Product market fit determines the stage of a company where they successfully identify a target customer and serve them with a product that meets the customer’s requirements. According to an expert, a “good market with a product that can satisfy the market is the best product.” It takes a company around 2-3 years of continuous research, experimentation and testing to find the right market fit. In the absence of one, the business either shuts down or pivots to another industry.
It is the reason many product manufacturers and businesses think-
“How to maintain this useful for the customers for a long time?” With changing times and customer behaviour, products must be upgraded. Product market analysis is critical to gauge this. It will help you optimise the product according to the customer’s requirements without compromising the quality. Thus, for more customers, more referrals and more brand engagement, you must measure the market fit right.
The blog lists the best ways to measure the market fit and create customer-oriented products. Let’s first understand the very term.
What is a product Market fit?
Product market fit is a product that effectively meets the needs of the customers and brand. Under this, the customers use the product and are satisfied with the brand experience. Therefore, they will continue to choose your brand over other competitors. Your customers become the primary brand advocates for your product and tell it to the known ones. It is the best way of referral marketing.
The only aim for businesses is to find the sweet spot that aligns with your products and customers’ needs in an equilibrium. It implies that when what you create meets the present requirements of customers, you scale the product market fit.
5 Ways to measure the product market fit success
You can measure the product market fit using a variety of metrics- quantifiable and Qualitative. Analyzing these metrics is critical before investing more than half of your reserve in product development and marketing. First, you can test with MVP or Minimum Viable Product.
To test this way, keep the product in front of customers and check their reaction. If the reaction is positive, you are in the right direction. Conversely, you must tweak your product strategy and product a bit to meet the customer’s needs.
Here are other parameters to measure the product market fit success.
However, before beginning, you must have hands-on tools and software for analysis. Businesses lacking advanced tools due to low capital fall on accurately measuring success and hence cannot decide the strategy. If you need more funds but refrain from external facilities because of poor credit, check low credit score loans in the UK marketplace. These loans may help you back up the business with the advanced tools and systems to nail the market fit strategy.
Are you tool-ready? Let’s measure!
1) Calculate the brand searches
You can calculate the brand searches by individuals using Google Trends. By just entering the name of the brand in the search box, you will get the total searches. You may also get the phrases and keywords your brand ranks for across the country or city you target. You can also compare it with another competitor in real time.
For example- if you deal in sport’s shoes for men and women, and your searches for sports shoes for men are more than the previous numbers, searches have increased for this keyword. You can develop your market strategy with this keyword and target similar phrases for your next marketing goal.
2) Calculate the customer retention rate
The retention rate is a crucial determiner of the market fit. If your customers leave the product after using it for the first time, customer retention falls. It means you missed the customer satisfaction mark. Another important aspect here is the churn rate. If the churn rate is high, the prospect’s attention must be low.
Here, you can calculate the loopholes which may prove problematic to customers. For example- the navigation of the website, form filling, adding the product to the cart, payment gateways, everything. It will help you analyse the glitch.
Alternatively, if your customers are higher than previously, your product or services are doing good. They meet the customer’s requirements and hit the expectations index well.
3) Analyse the leads from referrals or NPS
Net Promoter Score (NPS) is one of the best ways to get direct feedback from the user. It is a type of questionnaire that helps the brand know customer’s views about a product. It is important to know the customer experience as it would help you improve the product accordingly.
NPS grants a business peep into the interested customers willing to pass the word. It implies that you can know customers who like your product and would recommend it to others. Within NPS, you get a score between 1-10 for your services and products. If you receive a low number for reasons, it is high time to listen to your customers. Analyse:
How to improve the Product User Interface or UI?
What more features can help the customers stick by?
Where does the product rank among customers?
Knowing this would help you make the changes and re-create the product according to the customer’s preference.
4) Calculate Customer Lifetime Value (CLV)
Customer Lifetime Value measures the total value of your brand expects to make from a customer. Here, if you sell one-time and expensive items like- a car, you may not get a long-term customer. Even if you get one, the number would be low. However, the margin here is high.
Alternatively, if you sell small but useful products like monthly subscriptions, your customers may stick to you. Here, the customer number could increase as everyone needs a good subscription plan and updates monthly.
To understand CLV, analyse the lost customers and the present ones. How much time does a customer spend with your brand? If it is over 3 years, your brand is doing well.
5) Understand the cost of Customer Acquisition
Cost per Acquisition or Customer acquisition Cost measures the price of acquiring a customer. Analyse the total costs it takes to convert a customer.
It includes launching advertisements, affiliate pay-outs, influenced payments and sales compensation. If the customer acquisition costs are high, you may struggle to find one. Moreover, it is simply not worth it. Analyse ways to reduce customer acquisition costs.
Marketing automation is one of the best ways to reduce Customer acquisition costs. You can leverage it for your business, too. It requires a hefty investment initially but would help you optimise the business gear. You can even finance implementation without emptying the capital reserve by contacting direct lenders in the UK marketplace. They can help you finance the requirement hassle-free.
Finding the right product-market fit can be elusive. By finding the right customers for your market, you can nail it.
It requires the best amalgamation of the product and the customer’s needs. Your product market must satisfy the existing customer’s needs. Moreover, it should also raise the expectations among customers for the next big thing. Thus, continuously analyse the progress using the above metrics. It would lead to consistent business growth.