So you have a business idea. Where do you start? Hi, my name is Cort Davies and I’m a startup marketing expert, and today we’re going to talk about product-market fit.
Product Market Fit Theory
The fact of the matter is that 90 percent of startups build a product that nobody wants and that’s why 90% of startups fail. Product-market fit is essentially identifying a user and seeing if your product solves their challenges and if they’re willing to pay for that product or service.
The four steps in product-market fit are as follows:
- Identifying your Unique Selling Proposition
- Figuring out your target buyer persona
- Doing research on competition
- Performing target persona interviews.
Step One: Building Your Unique Selling Proposition
Your unique selling proposition is one solid sentence that describes the result your buyer is going to get when they use your product or service. Remember, you’re not selling the features, you’re selling the results. All buyer decisions are emotion-driven.
Fed Ex has one of the most famous examples of a USP: when you absolutely, positively, need it overnight. That says a lot right there. It is the exact result the customer is going to get when they use Fed Ex.
Fred Smith, the founder of Fed Ex actually received a ‘C’ when he went to Yale in the ‘60s because his teachers didn’t think it was possible, but now it’s grown into a multi-
Step Two: Designing Your Persona
If you’re not familiar with what a persona is, it’s an imaginary customer. We have to figure out what their problems and challenges are so we can see if we can solve them.
Let’s say your target persona is a female millennial (20s, female) and she’s on her second job. What are her challenges and goals? You need to figure out if your product is going to help her address these issues. You also need to anticipate and prepare for common objections and think about why that person might gravitate towards a competitor’s product instead of yours.
Step Three: Research and Competition
The next step is researching the competition. Use the power of the search engine to do your research. There are over 3 billion searches a day on Google and that number keeps rising. If your customer had a problem, they would most likely be searching on Google because 70-80 percent of buying habits start online with research. Your job is to search on Google about what terms your customers might use in a search engine to find your product. Make a list of as many keywords as possible to find out what terms your customers might use to find you.
Look at as many search results as possible. Many startups fail to do the up front research and it’s super necessary to determine product-market fit.
Google Trends is another helpful tool to use. Let’s say, for example, that you’re building a running app. You can look in Google trends to determine if the running app trend is rising or falling, or if you’re coming in mid-trend.
Another tool that I suggest all entrepreneurs learn to use is the Google Adwords keyword search tool. It allows you to take keywords from your list and find out how many times a particular term has been used in the past month. It also tells you the pay-per-click advertising competition for those keywords. With so much data and research at your fingertips, you can narrow it down from the country, to the city, to the zip code.
Step Four: Persona Interviews
The fourth and last step that we’re going to discuss is interviews. This is really exciting because this is where things come to life. You get to ask potential customers what their challenges are and position your product to them. Persona interviews are so important to proving product market fit because it functions as research and potentially sales.
When you’re doing this research, don’t find people from your warm market (your mother, your best friend, etc.) because people who know you are more likely to be biased. What you want to do is generate 10- 20 cold leads. Create 10 questions. Make them hard-hitting and quick.
Ask them if they’re using your competitors products: what do they like about them? What do they dislike? Then list out your product features and benefits and have them rank in order of importance to them. This is a critical step because you can never do enough research.
The Importance of Product Testing
We’ll never prove product-market fit until we go to market, but taking steps such as creating a unique selling proposition, creating a buyer persona, doing research, and doing interviews.
90 percent of startups fail because they create a product that nobody wants. Follow these four steps and you’ll be part of that 10