28 August

What you should you know about product-market fit

Finding product-market fit is critical for businesses since this is a clear indicator people love your product and are ready to pay for it. If you have that, it means you’ve managed to offer something the market needs.

But how come it’s so challenging to find product-market fit? What are the steps you need to take to achieve product-market fit? How do you measure the results? In this guide, we’ll answer these questions and give you a step-by-step instruction.

What is product-market fit?

Product-market fit (PMF) is the company’s ability to serve a large market with a product that satisfies people’s needs and desires. Given that having a large customer base and products to delight them is crucial, PMF is the foundation of any successful business.

In terms of the startup lifecycle, PMF is a solid point from which a business can enter the growth phase.

If a company is trying to solve unexisting problems or offer poor products that are not suitable for the market, it, eventually, fails.

Companies that haven’t found product-market fit face the following problems:

– Customers can’t understand the product’s value;

– An infrequent or insignificant number of sales;

– No loyal customers;

– Poor word of mouth;

– Long sales cycles.

In contrast, when product-market fit is achieved, products communicate clear value, make a lot of repeated purchases, and have a big community of brand ambassadors.

You can think of your product as the sail and customer demand as the wind. To succeed, you need to understand which way the wind’s blowing and build a product whose value proposition satisfies the needs of the market.

Signals your product has achieved product-market fit

Visible excitement

You have strong positive customer feedback, even from a small group of people.

People are willing to pay for it

Nothing is a better signal of customers’ interest and achieving PMF if you can get people to put down money to own your product.

High retention – users stick around

Plot the percentage of active users over time to create a user retention curve. If the curve flattens off at some point, you have probably achieved product-market fit for some market or audience.

Users say they’d be disappointed if your product went away

Ask your existing users ‘How would you feel if you could no longer use the product?’. Then measure the percentage of people who answer ‘very disappointed.’ If that percentage is over 40%, you have product-market fit.

For enterprise businesses, at the end of a free trial, they should desperately want to buy your product. If they don’t want to buy it at the end of a free trial, you don’t have PMF. To learn more about your shortcomings, if you are getting too many negative reviews, you can conduct a market research survey. You can use Delighted (https://delighted.com/pmf) or similar automated survey systems to create best practice surveys that your audience can enjoy. In turn, this might result in higher responses to surveys and more actionable feedback.

Acquisition costs < Lifetime value

You have found product-market fit when you can attract new customers at a lower cost than what they are worth to you. If you can maintain an LTV:CAC ratio of 3x, you prove product-market fit.

Tips on how to find product-market fit

1. Determine your target audience

It all begins with a target audience, as these people determine what your product should be like. Outline your high-expectation customer – a potential consumer who will value and enjoy your product most. The reason you should identify the high-expectation customer is that if you manage to prove product-market fit to them, you have more chances to impress other users with your products.

Divide thу audience into segments with similar needs, preferences, behavior patterns, and then create a buyer personas which makes it clear who your customers actually are.

2. Create your value proposition

If there’s a demand, there’s competition. To outperform your competitors, you need to figure out your value-what makes your product unique. Your value proposition is something you promise to your potential consumers. Basically, it should represent clear value and solve real-life problems.

3. Develop a minimum viable product

Mark out the features your product have to work. The MVP is oriented towards the early users. Later, feedback from users and analytics data will help you improve your product.

4. Develop a prototype and test it

A prototype is an interactive demonstration of what the end product will look like. It can be used not only to demonstrate a product to potential users but to pitch the idea to investors and stakeholders. That’s why you need to put serious effort into developing prototypes. Typically, you can use Sketch, Figma, or InVision Studio.

5. Test the MVP

After a series of tests, the prototype becomes a minimum viable product ready for use. The MVP then goes through another round of tests to get ready for the official launch.

After the launch, you should keep receiving feedback from users and applying it to keep improving the end product.

How to measure product-market fit

To find out if you’ve achieved the results you strived for, define key metrics for product-market fit.

Bounce rate

Strive for a low bounce rate by optimizing your content and doing A/B tests to achieve the best results. High bounce rates may be an indicator that your website doesn’t make a positive first impression.

Customer lifetime value (LTV)

Customer lifetime value shows how much you profit from a customer during the entire product lifecycle.

Net Promoter Score (NPS)

To measure how much your audience value your product, ask them if they are willing to recommend it to others.

To calculate NPS, you can look into Constructing surveys and invite people to take it after every purchase they make, or engage companies that specialize in this field to do it for you.


Engagement metrics show the level of user interest. Track users who interact with your content and use product features. Keep in mind that constant engagement brings in loyal customers. You can power up the engagement by adopting various tools like AI text-to-speech (check https://wellsaidlabs.com/features/api for more) and other customer-centered content strategies.

Key takeaways

  • Product-market fit is a process, not a random action. Get ready for a lot of tests, adjustments, and updates.
  • You should always be hungry for user feedback to see what they like and don’t like. Do A/B tests and compare the results to find out what appeals most to your audience. However, do not try to please everyone and stick to your product roadmap.
  • Measure your selected metrics.
  • Watch out for signals indicating achieving product-market fit.

Author’s bio: Anna Grechko is a marketing enthusiast and knows the field inside out. She is the marketing specialist at Smart IT. Sharing knowledge is a big part of her career, so Anna actively seeks to spread good vibes, and collaborates with the great tech and marketing minds of the world