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?