The Product Market Fit

August 8, 2024

Now, I know that for many marketers out there this is just marketing. But let's get off our high horses for a sec and do what we believe our brands should do: talk to our audience in their own language.

Many businesses are product or sales orientated, and as marketers we know that by adopting marketing principles they will quite simply make more money. So let's talk to that.

We're in a technological era where smart people and entrepreneurs are creating and launching products which they know or believe are needed and will be a success.

They might not have a trained marketer on board, but they are making marketing decisions around price, distribution, branding and sales.

But they could be doing even better, and obviously I'd advocate getting some marketing nous involved, but failing that or in advance of that there is one thing I would advise any founder or CEO to consider.

The product market fit.

You understand your product, but what about the market?

The market are your potential customers. They might be a broad group, they might be very specific, and there might be more than one ideal customer profile, but they are your market.

The people who will give you their money if they a) know that your product exists and b) decide that it fulfils the need for which it was intended.

Not what the product does. Not why it's better than what you consider are the competition. Not how much it costs.

What market needs can it fulfil.

Many product and sales led businesses focus on product features, trying to persuade potential customers that they have the best solution. But if you don't know what the problem is, how can you be sure you are the best solution?

Sure, you can guess, you can make your own biased assumptions. But you will always be more successful if you understand what problems the market has, and present your product as a viable option to solve that problem in a distinctive and memorable way.

People simply don't buy in rational ways. Even in B2B, people don't buy in purely rational ways.

The power of the product marketing fit is that you are considering your product as seen by the market.

Which in turn creates a narrative which more clearly and more memorably resonates with the market.

You are increasing your chances of your potential customers seeing the benefit of your product. Which will increase the chances of your potential customers buying your product.

It's not rocket science, but it is incredibly powerful.

Right. The Obvious Questions Answered.

What is product market fit and why does it matter?

Product market fit is the degree to which your product or service actually addresses a need the market has, in a way the market recognises and values. It matters because without it, marketing is trying to sell the right product to the wrong people, or the right product to the right people in the wrong language. Neither converts efficiently. Both waste money. With genuine product market fit, where what you offer maps cleanly onto what a defined group of buyers actually want, marketing becomes dramatically more effective. You're no longer creating demand from scratch. You're reaching people who already have the problem and helping them recognise you as the solution.

How do we know if we actually have product market fit?

The most reliable signal is retention and word of mouth. If the people who buy you come back, refer others, and would be genuinely disappointed if you disappeared, you have product market fit with that segment. If customers churn quickly, rarely refer anyone, and describe what you do in ways that don't match your own marketing, you probably don't, at least not with that segment. The question worth asking directly to your best customers: 'What would you do if this product no longer existed?' Strong product market fit produces answers like 'honestly, I'd be stuck.' Weak fit produces 'I'd probably find an alternative.'

We have a great product. Why isn't it selling?

Most often: because the market doesn't know you exist, doesn't understand what you do in terms of their own problems, or doesn't trust you yet. A great product presented in product-centric language, focused on features and internal capabilities, will underperform a merely good product presented in buyer-centric language that makes the connection between the product and the buyer's specific situation crystal clear. People don't buy in purely rational ways, even in B2B. They buy when something resonates, when they feel understood, when the risk feels manageable. Your messaging is the bridge between your product and that feeling.

How do product-led and sales-led businesses typically get marketing wrong?

By leading with the product rather than the market. Product-led businesses build impressive things and then look for buyers, presenting the product in terms of what it does rather than what problem it solves and for whom. Sales-led businesses rely on volume and persuasion rather than relevance, pushing hard regardless of fit. The market-oriented alternative is to start from the buyer: what are they trying to achieve, what's getting in the way, what alternatives do they already know about, and what would make them choose you over those alternatives? Only then does the product positioning become clear.

Can you have product market fit with one segment but not another?

Absolutely, and this is one of the most commercially important distinctions a business can make. What looks like 'our marketing isn't working' is often 'our marketing is reaching the wrong segment.' The product might have strong fit with mid-sized professional services firms going through rapid growth, and essentially no fit with the large enterprise segment the sales team has been pursuing. ICP work, properly done, is largely an exercise in finding where product market fit actually exists, doubling down there, and stopping wasting resource on segments where it doesn't.