You can build a brilliant solution to a genuine need and still fail, because customers buy what they want. Product-market fit is where wants, needs and your product finally agree, and finding it is a discipline.
You need to go to the gym. You want to look good. It is the oldest example in marketing of the difference between needs and wants, and it gets overlooked on innovation journeys constantly. Needs are rational and easy to explain, so plans get built on them. But for innovators the distinction is the whole game: you can build a brilliant solution that perfectly solves a need, and still get none of the target market’s time, attention or money, because it is not what they want.
What is product-market fit?
Product-market fit is the happy state of having a product that sells itself: it clearly solves a problem, in a way customers actively want to buy. You will know it when you have it, and there are useful measures for demonstrating it to stakeholders. If more than 40% of your customers would be “very disappointed” to lose the product, you have it (the Sean Ellis test). If a customer’s lifetime value is three times what they cost to acquire, and you recover that cost within a year, you have it (David Skok’s test).
If you screw almost everything else up, you can still succeed. How else would you explain the success of a 25-year-old running a billion dollar company? The market demands your product and pulls it out of your hand.
Andy Rachleff, co-founder of Benchmark and Wealthfront
You can’t trust customers to articulate wants and needs
If fit matters so much, can you not simply ask your target market what they want? Yes and no. You should absolutely be researching: deep-dive interviews into how people experience the problem, what they do about it today, and where it sits in their priorities are gold. But what people say they would buy and what they buy are different things.
You just can’t ask people what they want and then go off and make it. People want to be surprised, to see something different.
James Dyson
What that looks like in practice
With Higher, a product venture we founded, we set out to improve how people manage their careers: the CV is a poor tool for describing who someone is, so Higher gave candidates a way to explain their profile, demonstrate their strengths and build self-awareness. Growth was slow despite strongly positive feedback. Deep-dive interviews eventually told us why: people only think about their careers around job transitions, and in that window their priority is seeing what roles are out there. Only with options in hand did anyone want to think about fit. The lesson has stayed with us: you have to know the customer well enough to build the whole solution, because any effort you ask of them is friction, and friction quietly undoes product-market fit.
The four challenges, and what to do about them
The process for finding fit is well known: understand the job the customer needs done, build the minimum viable proposition, take it to market, test your assumptions, change what the evidence says to change, and repeat. The simplicity of that loop hides the effort inside it. Four challenges catch innovation projects again and again.
Challenge 1: understanding the target segments too late
Projects begin with an insight, and momentum carries everyone straight to features. Segments get a token conversation, then resurface months later as a marketing-communications question, by which point nobody deeply understands how the customer will actually engage with the product. The fix is sequencing: do the deep-dive interviews before the feature list, and write down, per segment, who the person is, how they cope today, and what would genuinely be in it for them.
Challenge 2: forgetting the value proposition is multi-layered
The headline proposition gets defined early. But underneath it sit the value levers: the individual, specific reasons different people say yes. On one client project, working through the core proposition surfaced twenty distinct levers, and the story that finally landed with customers was built from them, not from the strapline. Map the layers deliberately; the strapline is the roof, not the building.
Challenge 3: not budgeting enough time for fit
“Fail fast, fail often” means iterate frequently. In too many organisations it has been shortened to “fail fast”, which denies a project the iterations that finding fit requires. Our rule of thumb from experience: plan as much calendar time for product-market fit iteration as for building the first version. On recent projects it has needed every bit of it.
Challenge 4: over-investing in the MVP on the assumption of success
We have seen MVPs architected for a scale that was never needed, because success was assumed before it was earned. The first version’s job is to be valuable enough that customers pay, and flexible enough to change when they teach you something. Invest in scalability when fit is found, not before. Going too big, too soon has its own article.
Money is the only survey answer that counts
The strongest fit evidence we have seen recently came from an industrial equipment manufacturer we worked with. Rather than polishing the product in private, the proposition was put in front of real prospects early, and by the time the product launched, three buyers had already committed. No survey response, however enthusiastic, carries that information. If you want to know whether the market wants it, ask for the order.
The point
Think about product-market fit from the very start and it will save you months and a great deal of money later. Can you explain the innovation in terms of wants, not just needs? Have you heard real customers express those wants? Is there a metric that will tell you when fit arrives? And is your first version built to learn rather than to scale? Answer those honestly and the odds move in your favour.
