Finding the right product-market fit
Read time: 4 minutes
Getting a new product or service off the ground takes a lot of time and effort. It also takes conviction. You truly have to believe in what you’re doing to take it all the way to the finish line.
But inspiration is no guarantee your new product or service will find its customers, or that there even is a market for what you’re offering.
Dominik Loncar is an entrepreneur-in-residence with Futurpreneur, where he helps start-ups get off the ground. He offers these five tips to ensure you find the right “product-market fit.”
1. Do the necessary research
The idea for a new product or service often comes from an assumption. “Everyone’s into healthy eating and organic foods these days, so organic candy-corn is a great idea, right?” Or, “Nobody else is doing this, so the market is wide open!”
Maybe those things are true. But you won’t know until you’ve done the legwork.
Loncar says upfront research is key to a successful product launch. You need to know all the players, what they do, how they sell, etc. This is especially important if you don’t have a lot of experience in the space you’re targeting.
“You have to get your hands dirty, get out and meet people,” he advises. “Visit the competition. Go to all the websites. What are the rules, the best practices? Even if your goal is to break those rules, you still need to know what they are. If you want to be disruptive, you have to know what you’re disrupting.”
If you learn something that doesn’t jibe with your idea—pay attention. The market isn’t going to change, so you may have to adapt.
2. Create a minimum viable product
You need to know as early as possible if you can sell what you’re aiming to sell. Loncar says the goal is to get as close as possible to a minimum viable product—a prototype that’s usable, that reflects your vision and that someone can buy.
“There are two schools of thought about how to start selling,” Loncar explains. “The first says, ‘Go find a big market and try to break in,’ and the other says, ‘Find a niche, get rooted and then expand.’ In my experience, the more niche, the better. It’s how most products grow.”
3. Get as much feedback as possible
Loncar suggests starting your sales efforts with buyers who see the value of what you’re doing—your “maximum viable customer”, in his words. These people will not only buy from you but also give you valuable feedback. Hackathons, living labs, demos, trials—there are any number of ways to engage with test customers and early adopters.
“You want as much feedback as you can get,” Loncar says. “Not to confirm what you already think but, just as importantly, to challenge what you think.”
Instead of questions like, “Do you like it?” Loncar advises asking, “What is important to you when buying a product like this? What alternatives do you have? What would make you choose one option over another?”
Even with a small sample set, you’ll start to identify patterns that will help you focus your product development. If people tell you something isn’t really what they want, ask yourself honestly if you’re making the right assumptions.
4. Launch softly
With so much focus these days on brands and marketing, Loncar says he meets a lot of entrepreneurs who think they have to create a whole image out of the gate. His advice is to start small and stay focused.
“If you think you’re going to spend your way into the marketplace, you may be asking for a lot of headaches,” he says. “Marketing may make sense down the road. But early on, you need an inexpensive way to spread the word. It’s about having the wow factor and gaining traction.”
He recommends starting with a single product, building credibility and growing from there. A “soft launch” is preferable to a big splash.
5. Leverage your champions
Loncar prefers the term “best customer” to “target market” when talking about the profile of people who will help you determine your product-market fit. Your best customer is someone who wants what you have and values what you’ve put into it. These people can turn into champions who will spread the word about what you have to offer.