Post by wsannhbz on Dec 5, 2023 1:57:44 GMT -8
There are at least a few definitions of a product-market fit. According to Paul Graham from the American Y Combinator, it means creating a product that customers want to buy. Sam Altman from Open AI, in turn, believes that a product-market fit is when a product is good enough that customers recommend it to others.
Both statements are clearly true. However, one more can be added. Product-market fit is about creating a situation in which a product or service meets the needs and expectations of a specific group of customers. This happens when a company’s offering actually solves the problems of its target audience.
It sounds so trivial. But only apparently. Finding a product-market fit is not easy. First of all, how do you know you have found a product-market fit? What would you consider a good metric to measure it? Start with the 40% test.
Sean Ellis test
Sean Ellis is an American entrepreneur best known for his work Email List for Dropbox, his book Hacking Growth, and the “40%” concept. It is this concept that we will focus on.
Sean Ellis concluded that the measure of product-market fit is customer satisfaction. At the same time, he does not advocate asking customers direct questions. Probably because people might be insincere.
Therefore, he proposes a different question: “How would you feel if you could no longer use our product?”
Very disappointed
Somewhat disappointed
Not disappointed
And if customers would be very disappointed at the thought of discontinuing your offer, that means they are extremely satisfied with it. Good. Now, according to Sean Ellis, if you can get at least 40% of your customers to say they’d be “very disappointed,” then you’ve either found product-market fit or you’re very close to it.
Another American entrepreneur, Dan Olsen, has developed what he calls a product-market fit pyramid – simply put, a framework for finding and creating PMFs. It is a five-layer pyramid. Let’s look at it from the bottom up.
Both statements are clearly true. However, one more can be added. Product-market fit is about creating a situation in which a product or service meets the needs and expectations of a specific group of customers. This happens when a company’s offering actually solves the problems of its target audience.
It sounds so trivial. But only apparently. Finding a product-market fit is not easy. First of all, how do you know you have found a product-market fit? What would you consider a good metric to measure it? Start with the 40% test.
Sean Ellis test
Sean Ellis is an American entrepreneur best known for his work Email List for Dropbox, his book Hacking Growth, and the “40%” concept. It is this concept that we will focus on.
Sean Ellis concluded that the measure of product-market fit is customer satisfaction. At the same time, he does not advocate asking customers direct questions. Probably because people might be insincere.
Therefore, he proposes a different question: “How would you feel if you could no longer use our product?”
Very disappointed
Somewhat disappointed
Not disappointed
And if customers would be very disappointed at the thought of discontinuing your offer, that means they are extremely satisfied with it. Good. Now, according to Sean Ellis, if you can get at least 40% of your customers to say they’d be “very disappointed,” then you’ve either found product-market fit or you’re very close to it.
Another American entrepreneur, Dan Olsen, has developed what he calls a product-market fit pyramid – simply put, a framework for finding and creating PMFs. It is a five-layer pyramid. Let’s look at it from the bottom up.