Achieving product / market fit is one of the most difficult things to do as an entrepreneur and the ultimate goal of phase one of the startup process. Most of this first phase of the process is spent building a minimum respectable product and doing whatever it takes to get the product into the hands of users — users provide the required oxygen for the product to improve. While most startups never make it past this phase due to funding, timing, lack of viable market, poor execution, etc., many do complete phase one and enter phase two where they have to build an efficient customer acquisition machine.
Here are five ways to identify that product / market fit has been achieved:
- 10+ customers have signed on in a modest period of time (e.g. 3 – 9 months) and they haven’t been friendlies (people you already knew, favors you called in, etc.)
- At least five customers actively using the product with little / no product customization (e.g. the product is valuable and mature enough that heavy development work isn’t required for each new customer)
- At least five customers have actively used the product for over a month without finding a bug (no matter how great the product is people always find issues with it, which is natural for this beginning stage)
- At least five customers use the product in a similar way and achieve similar results (early on you find that customers use the product in ways you didn’t imagine, which is great, but the goal is to find consistent, repeatable patterns)
- At least five customers exhibited a similar customer acquisition and onboarding process whereby they bought and went live with the product in a timeframe that was consistent with each other (e.g. had a two month sales cycle and took a week to get the product running)
Here, the theme is consistency and a small amount of repeatability. There’s an on going maturation process that takes time, even with extended resources. As a founder deep within the process of developing product / market fit, it’s useful to refer back to these five ways to assess progress.
What else? What are your thoughts on these five ways to identify fit and what other ones would you add?
David Cummings on Startups 
This is one of the best blog posts as the advice is very actionable. How does one define a customer if we have following scenario,
Each paying customer buys multiple units (for e.g. say 20 units) where each unit is priced X$ per month. Suppose we have 3 such paying customers (meaning 3 * 20 units). Should we consider number of customers to be 3 or 60 ?
Note : A customer can purchase a single unit as well. Currently we are only targeting customers that will buy multiple units.
My old boss Sean Ellis benchmarked product-market fit across hundreds of startups, and determined that the best measure was if 40% of your users would be “very disappointed” to lose access your product: http://www.startup-marketing.com/using-survey-io/
Granted, he was writing more about B2C products with large user bases, and if you only have 10 customers it might be harder to generate meaningful numbers within a margin of error. But even if you only use the results qualitatively, it’s still a good idea to ask the question.