Product-Market Fit (PMF) Measure

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A Product-Market Fit (PMF) Measure is a product measure that reflects the degree to which a product satisfies a market demand.

  • Context:
  • Example(s):
    • Airbnb PMF achieved product-market fit by evolving from offering an alternative to hotels to something better than hotels. This was evidenced by its growing user base and increased bookings over time.
    • Superhuman PMF reached product-market fit by increasing the percentage of users who would be very disappointed if they could no longer use their email client, from 22% to 58%.
    • Segment PMF which found that by shifting from an analytics tool to a B2B customer data platform, gauging success through a solid, returning user base.
    • ...
  • Counter-Example(s):
    • Minimum Viable Product (MVP) measures, which may not accurately reflect Product-Market Fit (PMF) because they typically involve early product versions with limited features that have not yet been optimized for wide market adoption:
    • Customer Satisfaction Score: Derived from customer surveys on a scale (e.g., 1-10). While a high score suggests satisfaction, it does not fully capture the market fit for an MVP due to the product's developmental stage.
    • Net Promoter Score (NPS): Measures customer loyalty and likelihood to recommend the product. For MVPs, NPS might reflect initial enthusiasm rather than sustainable market fit.
    • Customer Retention Rate: Indicates the percentage of customers who continue using the product over time. High retention in an MVP may be influenced by novelty rather than true fit.
    • Adoption Rate: Monitors the product uptake within its target market. Rapid adoption can occur due to promotional efforts rather than genuine market demand.
    • Feature Usage Rate: Measures the frequency of customers' use of specific features. For MVPs, high usage rates may not be sustained as the product evolves.
    • Product Market Share: Reflects the product's market share compared to competitors. An increasing market share can be misleading if not supported by other indicators of PMF.
    • Customer Effort Score (CES): Evaluates the effort required by customers to use the product effectively. Low scores are preferable but can be artificially boosted in MVPs through intensive customer support.
    • Feedback and Qualitative Comments: While qualitative feedback can provide deep insights, for MVPs it often focuses more on potential improvements than on validation of market fit.
    • Conversion Rate: The rate at which potential customers become users. High conversion rates in the context of an MVP might result from initial curiosity rather than a sustainable fit.
    • Churn Rate: Measures how frequently customers discontinue product use. Low churn rates in the early stages can still be deceptive as long-term viability has not yet been proven.
    • ...
  • See: Market Demand, Value Proposition, Organic Growth, Consumer Preference.


References

2023

  • (Wikipedia, 2023) ⇒ https://en.wikipedia.org/wiki/Product/market_fit Retrieved:2023-8-14.
    • Product/market fit, also known as product-market fit, is the degree to which a product satisfies a strong market demand.

      Product/market fit has been defined by its inventor as "a unique product offering that people desperately want ." It is a first step to building a successful venture in which the company meets early adopters, gathers feedback and gauges interest in its product(s).

2023

  • https://mailchimp.com/resources/product-market-fit/
    • QUOTE: ... “Product-market fit," writes startup coach and investor Marc Andreessen, "means being in a good market with a product that can satisfy that market." When an entrepreneur identifies a need in the market and builds a solution that customers want to buy, that's product-market fit.

      This concept might seem obvious, but it’s important to make sure there are enough people who want what your business offers and to define your value proposition accordingly. Product-market fit can matter more to the future of your business than creative ideas, masterful teams, or any other factor, and is critical to take into consideration when you build the product. For any business to survive, there must be people who will buy what it sells.

      Product-market fit is the result of a deep understanding of who your customers are and their opinions of your brand and product. To know if you've achieved product-market fit, ask yourself whether you've met these criteria:

      • Is the product creating organic growth?
      • Are people spreading the word about your product on their own?
      • Do people think it is worthwhile to spend money to get your product?

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