How to Pivot Your Product Strategy to Achieve Product-Market Fit

“I don’t understand what’s going wrong! After investing so many dollars in Facebook and Google Ads and driving traffic to my product, my revenue figure just won’t budge!”

Believe it or not, as a provider of software development and digital marketing services, we hear it all too often! The reason? Prospects are intrigued by your product enough to play with it. But they aren’t as intrigued when it comes to buying.

Why does this happen? It’s because you haven’t achieved Product Market Fit (PMF).

Businesses experience numerous challenges throughout their existence. Survival in such a scenario mainly depends on what to focus on and what to ignore. Focus on the right things and success will follow. Even a slight deviation can prevent you from delivering a great experience to your customers.

Product-market fit refers to creating something that people actually need and want to use. When you focus on this concept, it’s only a matter of time before you achieve the success you desire.

That is exactly what we do at Imenso Software. Our experts have helped multiple businesses find their product-market fit, creating products that people truly want.

What Is a Product-Market Fit?

Marc Andreessen, a famous startup coach and investor defines product-market fit as being in a good market with a product that can truly satisfy the market. He even went as far as to say that getting a product-market fit is the only thing that matters.

PMF boils down to a simple concept that businesses have been long aware of. Identifying a need in the market and creating something to fix it.

Ultimately, this is what makes customers want to buy your product. And when they do and you see rapid growth in metrics, that’s product-market fit!

What Are the Signs of Product-Market Fit?

It’s not always easy to determine whether you have achieved a product-market fit. Often, you get mixed signals. So, it is important to know what really indicates a PMF.

1. Increasing Customer Base

Customer traction is the biggest sign of the value of your offering to your customers. If your existing customers are bringing new ones, it indicates that you are on the right track.

However, products of all industries cannot bring in new customers rapidly. In these cases, it is imperative to invest in the active promotion of your products.

2. You are Able to Bring in New Customers at a Lower Cost

As mentioned above, the active promotion of products is vital to attracting more customers. To determine whether you are inching closer to PMF, find out the cost it takes to convert prospects into customers. If the cost has been reduced, you may be well on your way to a product-market fit.

3. Customer Retention

You can attract a customer once. But if you are able to retain them, it’s a sign of product-market fit. People only stick to a product if they derive something of value from it.

A good way to make more people stay is to ask those leaving the reason for doing so. Use the feedback to improve your offering.

4. Increase in Revenue

Revenue growth is a telltale sign of achieving market fit. Many businesses with product strategy changes make the mistake of pricing it so high that people are unable to afford it. If you know that your product is capable of fetching high revenue, you must not make it economically unviable.

5. Happy Customers

The happier your customers, the better your product. It is crucial to keep gathering customer feedback as much as possible. This alone can give you a practical idea of where you can improve and move closer to PMF.

How to Pivot For Product-Market Fit?

Achieving product-market fit is critical to thrive in today’s marketplace. But why is it so difficult to create products that people love? Many great minds have tried to understand and answer this question. But one of the best methodologies that is proven successful is the Lean Product Process approach. Developed by Dan Olsen in his The Lean Product Playbook, it provides a stepwise process to enhance both customer experience and product efficiency.

Let’s look closely at it.

Determine Your Ideal Buyers

The basis of the Lean Product Process is having a clear understanding of your audience. This involves identifying and defining the people that your product will cater to. Understanding the target market enables a business to create a product in a way that satisfies the needs of its customers.

Market research is crucial to identifying the target customer. It includes strategies like psychographic profiling and demographic analysis. Through it, businesses are able to create detailed customer personas. These personas include all relevant information about their customers such as their behavior, demographics, pain points, and more. It ensures that all efforts at product development serve this target segment.

Identify Unmet Customer Needs

Unmet needs are the needs the problems that your prospects are experiencing. However, no product or solution in the market is able to adequately address it. If you can identify this need and develop a solution, nothing can stop it from becoming a product-market fit.

The best way to identify these needs is to conduct deep customer research. Some effective techniques include interviews and surveys. The underlying aim of this research is to discover the challenges faced by your target audience. This will enable you to align development efforts to meet these needs.

Define Your Product’s Value Proposition

A value promise is a promise of value that a product offers to its customers. It defines how it will solve the problems of the users. The stronger your value proposition, the better your product can attract customers.

To develop a compelling value proposition, focus on the things unique to your product and how they solve the user’s problems. Highlight the benefits and features of your product that differentiate it from the competitors. Ensure to create a clear and concise value proposition aligning with the needs of your target audience. Then, match the product development efforts to it.

