Product/Market fit and Market/Product fit

In many start-ups the difference between success and failure is gaining a critical mass of early adopters that love your product.  A lot of this has to do with getting the right product for the market you are going after (Sean Ellis and others refer to this as product/market fit) but I’ll argue that it’s also important to think about this in the reverse and make sure you are going after early adopters that makes sense for your product.   What I mean by this is that before you’ve written a line of code, some thought has gone into defining, to a fairly fine level of granularity, who is in your target market and how you are going to reach them.  The way you construct your value propositions, your call to action, how you attract early customers and possibly the look and feel of your early product will be influenced by what you define those early segments to be.

Some thoughts on what a great early adopter segment looks like:

  • They place a big value your key differentiators – Your product will have benefits that only it can deliver along with benefits that customers can get elsewhere.  For example you are offering a product where the key benefits are related to simplicity, scale and cost reduction. Your customer research has validated that all three of these are important to customers in the space.   You think you beat the other products in your market when it comes to simplicity and cost reduction but nobody else offers scale.  The easiest segment you could go after is one where scale really matters because even though you think you might be better at simple, the difference between you and the alternatives might not be meaningful for customers.
  • They don’t care much about the stuff you aren’t good at – In the early stages there will be gaping holes in your product and other things that your product just doesn’t do all that well.  Your best segment doesn’t care too much that those things (at least not at the beginning).
  • The risks of adopting your product are lower for them – There will be reasons why customers will not adopt your product related to the risk in doing so.  For example some segments will have to migrate off of another product in order to adopt yours or customers will have to trust that you can do what you say you can do.  It’s often a useful exercise to document all of the reasons people won’t adopt your product and then map that our against your potential customer segments. Choose a segment that has the least barriers to adopting your product.
  • The segment is big enough or is a gateway to a big enough segment – Make sure that the segment you end up with is big enough to get your business to where it needs to go.  If it isn’t quite big enough then it should at least be a good, clear pathway to a bigger segment.  For example, having a beachhead of customers in mid-sized services businesses might be enough to help you get into the market for independent consultants (where having that base would address some of their concerns).

As you are iterating with the product and figuring out what customers really love about it and why, you are also learning more about how to identify customer segments that are the best fit for your product and fine-tuning your segmentation.

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15 thoughts on “Product/Market fit and Market/Product fit”

  1. Pingback: Darrin Johnson

  2. Hi April,

    Love the ‘new’ blog format!

    I would add a couple points to yours on product/market fit.

    I think is is key to stay focussed on the business (if B2B) problem you are solving while remaining fluid and flexible on specifically HOW you will solve that problem. Especially early on it is critical to get an early adopter on board as you have mentioned. The important thing in my opinion as you are building and interating your product with your early adopters is to get feedback from as many sources as possible. Sometimes you get that one person who really takes a shining to what you are doing and what your product can do and you end up building a custom application/product that works magically for that person but has less appeal to your defined market.

    Great post April, thx for your thoughts.

    ~Paul

    1. Hi Paul – thanks for the comment. I couldn’t agree with you more about staying focused on solving the problem without getting too stuck on how you do it because the how needs to be applicable to the whole segment, not just a particular customer. This is why it’s especially important for B2B startups to choose their first customers wisely and make sure that they are representative of a segment. You need to validate your assumptions not just for those one or two customers, but for the entire segment.
      April

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  6. Hi April:
    I liked your blog post. While somewhat unrelated, I have a question for you. I keep hearing about customer acquisition cost and I was wondering if you could do a blog post that defines and discusses how one goes about determining this cost?
    Thanks so much!
    Christine

    1. Hi Christine,
      Thanks for the comment. That would make an interesting post. Let me do some thinking about how we’ve specifically measured that at the places I’ve worked and what the gotcha’s might be. Thanks for the suggestion!
      April

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