Assessing Achievement of Product / Market Fit

Yesterday I was talking to an entrepreneur about product / market fit. His startup is making good progress and has a minimum viable product in the hands of a couple friendly, paying customers. After getting an overview of the market opportunity, and digging deeper into the business, the question of assessing product / market fit came up. I asked if every customer so far has found bugs and run into issues. Yes, the friendly customers are happy, but they’ve all run into problems, which is normal.

So, if a handful of friendly customers are using the product and getting value from it, how do you know when product / market fit has been achieved? Here’s what I recommended:

  • Sign up as many friendly-introduction customers as possible as they are key for helping identify issues, providing feedback, and acting as references for future customers
  • Start acquiring traditional customers that aren’t from warm intros and assess customer engagement (daily active users, breadth and depth of module usage, etc)
  • Calculate the net promoter score for both your friendlies and your traditional customers
  • Look for a pattern of 10+ new customers signing on to the system, receiving significant value, and not encountering any bugs or problems

Product / market fit doesn’t happen immediately, but by paying attention to context clues it’ll gradually emerge that fit has been achieved and it’s time for stage 2 (building a repeatable customer acquisition machine).

What else? What are your thoughts on assessing achievement of product / market fit?

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