MaRS Library Pivots: Part 2 | The search for product–market fit
This is from the lost section from The Growth Hacker’s Guide to the Galaxy. Mark Hayes and I wrote that book a few years back and went deep down a rabbit hole on the topic of pivoting. Before long, we had too much pivoting content and it got cut from the final manuscript. Now it rises like a phoenix from the ashes as a seven-part blog series. Make sure you stick around until Part 7—it promises to raise some eyebrows.
We touched on the concept of product–market fit in Part 1 of this series, but let’s take an in-depth look and see why it matters for your company and how it relates to pivoting.
What is product–market fit?
The ability to achieve product–market fit is probably most coveted scenario for a company, as it means a business has reached a state where customers have the very least amount of resistance to buying.
For product–market fit to exist, the following needs to be true:
- There’s alignment between the core problem faced by customers and the product created to solve the problem.
- There’s a resonance between the problem faced by customers and the ability to build and deliver solutions using current technology.
- Channels exist that make it easy to reach and market your solution to customers, thereby enabling growth.
- You have a fairly good idea of your messaging and positioning, which is the bridge between the product and the market.
Pivots change how you achieve product–market fit
It’s worth mentioning that when you pivot a company, the way in which you achieve product–market fit will likely change.
For instance, suppose you identify different needs in the marketplace or a better “kind” of customer to serve.
In order to fully meet these needs, you probably need to build different products, which might be built using different technology. You may also need market your solution using different channels—e.g., apps require different marketing channels than websites.
This is because each of these factors will have dependencies on one another. A change in one area of your business affects all the other parts involved in your company’s ability to achieve product–market fit.
We’ll delve into this in more detail later in this series, but keep this notion in mind for now.
Why product–market fit matters
Having product–market fit matters because it enables your company to tap into the latent demand that exists in a certain marketplace. When you achieve it, the marketplace will demand your solution—almost naturally.
And this creates a situation where your company will be able to sustain significant growth.
How do you know if you have/have not achieved product–market fit?
When you achieve product–market fit, odds are you won’t get a message from the heavens letting you know that you’ve hit this coveted goal.
What you will see, though, are some dramatic changes in the numbers of your business. One of the most obvious signs is that you’ll start to experience a dramatic rate of growth.
Should you achieve product–market fit, there’s going to be a point when people are getting a lot of value out of your product and they’re voraciously recommending it to people they know.
This cycle compounds and leads to massive growth.
Keep in mind that this effect can also happen (and be magnified) when you find a marketing channel that works very well for your solution and target market.
You’ll also experience something known as the “shut up and take my money”-effect, where it really doesn’t take that much convincing to get customers to invest in or engage with your offer.
On the other hand, if you’re not experiencing any of the above, you probably have not achieved total product–market fit.
In this situation, you’ll need to go back to the drawing board and start out with a different set of assumptions.
Next in this series
In Part 3 of this series, we will look at the role of timing and why companies fail at gaining product–market fit.
Catch up on the series so far
Pivots: Part 1 | Why is pivoting important?
Pivots: Part 3 | Why most startups fail at finding product–market fit
Pivots: Part 4 | Some pivoting myths
Pivots: Part 5 | Pivoting: Case studies (PayPal, Flickr & YouTube)
- Ontario’s accessibility standards for customer service.
- Pivots: Part 1 | Why is pivoting important?.
- A strategy canvas: A tool for developing a differentiation strategy for technology products.
- Concept stage of company development: Funding, investors, risks and expectations.
- Marketing plan for your product launch.