Product-Market Fit: Benefits and How to Achieve It

The Product Marketing Kit

Free Product Marketing Kit

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Imagine the following scenario. You have a brilliant product idea, you do a little bit of research, and ask a few friends, but when you launch the beta version of the product you don’t get the expected response.

Possibly because it does not have the right product market fit.

But hey, you don’t need to worry. Improving your product-market fit is usually about a few quick fixes, a little bit more research, and a few tweaks in your target market segmentation.

Moreover, analyzing your product-market fit before launching your product helps you ensure that you don’t waste your efforts with either the wrong product or the wrong market.

But now what is product-market fit? And how would you achieve it? We will discuss all of this and more through this article.

As you start working towards launching your product/service you might have heard of this term at least once. But what is it exactly?

According to Forbes, if your products get ripped out of your hand by eager customers, then you have a good product-market fit.

Advantages of Analyzing

Now that we know what product-market fit is, you might wonder what are the advantages of going through the hassle of surveying people, analyzing their habits, and much more. Why is it important?

Well, the most foundational advantage is that you highly increase your chances of business success.

The most common mistake startups do is to solve a problem no one has.” – Paul Graham

Advantages of analyzing product market fit

Finding your product market fit helps you avoid this mistake easily.

Apart from that, the product-market fit has the following advantages:

1. Lesser Customer acquisition cost:

As the product is just the right thing for the market, it is likely to gain a lot of traction through word-of-mouth publicity and free media coverage, reducing your promotional and customer acquisition costs to a considerable level.

2. Faster growth:

As you have a product-market fit, your product is bound to receive a good response and that is bound to help you grow at a fast rate.

3. Higher customer retention:

As your product fits your customers’ needs and demands perfectly, you’ll get a higher customer retention rate. Look at it like this, if your customers are already happy with your product, why would they go through the hassle of experimenting or trying to find a new product? This eventually helps you lower your customer retention cost and lets you have more revenue to spend on business growth.

4. Optimal Scaling:

Scaling after you find the product-market fit is much better and more optimal for your business, as you have lower customer acquisition and retention costs. Again, as your company isn’t losing a huge chunk of revenue on these expenses, your scaling would be optimum and actually profitable for your business.

Don’t be in a hurry to scale. Growth is important, but growth at the right time is foundational to business success.

Now as we know about the Sure shot advantages of product market fit, the next question is, How would you achieve it?

How to Achieve Product Market Fit?

This is probably the single most important question we would like to discuss in this article. And although achieving product-market fit would be different for everyone and would involve a lot of trial and error, there are a few things that can help you along the way.

In the words of an actual customer, “ Build what I do, not what I say.”

Finding product-market fit is all about analyzing and drawing from consumer behaviors, identifying their pain points, and addressing them in the most optimal way possible.

The framework can be easily defined through the product-market fit pyramid given below:

Product-market fit Pyramid

1. Identify your target customers:

The first step is to identify your target audience. Ask yourself who are you making these products for? Who can find a good use for your products? What is their age, occupation, geographic area, income group, buying behaviors, etc? You may also consider following a KYC checklist to better understand your target customers. It helps you identify multiple target segments or segments closest to your customers, customer needs and challenges, and more.

2. Identify your customers’ pain points:

Once you’ve identified your target market the next step is to identify what are their problems, how these problems affect them, and what kind of solution are they looking for. You can also try to find out if solutions for the said problem exist in the market or not, and how your solution can serve your customers better than the existing ones. You can do so by carrying out surveys, reading customer reviews on your competitor’s products, carrying out focus groups, and so on.

3. Describe your value proposition:

Describe how your product would benefit your customers. Explain in what way it will answer their needs and make their lives easier.

Here are a few examples of value propositions from popular companies:

Uber – The smartest way to get around
Apple iPhone – The experience is the product

you can look at many more such examples. For a good value proposition, define your brand’s purpose as clearly as possible and deliver it to your audience in a precise way with little or no room for misconceptions.

4. Define your minimum viable product feature set:

Now you’ll define the features of your minimum viable product that can be used to achieve the said value proposition. Describe how the features work clearly and precisely for every stage of your customer’s buying journey.

5. Make your MVP prototype:

Now as you have decided upon everything else, now it is time to make your MVP prototype. The prototype is much cheaper than the actual product. It is basically a minimum-cost sample that can give your customers an idea of how your features work.

6. Test your MVP with real customers and get their feedback:

The final step to knowing your product-market fit is to test your MVP with real customers and know what they think about it. Prepare a set of diverse questions for your customers to get feedback that is as unbiased as possible.

If you don’t find the right reaction, you should go back to step 2 and analyze how your product can be optimized or changed to serve the market better, what are the loopholes, and how you can fix them.

Overall, a product-market fit framework is all about making the product, testing it, analyzing its performance, fixing the loopholes, and trying it again until you are satisfied with the results.

How to Analyze Your Product Market Fit

We’ve discussed the importance of achieving and analyzing product market fit throughout the article. And here are quick steps that can help you analyze it the right way:

  1. Measure: This approach is one of the simplest ones to analyze your product market fit. You can measure it by measuring your customer acquisition rate, retention rate, and the number of referrals you receive. Among all of the above, the customer retention rate is the most accurate way of measuring your product market fit.

    If you have a 40% customer retention rate then you have a product market fit” – Ash Maurya, the author of the popular business planning book Running Lean

  2. Don’t push your features: As we’ve discussed earlier, product market fit is all about how eagerly your customers take your product from you. Hence, there should be a pull, not a push. i.e., Your customer should readily want or ask for the features you are selling them, you shouldn’t be the one forcing the features on them. Apart from that. The process is also a lot about taking customer feedback and improving the old features instead of adding a ton of new ones.
  3. Prioritize feature backlog: Prioritize feature backlogs, be it for adding new features, improving old ones, or fixing bugs or loopholes. This helps your customer utilize the best version of your product as soon as possible, and reach your product-market fit faster.


So, from this article, you can draw out that product market fit is essential. Be it for a startup or a business that is already up and running. In fact, product market fit can become the primary reason for your business’s success.

All you need to do is to find an underserved need, make a product, test it, and improve it.

Above all, the primary thing to finding it or success is to go ahead and take action.

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About the Author


Radhika Agarwal

Radhika is an economics graduate and likes to read about every subject and idea she comes across. Apart from that she can discuss her favorite books to lengths( to the point you\'ll start feeling a little annoyed) and spends most of her free time on Google word coach.


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