How to Align Product Market Fit: Part II

In Revenue Capital

In the first part of our two-part series on aligning product market fit in your startup, we covered the steps you need to take to get started on this incredibly important process. Today, we’re going to dive into the next piece of the puzzle. Specifically, once you think you have product-market fit, you need to validate it. Here’s how.

Key Indicators to Validate Product-Market Fit

It’s not enough to have internal consensus about product-market fit; you need to get proof that you do. These are the indicators to watch for that will give you that validation:

  • Immediate Value Recognition Customers should see immediate value in your offering. You shouldn’t be making future promises; instead, the product should solve a current problem.
  • Usage Frequency Monitor if customers use your product regularly, as high levels of engagement indicate a strong fit.
  • Superiority Your solution should stand out from alternatives in the market. Strive to be better than competitors by an order of magnitude.
  • Community Building An enthusiastic user base that creates a natural community speaks volumes about your fit.
  • Referrals Customers referring peers is a strong indicator of satisfaction and fit.
    Ease of Selling: If customers quickly understand and invest in your solution, it’ll make selling easier and will show that you’re on the right track.

Lagging Indicators of Success

Of course, not all indicators are instantly available. Here are the lagging indicators that will also reveal whether your product-market fit is as strong as you think it is:

  • Retention High customer retention rates (and low churn) demonstrate that you’re solving a real problem and providing value to your customers.
  • Upgrades and Expansions The ability to upsell or expand within your user base also shows value, and indicates a solid fit.
  • Net Promoter Score (NPS) While a controversial method, NPS scores are still widely used. A high NPS suggests customer satisfaction.
  • Implementation Time A short time to value indicates a strong fit.
  • Customer Feedback Positive, enthusiastic customer feedback affirms your product-market fit.

If you come out on top with the indicators listed here, it’s safe to say that your product-market fit is indeed on the right track.