Define Your Minimum Viable Product (MVP) Feature Set

The next step is to establish a minimum viable product (MVP) feature set. This includes the particular enhancements and features that the product needs to provide value.

Some good techniques to define MVP sets are prioritization matrices and story mapping. The most important task is to identify the features that can deliver the value proposition. This helps with developing a product that fulfills the needs of its users.

Once the product is equipped with core features, additional ones can be added later based on customer feedback.

Create Your MVP Prototype

The MVP prototype is a basic version of the product that delivers the core value proposition to the end users. Businesses can use this prototype to test the product assumptions with actual customers. This allows them to obtain the necessary feedback related to the product’s usability and effectiveness.

The MVP prototype should be adaptable enough to change based on the feedback. This enables the business to improve the product quickly. Ultimately, the purpose of MVP is to enhance the product based on the insights received from the feedback.

Test Your MVP with the Target Audience

The final step is to test the MVP with the target audience. It involves carrying out usability tests and getting feedback from the ideal buyers. Testing the MVP allows companies to discover areas of improvement. They can then make appropriate changes to the product.

The purpose of testing MVP is to understand how buyers engage with the product. It makes way for the identification of further improvements. Companies can get insights regarding the features they can add (or remove) to make the product more suited to the needs of its users.

Compelling Examples of Adjusting Strategies to Find Market Fit

Research has shown that most start-ups fail because of their inability to determine and solve a real market need. Still, there are also a few that have been able to find that sweet spot where their offering perfectly aligns with the market need. Businesses should be inspired by them to enhance their solutions.

1. Dropbox

Dropbox solved a widespread problem. File storage and inception have always been riddled with complexity. Dropbox came up with a user-friendly interface. With features like seamless syncing, it solved the problem of accessing files across various devices. No longer do the users have to endure the hassle of email attachments or USB drives for this purpose.

Dropbox’s value proposition is clear, concise, and compelling: Easy-to-use online storage that just works. Moreover, their referral program provided more storage space for the referrer and referees, skyrocketing its user base.

2. AirBNB

Almost everyone loves traveling. But no one loves spending their time endlessly searching for decent accommodation. AirBNB solved this problem by identifying a gap existing between travelers and property owners. It capitalized on travelers who found hotels too expensive and property owners who love to earn extra by renting their space.

Airbnb offered a platform where hosts can list their spaces and travelers can find and book them. This also had the effect of making the travel experience more personalized. Finally, it created a win-win situation for both travelers and property owners.

3. Slack

Slack was originally an internal communication for a gaming enterprise. The owner soon realized the potential of the software beyond gaming. Slack discovered the pain points of workplace communication in different businesses. They found information overload and fragmented communication channels as the two most common issues.

Slack solved this problem by consolidating files, messages, and tools in a single place. This led to more systematic and efficient communication in the workplace.

4. Spotify

There’s hardly anyone who’s not heard or engaged with Spotify in some way. During the 2000s, the music industry was struggling to resolve issues related to piracy and digitization. Spotify’s fixed this problem by offering a huge library of music accessible through streaming. It thus provided a convenient and legal alternative to piracy.

To tap into a broader audience, Spotify came up with a freemium model. This was for those hesitant to purchase music but willing to endure ads in exchange for free access. Spotify satisfied both the music industry’s need for a sustainable revenue model and the average person’s desire to access music easily.

5. Zoom

Zoom shot to success overnight capitalizing on the COVID-19 pandemic. The increase in remote work necessitated reliable virtual communication. Zoom offered superior video quality, was easy (and is) easy to use, and highly reliable compared to other similar programs. It simplified video conferencing, something that was crucial for almost every business. Within a few weeks, companies, schools, and individuals adopted it. Nothing illustrates a product-market fit better than Zoom.

Achieving Product-Market Fit and Your Path to Long-Term Growth

“Listening to sales calls, I marveled at the sweet spot we’ve hit. The team had no problem closing the deals. New customers poured in like a crowd at a grand opening. There was no back and forth, no overexplaining about the product’s benefits, no struggle of any sort. People just loved what we offered and that was it.”

Most start-ups would do anything to reach this level of success. Attaining product-market fit is about confirming with full certainty that your offering works for your customer at every single level. Of course, it feels hard and not every business is able to achieve it. The only way to go about it is to get a clear understanding of your target audience and what they desire. Stay committed to continuous improvement and embrace the ups and downs of this journey. Remember, everything is bringing you closer to building something truly impactful.

At Imenso Software we are eager to learn about your product roadmapping goals. With years of experience creating successful products, we help you build a strategy that positions your business for long-term growth and scalability. Talk to us for a few minutes to see how we can be your growth partners.

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