Today we are talking about product-market fit. Recently, I attended a talk by Max from the GrowthX Market Acceleration Program. They offer live coaching, on-demand training, and interactive playbooks to help you with finding product-market fit.
And he shared a lot of wisdom from his own experience. And their acceleration program and coaching really dive in deep to explore how this is relevant for your business. But he made some really great points in his talk about really understanding your ideal customer profile and staying focused on who you can serve right now. And not trying to worry about the total addressable market that you have for your product or service.
As Max put it, the whole point is to find out how you can earn the most revenue for the least amount of effort. And product-market fit is really your ability to acquire this revenue using a proven and predictable method. So he says, focus on the process first. Then figure out how to repeat that process. And that’s going to take you a lot of time, but that’s where your energy needs to go before you think about how do I scale or grow a company.
A lot of his talk actually revolved around identifying your ideal customer profile and how to be intentional about this. Being able to access people you can help right now and communicate with them and follow up with them and help them. He spoke about how it’s much more effective to work with the people that you have access to than to blindly improvise and try to shoot in the dark, wearing a blame blindfold.
Understanding your Market: Create a Customer Avatar Profile
When I was in Jake Klaus’s unreal collective, we did a similar exercise, developing a customer profile and what it was really identifying our best customers, the best representation of who we were trying to serve, and understanding what their needs were, going out and talking to them and getting some feedback about what they actually wanted.
We took these people and built an avatar of who they are, how old they are, where they live, what they do, and really what their needs were like. So basically understanding what their why was to buy the product or service that we were selling.
Personally, I always liked this approach because it’s less focused on how do I get someone to buy what I am selling and more focused on how I can best serve the people that I’m going to interact with within the most efficient way possible.
So if you have a solution that helps people, how do you find the people that it helps the most and get it in front of them in a way that’s going to make their life easier? What’s useful is that when you start to understand these people and you actually have examples that you can call up and say, “Hey, here’s what I’m offering. What is the priority a challenge for you when using our product or service?” Like getting that kind of feedback just around what makes people happy or sad about the problem you’re solving and how you’re solving it, and the best features of the service you’re offering. Even just understanding, “Hey, here’s a solution for you.” and asking if it fulfills the promise, the product to service, aim, to film.
Max had some great insight into developing this and being intentional about who you’re contacting and being persistent about it, and personalizing it. It’s not just a stranger that you’re communicating with, but somebody you’re communicating with as another person you can relate to and follow up with them quickly.
Why is Product-Market Fit important?
Going back to product-market fit, what actually is product-market fit?
The term was originally coined by Marc Andreessen in his post: The only thing that matters back in 2007. Product-market fit means being in a good market with a product that can satisfy that market. And by market, he means access to a group of people you can sell to who behave similarly. That can either be online through targeted ads on a certain platform or offline in a specific marketplace or venue.
If you step back and think about it for a second, it’s a pretty basic concept. How are you going to find the people that you’re going to sell your product or services? In previous blogs, I’ve emphasized the importance of validating your idea, typically with small tests that you can get in front of your potential customers to get their feedback.
Hopefully, as you’re doing this, you’re learning how you can actually access those customers and maybe find different ways of reaching new customers to get their feedback. As you validate a product with them, spend some time getting to know them and understanding their needs.
Product-Market Fit: It’s All About Your Market
This is a good practice in anything you do, but really people want to be understood. So making it less about you and what year you’re selling, but finding out what’s going on in these people’s lives and what they’re facing and what their biggest pain is, that they want to solve especially as it relates to your capability.
For example, if you’re trying to sell scuba diving gear in the middle of a desert where people only care about how they can get out of the sun, it’s probably not a good fit for your capabilities. However, If you can adapt to your product or services to better address those needs and it’s within your capabilities, great! Then you’ve just been able to validate and pivot on your idea to serve this customer base that you found and help them solve one of their needs.
One of the reasons you do all this validation is to really refine that understanding of the needs you’re solving and how you can solve them.
By going out and actually interacting with potential customers, then you learn how to access those customers and where they live and what they do and what they look like, and where they go. And if you can figure out what their habits are, you can find more similar people. And in doing that, build the business, that’s helping people and making a difference.
Product-Market Fit is for Social Entrepreneurship too.
Now a short note on social entrepreneurship, understanding your ideal customer profile and your product-market fit is great for developing your product or service that you’re selling. But it’s also a good exercise to do with the impact that you’re delivering, making sure that the impact you’re delivering is relevant and reaching the right people. It’s like the classic case of doing a charity drive to raise secondhand clothes and then send them off to a country in Africa where they might not want them. They might not be relevant, or it might be holding them back from developing their own textile industry in that local country where it’s just not a relevant solution towards what their needs are.
It’s very easy to make assumptions about how to solve other people’s problems; in short, don’t do it. Go and work with other people to develop the solutions that they need. Make sure it comes from them. When people can articulate what their needs are, and you can work together to develop a cool idea that they’re excited about, then you’ve got something. Never try to impose your own solutions on somebody else. Because you probably don’t understand them or their needs and do the same product-market fit. Understanding the customer profile of the people you’re trying to impact will make that impact much more powerful.
So as a social entrepreneur, you’ve got two dimensions to your business, both the regular product and service that you’re selling and the impact that you’re making. And you’ve got to do work on both sides of the story.
In conclusion, the moral of the story got and talked to more people really understand their needs and how you’re able to access them, but also do it through a lens of, “Hey, what am I capabilities? And how does that line up with the people that I’m serving?”