4 steps to reduce risk of product-market fit failure
There's no perfect way to prove PMF, but this abstract metric can still help you win.
👋 Heya! It’s Alicia. Customer Focus is a newsletter to help you grow your business by putting customer value at the heart of everything.
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You can create something special by assessing product-market fit through a customer lens. Let’s dive in!
ProfitWell found that 75% of founders do not send customer development surveys.
And even worse, <10% of founders have qualified buyer personas.
Yet, these same founders still think their companies get customer development right.
So what does this mean? It means there is a delta between our internal assumptions and actual reality. So the reality check that I want to (kindly) convey is that - you might not know your customers as well as you think you do.
Let's discuss how better understanding your customer can help you find product-market fit.
“Don't find customers for your products, find products for your customers.”
Seth Godin
In my 12 years of product marketing, I’ve launched +25 products. I’ve built teams, advised founders, and lived and breathed the B2B marketing trenches. So I say the following with confidence: it is dangerously easy to build product vision in the image of beating a competitor.
“If they can do it - we can do it better. We are going to be the best.”
This happens by trying to replicate a competitors’ core value — like the features they have — and perhaps building X% more stuff for good measure.
But there's a problem with this thinking. There is a complete absence of focus on real pain to be solve, and how that connects to an underserved market. Understanding pain within an underserved market is the only way of creating a product that shines in a sea of “same-same”.
Make every product launch build towards stronger PMF
You need every single product launch to build towards stronger product-market fit.
The biggest risk that a company faces is a disconnect between self-perceived product-market fit and actual product market fit. This means building value through evidence that you are addressing pain for a target customer in an underserved market.
And yet, startups often ship stuff (e.g. products, features, sales narratives, content) based on opinions and assumptions, versus evidence of customer pain.
Self-perceived product-market fit = Building personas and product priorities based on internal assumptions and biased groupthink
Evidence of product-market fit = Discovering personas and turn their needs & pain into value messaging and product priorities
My advice: Go talk to your product managers. Talk to the folks who are responsible for your customer experience and examine your feedback loops. This includes auditing your team’s internal comprehension of customer needs.
How do you tackle this? By investing in customer development.
Define and protect product-market fit by rooting everything your teams do in knowing:
Whose pain you’re solving
Why you’ve chosen their pain
How to occupy space in their minds
How to reduce risk of PMF failure in 4 steps
1. Build scalable feedback loops
You can mitigate risk and gather evidence by building scalable feedback loops. You’ll use these to interrogate these questions:
Are our customers *getting* our value?
Do they *actually* know what to do, how to use the product, and why it matters?
Do they *need* us yet?
That last one - do they need us - is critical.
Here’s some data to back up how important it is: it’s called the Sean Ellis test.
Sean surveyed one hundred startups and asked one question to understand PMF: "How disappointed would you be if you had to stop using our product?”
After comparing 100 startups, Sean found:
Those that struggled to reach traction always scored under 40%
Those that gained strong traction always scored over 40%
Key takeaway #1: Try the Sean Ellis test by asking your customers:
"How disappointed would you be if you had to stop using our product?”
Whether you throw this into your next customer call, or send out a mass survey via Mailchimp, give this test a try!
Below are a few more ways to build customer feedback loops. A product marketer can connect the dots and bring the insights together in a Voice of the Customer Report.
Listen to sales calls
Map out themes of pain / gains / triggers / motivations
Listen for value messaging repeated back
Embedded surveys
NPS / CSAT
Perception & sentiment
Social & conversation monitoring
Automate outreach and scheduling for:
Customer interviews
Win/loss interviews
Value discovery interviews
Tool recommendations:
UserTesting.com for qualitative insights
HotJar for web & product pain discovery
Chattermill for quantifying qualitative sentiment
2. Deduce value from customers
I will let you in on a little secret - PMF is a rather blunt, and abstract, metric. To learn more about why, read “Product-Market Fit is Dead” written by Dave Martin and my PMM pal Andrea Saez.
In short, it’s all about creating value for your customers, and gathering evidence to validate that value.
In the product marketing world, we call this developing value stories. Value stories ask, "what value needs to exist in order for our customers to NEED this?"
In the WTF is Go-To-Market course materials, we talk about value nuggets. Value nuggets connect customer value to the functionality that substantiates it, and the proof points that demonstrate its truth.
You cannot prescribe value stories for your customers to get behind. You need to do the work to meet your ideal customers where they are, and discover value.
Key takeaway #2: You cannot prescribe value stories for your customers to get behind.
When you deduce customer value, you can use it like a secret weapon. Value then permeates everything from brand messaging, product roadmap priorities, team culture, and even your investor story.
Failure to deduce value means you’re stuck speaking in your own terms, and it’s often pretty generic.
“Our product is the fastest.”
“Ours is the only…”.
“We’re an all-in-one solution.”
Boring. So what? Who cares?
Focusing on one core audience makes it easier to appeal to customers as humans first. This in turn makes it easier to protect PMF with them.
3. Understand how to assess product-market fit
The third way of reducing risk of PMF failure is to learn how to assess it through a customer lens.
Here are two examples of how you might assess product-market fit; it’s almost a matrix of evidence of value:
Qualitatively experience faster sales cycles with better qualified buyers.
Quantified improvement in customer experience metrics like NPS or CSAT
Think of these CX-focused tools as drivers of customer lifetime value (e.g. sustainable growth).
I always look at growth and churn rates together. The recent extinction of the “growth at all costs” mantra is evidence enough for why, but let’s drive this sucker home.
All is well and good if you achieve an ambitious target of 100% YoY growth. But if your churn rate is 30% within 90 days of onboarding, then you are not delivering value. Period. In fact, you might be delivering more pain than your fiercest competitor - doing nothing at all.
I also love to think about PMF in the context of market share. Are you trying to win the whole pie of a niche market? Or take a small part of a massive pie? How many customers do you have that align with that goal? How hard is it to continue to convert more? Go deeper on this topic by reading this great Twitter thread.
And, for me as a product marketer, the qualitative stuff is gold.
Product-market fit is also a feeling — a buzzy energy. It’s:
Hearing your value messaging reflected back to you during a live interview.
Organic PR and word of mouth — customers recommending you and referring new business
Here’s a quick summary of all the ways you can build your PMF matrix and deliver real value for your customers:
Quantitative:
Efficient sales cycles - more qualified leads and accelerated conversion.
Customer experience - Net Promoter Score to customer satisfaction
Growth, engagement, and churn - How many customers are joining, using us, parting ways?
Market share - How much of the addressable market were you going after? How much have we taken?
Qualitative:
Word of mouth (cost efficient and powerful when you’re ‘the thing’ for someone vs. ‘something for everyone’)
Visibility and press engagement around your product and company increases naturally - and with pace.
Hearing value messaging reflected back to you in customer interviews, testimonials, and case studies
4. Iterate towards success
The fourth way of reducing risk around PMF failure is to view ‘Product Launch Day’ as the starting line. After you’ve launched, go to the pub with your team, celebrate that you’ve not melted anything down, and take the win.
But then the next day, I want your ears to the ground: listening.
This is where the hard work begins. You need to iterate towards success — towards evidence of value being creating for your customers.
Read a deep dive on this topic and download my free launch template.
In summary
There’s no perfect way of proving product-market fit. But with the right tools and mindset around creating customer value, you’re destined to build something that will stand out amongst the rest.
Here’s to growth,
Alicia
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