We hosted more than 130 product, marketing and sales executives at our Norwest Product Summit to discuss achieving and maintaining product/market fit in today’s fast-growing, ever-changing technology sector.
It’s a critical topic: 42 percent of start-ups fail because of a lack of product/market fit, according to CBInsights data. Through keynotes and panel discussions, Product Summit attendees heard first-hand from industry leaders about their struggles and triumphs on the road to product/market fit.
Our lineup included product and technology executives from successful public and private companies, including ServiceNow, Veeva, RingCentral, BlueJeans Network, Steelbrick and the San Francisco Giants. They shared lessons learned on their own product/market fit journeys, including the following key takeaways.
Sell the Problem You Solve, Not the Product
While the adage takes many forms, it boils down to this (and it shouldn’t really be a surprise): buyers want products that solve real business problems.
As keynote speaker Allan Leinwand, CTO of ServiceNow, pointed out, buying decisions are often justified by specific product features or a price point. However, these factors are not actually the primary sales drivers: motivation for a purchase usually lies in achieving a competitive advantage, reducing costs, and/or resolving a top pain point.
Knowing this, startups should get to the root of the problem their product solves, and leverage what they’re hearing from current and prospective customers to create a more viable solution. During our panel discussion, Avril England, general manager of Vault at Veeva Systems, shared her company’s story. “We finally sold the first couple of deals with HTML mockups and that’s when we knew we had real product/market fit—because we did it without a product. And we’ve repeated that many times by asking, ‘Does this look good, would you buy it?’ If yes, we build it.”
“That’s when we knew we had real product/market fit—because we did it without a product. And we’ve repeated that many times by asking, ‘Does this look good, would you buy it?’ If yes, we build it.” – Avril England, Veeva Systems
Further, an efficient customer feedback loop keeps companies from going under what Allan called the “redline”— which can be calculated by taking the total number of monthly incidents (any time the customer contacts you) and dividing it by the total number of customers. The reason for contact could be anything regarding a feature or product. The point is that if you know why people are contacting you, you can quickly address the problem so that customers don’t have to contact you over the product, feature or particular functionality. The result, higher customer satisfaction and better product-market fit.
Don’t Ride the Middle: Solve for UI, Function or Both
Go-to-market timelines often force startups to sacrifice features or functionality. There is a fine line to toe in the development process—one that leads to either market success or failure. On one side, customers can hold onto products that are intuitive and easy to use as new functionality is introduced. On the other, high-impact functionality without bells and whistles can do the same as products that are fine-tuned to meet user needs. In sum, a product should look beautiful, work well or (ideally) achieve both, but it should never fall under the mediocre label in either category.
A poster child for executing on this rule effectively is Craigslist. It has not changed much in terms of UX or features since it was first expanded into a web service in 1996, but it is one of the most used websites in the world. Evidently, what is important is that it works, and works well, not that it’s aesthetically pleasing or has all the latest features.
How Do You Know You Are Making a Product That Fits the Market?
You can make an unsuitable product fit the market, but you can never make the market fit an unsuitable product. This is why large companies spend millions of R&D dollars on extensive market analysis, using methodologies ranging from surveys and online analytics platforms to analyst meetings and focus groups.
You can make an unsuitable product fit the market, but you can never make the market fit an unsuitable product.
Any organization should consider doing the same when working to better supply a given demand. For startups with smaller budgets, it may be harder to do it all, but prototypes and beta testing can be a boon for gaining industry and customer insight. The goal is to avoid having a product that doesn’t fit its intended market, because it will never succeed. Even elevated distribution or infusions of new features can’t change this without a finger on the pulse of the market.
In fact, as noted by both Mike Mansbach, president of BlueJeans Network and José Pastor, vice president of product management at RingCentral, sometimes it’s not until you step back and divest yourself from superficial, distracting features that you can truly understand and mitigate user concerns to make your product a market success. The key is simplicity and effectiveness in function or UI, not a slew of superfluous perks or features that ultimately don’t map back to user needs.
So, What Have We Learned?
These lessons share a few key themes:
- Customers come first: don’t be afraid to ask them questions and listen to them
- Focus on thoroughly executing on your product’s functionality, UI or both
- Remember your business goals and priorities while not fearing change
Ultimately, achieving and maintaining product/market fit can vary depending on the sector or the stage of your company, but these core principles are essential to adopt. Remember, poor market timing, competition or a lack of funds aren’t the main reason companies fail. Instead, it’s a lack of market for their products.