Why getting product-market fit right is essential.

We’ve all been there.

Whether we’ve been on the buyer side, user side, or on the inside, many of us have inevitably come across product or service offerings that seem to have followed the ‘ready, fire, aim’ approach. The use case isn’t sound, the UX is terrible, or the value proposition simply doesn’t provide value to the target audience. It’s a flop and can be damaging not only to commercial efforts and employee morale, but can negatively impact brand perception, the latter of which is much more challenging to bounce back from.

Unfortunately, a questionable product-market problem can happen to the best of us.

Being the first to market and working agile matters. Maybe the offering in question was built with a hefty and newly attained cash injection, or perhaps new product leadership needs to put their mark on something, or maybe company leadership pivoted focus and placed greater budget R&D – nonetheless a product is born without due diligence – that is, thoroughly assessing market fit and use cases outside of loose assumptions, spotty customer feedback, and gut instincts.

We see this a lot in startups: a great idea gives birth to shiny new widget that may or may not satisfy a market need, but is often developed to the specific niche it was intended to serve. Then, when it comes to scaling and charting new verticals, the offering falls flat because the offering isn’t differentiated enough or the audience beyond iteration one is not in a place to realize its value.

An good example of this today in action is within the now, very saturated AI-SaaS company environment. Everyone seems to be touting ‘disruptive’ AI-powered offerings and simply inserting automation workflows into existing platforms within ‘name-that-domain-niche-here’. The challenge here is that it's becoming increasingly difficult to distinguish and address a genuine market demand – the very core of achieving product-market fit: resolving a specific gap. A simple LinkedIn company search within healthcare SaaS for example, will yield many like-companies selling the same offerings. The market is oversaturated and differentiation and exacting messaging will be imperative in the coming quarters.

Embrace that the road to success is always under construction.

Achieving perfection on the first try isn't possible in life, and in marketing. Given that in marketing, the process typically involves formulating a hypothesis, conducting experiments (to test that hypothesis), evaluating the results, and then making necessary improvements through iterations, it’s the very nature of the practice area.

That said, ideally a good amount of analysis is done prior to product build, but as we know in agile settings, the first to market that addresses gaps, wins. It’s a true paradox and thus requires a skilled product marketing and product team to work in tandem to deliver. Unfortunately though, time and resourcing is usually never on our side (see blog Product marketing isn't for the weary) and much of the early analysis and legwork is passed over resulting in a lackluster product-market fit early on.

So, what early warning signs and key indicators should we be on the lookout for?

• NPS is trending downward. Unfavorable net promoter scores and negative feedback are a great indicator that customers don’t value your brand or product, and aren’t keen to be promoters or advocators. They’re not likely in these buckets because they don’t realize value from the offering or service model.

• Customer churn is trending upward. Not to pick on customer experience and account management teams, but these people are the first lines of defense – and information sharing – that should serve as the eyes and ears to the rest of the organization, supplying the knowledge base with valuable intel. With proper data management and analysis, these trends can be examined early on by product marketing and product teams to inform solidifying a solid product-market fit – ideally before launch – and hopefully, long before pipeline and revenue loss. Any necessary course corrections can be made and ideally stop the leaks.

• Marketing-qualified leads are not converting to new sales. The marketing plan is launched. Content is a goldmine and perhaps a solid press plan was in place to amplify demand, but these leads aren’t converting to pipeline and sales isn’t able to qualify them into opportunities. It’s likely a product-market fit with a particular audience and lack of a viable, and value driven, use case. Time and time again we’ve seen that taking a one-size-fits-all approach without deeply understanding each target persona and its unique workflows is sure to result in a product-market fit flop.

• Usage is trending downward. The concept of product-market fit is to ensure that your target audience needs your offering and simply cannot live without it. If usage is trending downward, it’s an early indicator that something is not right – the end user is not getting needed value from your offering since they’ve been able to manage their day without it. Keeping a close eye on usage patterns and early trends can serve as potential areas for hypothesis testing and validation, which will be crucial in later stages of assessing further market suitability.

Reality check: you cannot promote your way out of a poor product-market fit.

In certain B2B scenarios, I've encountered instances where the product-market fit is so poor that the offering seems almost unviable, to the extent that it's challenging to give it away for free. However, significant investments have already been made, and there's an imperative to bring the offering to the market. This situation is disheartening for everyone involved and underscores the importance of defining market requirements and validating assumptions early in the process.

So here’s the hard truth and why having sound frameworks and sound data matters: while achieving product-market fit is usually a collaborative effort involving both product management and product marketing teams in the early stages of the epic-making process, embarking on development without solid data to confirm that it addresses genuine market demands is not advisable. It cannot be stated enough, that this is the inflection point – it is where the company's overall strategy and product strategy must harmonize. And without a doubt, the CEO bears full responsibility for driving this alignment throughout the entire organization.

So how exactly does one know if product-market fit is dialed in?

Aside from the proverbial ‘hockey-stick growth’ in terms of revenue, sales can’t have enough conversations or make their way through all the leads in queue because demand is so high. You wiull never hear from your sales team because they will be so busy closing deals! Aside from the obvious explosion in pipeline, the customer base converts to raving fans/advocates that promote your offering to their esteemed colleagues and professional circles and customer experience teams are closing renewal deals on repeat. The product basically sells itself and requires little marketing to drive demand. It’s an optimized state and a dream to attain this level of excellence, and if you are lucky enough to capture this in your career take a moment to pat yourself on the back for a job well done!

Know that getting the foundation right takes a village.

While there's no single path from point A to point Z, there are several checkboxes to mark off on your list to ensure that your product-market fit is heading in the right direction:

• Deeply understand your personas. Who is this group? What does this offering do for them and how will they engage with it? Remember, no one cares how it works, they need to know what value they get. Think intangibles.

• Solidify the value hypothesis and benefits. This is critical to ensure alignment that will drive both product and commercial strategies. You should be able to answer the what, why, who, and how when building out the value hypothesis per audience.

• Get the go-to-market working group or team in place. This group works to ensure that alignment is achieved across the organization and information is shared out accordingly. Representatives from product marketing, product management, sales, customer, and executives all have a part in the process and should work to evangelize throughout the company. This also helps drum up internal interest and build momentum early on. Get people excited and work through any concerns well ahead of launch.

• Develop documented and assessed feedback loops. Leverage customer and sales teams to provide insights to the organization in shared knowledge bases that can be used in validating the value hypotheses on a regular cadence. I recommend quarterly fact base submissions and analysis to capture trends quarter-over-quarter and identify any cyclical considerations in the target markets or industry.

Achieving product-market fit is a journey marked by continuous iteration, navigating through ambiguity, and, most importantly, exercising patience.

What makes it exceptionally rewarding is when you reach that point of optimization, where your product no longer requires active marketing efforts to gain traction. It's a fantastic place to be! This opens up opportunities for teams to further innovate, explore new markets, and begin the process anew. As a colleague once told me, "marketing is 50% science and 50% creative," and product-market fit perfectly embodies this balance. It involves using data to make informed hypotheses, conducting assessments, and employing creative problem-solving to ensure all the pieces of the puzzle fall into place.