product that fulfills one of their particular needs.
Finding Product-Market Fit means identifying:
It can also be used to gauge the market for a product in development or to analyze a market to identify where there may be opportunities for new products.
Here are three examples of Product-Market Fit resulting in success—and one example of how not achieving it led to failure.
A great example of Product-Market Fit is Netflix. The entertainment media business started in 1997. By the early 2000s, it was changing the way the public viewed entertainment. They saw that people didn’t like paying late fees to video rental chains, so they offered DVD rentals by mail that you could keep as long as you wanted.
Netflix would likely have gone under when DVDs lost popularity. Instead, they altered their product to fit the evolving entertainment market with subscription streaming services that make finding entertainment cheaper and easier than the alternatives.
Netflix has continued to stay flexible to fit the market as it changes.
The creators of Slack, an instant messaging system, were developing a role-playing video game when they came up with Slack as an easy way to communicate with each other. Fortunately, they did their research. The developers found that the market for role-playing games was saturated, but there was nothing out there like Slack for effective, instant communication.
They pivoted their plans and rolled out Slack in 2013, which today is used by over 10 million daily. In 2021, Salesforce acquired Slack for approximately $27.7 billion.
By understanding market needs, the Slack team could focus on a better Product-Market Fit and increase their revenue.
The Uber ridesharing team did their research and found that there was a need for an easily accessible method of transportation that didn’t include trying to hail a cab or catch a bus. The development of Uber met that need with their app for passengers to hail a ride and drivers to charge fares and get paid.
The company meets two needs. It pays drivers as independent contractors, providing employment opportunities as well as easy, affordable transportation for passengers.
Quibi, a video platform for mobile devices, didn’t achieve Product-Market Fit. In 2018, a Hollywood producer and technology CEO co-founded Quibi, thinking it would appeal to younger generations looking for video on their smartphones. They involved big Hollywood names, like Steven Spielberg and Jennifer Lopez, and launched on iOS and Android in April 2020.
Quibi required a $5/month subscription fee. However, its target market of younger viewers was used to watching free video content on Instagram and YouTube. The Quibi team didn’t seem to understand their target audience very well.
Despite the huge buildup and advertising, Quibi fell well short of its goal of 7 million subscribers, with only 500,000 signed up by the end of 2020. The platform shut down, scrapping the rest of the content that was in development.
A Product-Market Fit survey would have helped Quibi either find a better market fit, offered ideas for tweaks before launching, or prompted the idea to be dropped before development.
Product-Market Fit is useful because, when achieved, your product will be successful in your target market. Without researching your target customers and the market for fit, your product could end up failing like Quibi.
And you can’t just go with your gut. You and your development team might think your product idea is perfect for a particular market. Can you be certain? Many businesses have launched products without the proper research for Product-Market Fit. Friendster, Navdy, Reach.ly, and others have failed, just like Quibi.
With Product-Market Fit research, you can determine if there’s a demand for your product or service before you allocate time, effort, and money to develop it. Instead, do your market research and base product development on solid data.
Another important factor in Product-Market Fit is the ability to tailor your product based on your market research. If your data shows that the demand for your product isn’t high enough, you may be able to make tweaks that will make it more appealing and a better fit for your customers.
This is particularly helpful during product development when you haven’t made a substantial investment in production.
The ultimate goal of any brand is to build brand loyalty. When your customers feel heard and that you’re providing them with a valuable product based on their needs, they’re more likely to purchase from your brand, regardless of other offerings.
Market research is critical to Product-Market Fit because it relies on having product interest among customers in a given market. The best way to measure customer interest is by asking potential customers directly with survey questions. With the right questions, you can gather genuine feedback from an appropriate sample of your target market. Of course, none of that can happen without understanding your customers.
In general, you need research to:
Using surveys, you can acquire the answers directly from your potential customers. There’s no better information than that gleaned from the people you’re creating the product for.
It’s easy to create Product-Market Fit surveys with SurveyMonkey. Our platform is intuitive and allows you to insert your product mockups, company logo, and other supporting graphics into your survey. Here are a few helpful tips for creating your survey.
One of the most important questions in your Product-Market Fit survey is:
How would you feel if you could no longer use (product name)?
The 40% rule states that if 40% of survey respondents say they would be “very disappointed” if they could no longer use the product, Product-Market Fit has been achieved, and you can expect sustainable growth. It’s the green light to move forward!
Regardless of how your survey respondents feel about your product, it’s a good idea to use this opportunity to assess your competition. One question you could ask in your profit market fit survey is:
What would you use if (product name) was not available to you?
If the respondent chooses the answer indicating they would use an alternative product, a blank text field allows them to enter the name of a competitor’s product. An evaluation of that competing product may inspire changes to your product.
You don’t need thousands of respondents to gather actionable information, but the respondent panel you choose must be diverse and consist primarily of potential customers.
We recommend a sample size of 40-50 responses to obtain meaningful results. If you need help assembling a survey panel, SurveyMonkey Audience is a useful tool for reaching out to your specific target audience.
The best times to send these surveys are:
Pro Tip: Not sure if you’ve accomplished Product-Market Fit for your online product? Look for these five metrics on your website: Low bounce rate, high time on site, high pages per visit, high returning visitor count, and customer lifetime value.
Product-Market Fit surveys provide you with the data you need to ensure the success of your product in your target market. Remember, you can’t please everyone, but you can please your customers with Product-Market Fit.
Don’t forget—your customers’ needs evolve and change, and your product needs to fit their new needs. In fact, as time goes on, your end customer might change, so you’ll need to perform ongoing research to maintain Product-Market Fit.
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