Product growth requires a push from your whole team. Unfortunately, if you’re not reaching product-market fit, the whole team might as well be banging their heads against the wall. Your product growth strategy hinges on a rock-solid product-market fit.
Luckily, there are a few ways to measure product-market fit and launch a growth plan that’s worth your time and energy. Read on for a breakdown of product-market fit and secrets to using it to drive product growth.
What is product-market fit?
Your product-market fit describes how well your product satisfies the needs of users in a market. It’s a way of measuring whether your product and the service your features offer are filling a demand. It’s important to identify product-market fit in order to push your growth strategy forward because without product-market fit, your growth plans will be doomed. After all, if your product isn’t fulfilling a market need, it doesn’t matter how long you spend perfecting it—it won’t be in a position to grow.
How do you determine market fit and grow your product?
Here are a few tips to help you determine product-market fit and grow your product:
1. Define your north star metric.
The first step in determining your product-market fit is nailing down a north star metric. This is the key metric you’ll use to drive your brand and feature’s success. And for most SaaS companies, product adoption will be the north star you’ll want to point you in the right direction.
Product adoption is a strong indication of both churn and growth potential. Early on, when you plot out product adoption figures, the goal should be to see 20-30% of your users coming back to your product week to week. If that number drops to zero, it’s a strong signal that either you have issues with a feature or your product didn’t reach market fit.
As you’re setting a north star and digging into metrics, think about your business as a bucket. There are always holes somewhere, but you’ll want to stabilize that business by repairing as many holes as possible and continually filling the bucket up as much as possible with new revenue.
With that analogy in mind, there are three KPIs that will help you keep your business’s bucket full:
- Customer acquisition costs: To be successful, you’ll want to reduce acquisition costs and drive faster adoption. The quicker your users experience value, the lower your acquisition costs will become and the fuller your company’s “bucket” will be.
- Growth retention rate: Churn drills holes in your bucket. Measuring growth retention rates shows you how well you’re repairing those holes and driving long-term value.
- Net dollar retention: Net dollar retention measures the overall effectiveness and efficiency of your business. This is how much water, or cash, you’re retaining in your bucket.
2. Perfect the first mile of your product roadmap.
When you’re building a solution to reach product-market fit, it’s important to focus on the first mile of your product roadmap. That means identifying your personas and pinpointing the main problem they face. Just remember: Start early and often.
When your users sign up, make sure you’re identifying who the persona is and what their main problem is. That way, you’ll be able to lay out advice and help them reach the outcome they’re expecting from your product.
Another key to perfecting the first mile of your roadmap is capturing user objectives. As you’re reaching out and trying to determine product-market fit, you’ll see that pain points are repeatable. Use those repeatable objectives as a guide. Ask yourself, “How can we support our user’s objective from day one?”
3. Uncover opportunities.
Another way to determine product-market fit is to dig into the features within your product data. For instance, you can identify sticky features that are grabbing your users’ attention and sparking more frequent use. This is a way to flesh out market fit and amplify the high-demand points in your product. By making it as easy as possible to reach these sticky features, you can lift your product’s value in a hurry.
At the same time, you can use customer feedback loops to build a pipeline of ongoing product-market fit data. By inserting in-app engagements and gathering feedback, you grab an inside look into what’s working and what isn’t from the user’s view. These ongoing feedback machines fuel themselves by giving you feedback on a new feature, providing opinions to base changes on, and pulling in even more feedback after you’ve adjusted features.
4. Map out your product’s future.
Once you’ve nailed down the objectives your personas want to accomplish, you can use guides, communication, and path analysis to map out a clear path to those objectives. The goal is to let users know how to use the features that will help them reach that objective right away. For instance, if a user is interested in using analytics, you may want to send them a checklist that lays out 10 steps to accessing your analytics feature.
Again, the key to success is consistently testing user paths, gathering feedback, and adjusting. That way, you’re constantly improving your user’s experience and growing your product.
Master market fit and start building a winning product experience
A cornerstone of determining market fit and fueling product growth is data. And the more in-depth your in-product data is, the easier it will be to grow in the right direction. Download our white paper and learn which metrics and data the leading SaaS organizations utilize to measure their product success.