What is Product-Market Fit?
Product-Market Fit is an important concept within growth hacking.
Product-Market Fit the foundation of growth hacking
Growth is only possible with a great product. Companies who build products that don’t make people extremely happy will never grow. That’s why you need to have a product that fits the market. You have strong product/market fit when 40% or more of your customers are very disappointed if they can’t use your product or service anymore. This framework was introduced by Sean Ellis to quickly figure out if a company is ready to scale.
How disappointed would you be if this product no longer existed tomorrow? a) Very disappointed b) Somewhat disappointed c) Not disappointed (it really isn’t that useful) d) N/A—I no longer use it. Interpreting the results is simple enough; if 40 percent or more of responses are “very disappointed,” then the product has achieved sufficient must-have status, which means the green light to move full speed ahead gunning for growSean Ellis
When you don’t hit the 40 percent threshold, it’s important that you focus your time and effort on really understanding why that is the case. You don’t want to lose tons of money on a proposition that is not working. Are the benefits not articulated properly? Is it the wrong audience? Is there a subset that gives a higher rating? There are many different routes you can explore based on the results of this survey. Why is the survey so powerful? Because you want to know (and it identifies) those moments when you are delivering – the AHA moment. This is the moment when users really experience and see the value your product delivers.
Some examples of an AHA moment:
- Facebook: 7+ friends in 10 days
- Twitter: followed by more than 30 people
- Slack: Team sends 2,000 messages to each other
You want to understand the road to that moment and to create an onboarding flow that guides people through those points. An entirely new movement – product-led growth – has evolved out of this and I will discuss it later on in this book. You need to capture the data required to get the most out of your growth experiments. It is important to have all the information in one location so that it is easily accessible for everyone in the growth team. In short, you need to have a great product and capture the kind of data that shows how users are interacting with your product.