STOP! Don`t Start Your Online Business Until You Understand This
The success of your business depends on 3 major factors.
- Market Fit
You can’t succeed if your business isn’t running properly or nobody knows about it… of course.
But even if you’re an efficiency machine with a killer marketing strategy, you’ll never succeed if the product/market fit just isn’t there.
I might be able to produce Nickelback mix tapes at a penny a pop, but even if I got a free commercial spot on next year’s Super Bowl, the market fit just isn’t there (and yes, I checked: the “gag gift” search volume won’t make up for it).
The point is that your business is already doomed if it’s not a good market fit. Sure, the pet rock used to be a thing, but counting on a dud product to trend is like investing your savings in lottery tickets.
NOT a good plan.
Famed entrepreneur and investor Marc Andreessen even says that product/market fit is “the only thing that matters” for new businesses.
Every wondered why some well-marketed products just don’t seem to convert, but other less-refined offers are snatched up?
Okay, you get it. Let’s look at how your business can achieve product/market fit.
#amreading Understanding Product/Market Fit BEFORE You Start Your Business
What is Product/Market Fit?
While product/market fit is somewhat of an abstract concept, it essentially means that a significant number of people want your product — enough to make it viable as the center of a profitable business.
Sean Ellis’ personal metric for market fit is that 40% of your users would be “very disappointed” if they were to lose access to your product.
The idea behind this metric is that your product is not just another option in the minds of your customers. It’s a a significant, beneficial part of their lives and/or businesses. In other words, your product is filling a tangible market need.
Ryan Deiss evaluates market size and its ability to be monetized when attempting to predict market fit. He uses the following metrics:
To determine if the market is large enough look for:
- 30,000+ Google searches per month on your top 3 keywords
- Active blogs
- Active Facebook pages
- Active forums
- Active email newsletters
- Active associations
To determine if the market is monetizable, look for:
- Direct competition (They are doing exactly what you want to do. This is a good thing.)
- Indirect competition (They are selling to the same market, but don’t sell what you do.)
- Affiliate offers (Check Clickbank, Share-A-Sale and Commission Junction for related affiliate offers.)
- Advertisers (Where there are well-known advertisers, there is money.)
- Gurus (Look for very influential people associated with your market.)
- eCommerce Sites (Find sites that are selling products to this market.)
But many businesses will fail to ever achieve this. How can you be one that succeeds?
Startups fail because they don’t nail their target market. Don’t suffer from #marketfit #fail.
The Success Template
There are two ways to approach building a new product.
- Clone a successful model.
- Create something completely new.
The downsides to a clone include:
- Playing catch up
- Competitors define the market
- Inability to grow market in new directions
- Inability to convert existing customer base
While there are multiple downsides to starting from scratch, the biggest is:
- Potentially no market fit
The solution, as described by investor Andrew Chen, is to go 80% clone while using 20% for strategic innovation.
This allows you to benefit from an existing, successful model, while still differentiating enough to pursue new market direction and steal customers from your competitors.
In order to discover whether your product can find it’s market fit, you have to get out there and engage with potential customers. You have to get the ball rolling in order to have any chance at building traction.
Here’s a starter guide to getting that ball rolling.
1. Define your value proposition.
Your unique value proposition defines your attempt at product/market fit. It’s a statement that displays your company’s unique value to your target consumer.
Read more about creating your unique value proposition here.
2. Create your sales funnel.
To have any chance at building traction, you need to turn your website into a high-converting sales funnel. The website should include the following setup:
- Primary landing page
- ~ 2-minute demo video
- About page
- Pricing and signup page
- Contact page
Your basic sales funnel should take visitors through the following process:
- Lead Magnet
- Tripwire Product
- Core Product
- Profit Maximizer
- Returns Paths
For more on creating a sales funnel, click here.
3. Create distribution channels.
The core distribution channel is your website, but think about other intuitive places to get your product in front of your target consumers.
This could include conferences, camps or other in-person events. You could utilize free-to-distribute digital products in order to get your brand circulating. More is typically better, but only if you can keep messaging consistency and cost-efficiency across all channels.
4. Develop traffic acquisition channels.
You typically need some sort of targeted traffic in order to put your lead magnet into play and begin converting leads.
There are a wide number of channels to pursue here. The best advice on traffic channels comes from Digital Marketer:
Become a master of a single, steady traffic source. Stay focused on that traffic source and, once mastered, add a second and third traffic source.
Traffic acquisition channels include:
- Organic SEO traffic
- Email marketing
- Social media platforms
- Paid advertising
- Partner cross-promotion
- Content marketing
Traffic allows you to measure your conversion funnel and your product/market fit. You can’t test anything out without anyone to test it on.
5. Feedback, Feedback, FEEDBACK!
The final piece of finding your product/market fit is customer feedback.
Here’s the deal. Your customers are very interested in getting a better deal, in having more of their problems solved.
They WILL tell you what they want if you just ask. It’s super simple, and yet so many gloss over this step. Ask your customers what they want. If you have an existing audience pre-product, ask them what they want and then build that!
Bryan Harris has a fantastic, extremely thorough feedback process he uses every time he begins looking into creating a new product. Instead of trying to direct the market, he simply analyzes his audience to see exactly what they are interested in… and he utilizes their direct feedback throughout each step of the development process.
Find Your Fit
At the end of the day, you can do everything right and still fail to convert if the product/market fit isn’t there.
Follow the processes outlined above, but stop there. Find someone who has done this successfully before. Then do WHATEVER you can to get their input.
You’ll see new startups finding success every single year for as long as you live. The opportunities will always be there for those that find their fit.