What’s the best way for a startup to determine product-market fit?

Based on the way you’ve framed this, I am assuming you are under a tight budget. This prevents you from handing this project off to an agency. I would suggest the following regardless, but it is especially necessary under tight budgets – there is nothing more expensive for startups than going all in on a strategy before at least testing PMF.

 

I agree, in principal, with The Lean Product Process:

  1. Determine your target customer
  2. Identify underserved customer needs
  3. Define your value proposition
  4. Specify your Minimum Viable Product (MVP) feature set
  5. Create your MVP prototype
  6. Test your MVP with customers

I can add value by explaining, in detail, steps 5 and 6.

 

Aside from what you would discover in articles online through a simple google search (I took the liberty of summarizing some good one’s below), my approach to determining PMF very early on, and very inexpensively, has been to:

 

  1. Buy an affinity domain name that exemplifies your value prop (i.e. “EasyInsuranceRate.com” for insurance quotes). You want to target your specific market, in the easiest way possible. A simple name that relates to your market will bring more users to your platform than a more unrelated name. This will be your landing page in a sense. This is the attention-grabber, and it needs to be simple.
  2. Build out the microsite under this domain with the same copy/creative they plan to use on your branded site. This technique is being used by large companies like Snapchat and Spotify. The idea here is to actively engage the user in clicking onto a that microsite in order to narrow down the focus of your product. Let’s say you are trying to sell music. Your main affinity domain name may have a variety of artists, but the microsite you have embedded within this domain will narrow the search down to local artists in a specific city. This is a great way to target a specific audience.
  3. Create a hook (this may not be the final product, but an offer to get involved in a beta test, be shipped a sample, sent a coupon code…). Although you may have gained some interest from potential buyers, you need a way to retain these potential buyers. Very much like the Chicken and the Egg problem which I have answered here, you need to create some sort of “hook” to keep these buyers interested in your product while you continue to improve your site/product. This can be anything from a beta test for software or a sample of a make-up product in relation to physical goods.
  4. If your product is a larger-ticket item with a longer or repeat sales cycle, sign up for a CRM (I recommend AgileCRM.com for lower budgets) and use that CRMs forms so you can capture/track these customer leads. What a CRM does is essentially filter out users who are unresponsive to the emails your CRM automates. It can also notify you when a potential customer opens that email so that you can intercept that email in order to further coax that user into using your product.
  5. Install google/facebook/linkedin etc… pixels onto this page/site so you can cookie users and retarget them later. Similar to the CRM, tracking pixels and cookies will allow you to track when and where your potential customers visited your site. This pertains more to social media applications, but works in basically the same fashion.

 

  1. Launch traffic to this funnel from a variety of target persona’s/interest/demo’s. You can use the CRM, paid advertisements or call-to-actions and landing pages. Invite potential prospects in by using descriptive words that would produce interest in your product. Watch the wording of these CTAs. “Discover a new way to save today!” works much better to generate interest than a simple “try it” button.

 

  1. Use ads in ^ campaigns to test out the copy and call to action they are considering. Ads are placed everywhere on virtually every website today. Use this to your advantage and make buyers feel almost obligated to click/browse your page by posting intriguing ads on your page.

 

  1. Review all results and data. If all goes well, you should have reached or exceeded your PMF.

 

This process allows you to see real numbers and costs to market your product/service to those audiences. If they will buy from a vanity URL, or even leave their information to receive early access, you can feel confident a percentage of those will sign up or buy your product at least once.

 

As you progress through your PMF determination phase, the questions you need to get answered to get to a product market fit answer:

  1. Who are your first 20 customers and what did it cost/take to acquire them?
  2. Will online audiences buy your product or sign up for your service after clicking an ad?
  3. What were your unit economics for the above ad channels^
  4. What changes when you add credibility to you sales funnel (influencer mentions, testimonials, client logos…)?

 

**Find/summarize action items for determining PMF from experts in the startup space.

 

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