Importance of Product-Market Fit

In this section, from time to time, I will share my thoughts on what I see are important observations, trends, caution zones and other tit bits. These are personal thoughts that I notice from my travels world-wide or from my other investments and so on. Some of which are important lessons I learned in my journey on the path as an entrepreneur. Some of them may hold for you and some may not. In any case, here you go.   Importance of Product-Market Fit On a flight from Hong Kong, mid-Sep 2019  

1. Every product business will face this question at some point or the other – and this is an important thing to answer.

Timing

1. a) depending on stage of the market (infancy, growth, maturity and decline) a product- market fit may have different manifestations.

1. b) Typically, when you hit product – market fit, you will notice the following –

• Sales process becomes easier and faster
• You will almost not need to go to engineering or research team – as the product is now standing on its own legs, with no new changes required
• Very quickly in the discussion with the customer, the pricing and installation, delivery schedule become points to discuss
• Feature capabilities are either already known to customer or is a part of expected check list – any new features client is asking is either already on your development roadmap or already built and is now GA stage
• Installation environment or nature of deployment (SAAS / premise based / private cloud) etc type of discussions are no brainer as any option the client is asking is already ready and available with you

1. c) Your next big indicator that you have hit product-market fit may be

• The possibility of repeat sales of the same configuration or with minor changes now becomes a reality, which means
• Your next several customers are all asking similar stuff and the sales process now becomes hugely predictable
• For the given genre of clients, your sales process now approaches a templatization model
• Sales decision time frames also become predictable

1. d) If you have hit this situation, then what?

If you have hit this situation, then you are doing something right This means you have now hit the Product – Market fit for the given genre of prospects, so what next?

• Now is the time for you to quickly define / update a Sales plan for this segment, fine tune it and invest in sales resources. Do not wait anymore
• Product Market-Fit is a difficult situation to reach and all the signs for monetization are now visible
• Quickly assess Competition offerings
  • Stabilize your pricing model – discount structure etc
  • Pick a unique positioning and brand out like crazy for the proven genre
  • Multiply sales efforts and cover the genre at earliest
  • Accelerate and close sales urgently

1. f) If done well you could become a segment leader for the product category. But don’t rest on your laurels.

• A new version of Agile could suddenly give your competitor an edge. Product businesses are exciting because they are also fast-moving dart boards. But more on that for another day.