Blog post

What's wrong on current product-market fit definitions

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INDUSTRY

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There are 2 common definitions of product-market fit

The first definition is described as a state in which a company...

  1. can’t keep up in dealing with its new clients,
  2. is growing uncontrollably and almost collapsing before the founders’ eyes,
  3. Its products or services are being used by people in ways that the company never thought of,
  4. and money is piling up in your company checking account

This definition makes sense (and definitely an interest too). It’s also certainly true in some cases, but this state can be “achieved” for other reasons as well:

  1. The company isn’t able to handle its operation,
  2. its founder(s) easily succumbs to stress,
  3. it doesn’t have a functional code or design,
  4. and there is euphoria in the company because it’s making revenue, or
  5. The company doesn’t know how to reinvest its profits

So the worse the situation a company is in, the closer the product-market fit? Of course not...

The problem is this definition is correct, but it’s based on emotions or feelings within a company. It’s not a bullet-proof indicator. Which leads us to a few words about...

the “superhuman method” and its disappointment score

You probably know this method. It expresses product-market fit in the degree of disappointment among users. If more than 40% of your customers say they’d be disappointed if they weren’t able to use your products/services anymore, you have a product-market fit.

But what happens when a person is disappointed because he or she simply doesn’t want to lose the opportunity to have access to something? Most of us know someone who buys tons of things they don’t need or use.

Or, for example, you’re doing business in the area of ecology, which is close to a person’s heart, and they just don’t want your business to disappear even though they don’t need it at all?

On the contrary, imagine a customer that’s fired from her job, and you ask her 10 minutes later if she’d be disappointed if she wouldn’t be able to use your company tool anymore.

Again, the definition isn’t stupid, or bad, but it’s also not a bullet-proof indicator, because it’s based on feelings – this time the feelings of someone outside a company.

Keep in mind, there are another 2 important aspects of this method

  1. You need to collect data from your users. That means you need to convince the vast majority of your users/customers to answer you to get the valuable results. It’ll be difficult to motivate a user to fill out the form for the product/service he doesn’t need and use and thus probably has no relationship with, so you can end up with much more positive results as compared to reality.
  2. People want to be nice to other people and themselves. You can also end up with much more positive results because people don’t like to be harsh on someone -  plus, it’s hard to admit that one has made a mistake spending time or money on a product they don’t need.

So not filling in this form could probably be a win-win for them. They won’t be harsh while saving time.

People  say that, during a market survey, you shouldn’t believe that someone likes your product or service (expressing a feeling). You should only believe that they’ll buy it or use it (behavior). And that makes complete sense to us. So if you shouldn’t believe feelings during a market survey, why should you believe feelings during the most important and vulnerable times of the company?

Reference

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