Why a good product/market fit will get your product flying off the shelves
Over the last year or so, I’ve had a chance to meet with the CEOs or founders of many startups. When we get to talking, I often find there are two distinct themes.
One group focuses on how to generate leads or how we drum up sales; the other group wants to know how to cope with growth.
This blog post is aimed at the first group—those who are interested in drumming up interest.
I’ve got some thoughts on that topic, based on our own experience at Klipfolio. However, it may not be the answer you want to hear.
That’s because it’s clear to me, as I consider my own experience and the experiences of successful companies I talk to, that if you struggle to generate interest in selling your product it’s probably not because there’s a problem with your marketing or sales teams.
Instead, chances are the real problem is with your product.
It’s all about product/market fit. And perhaps the best way to increase real demand for your product is to focus deeply on what your market really needs.
Klipfolio’s product/market fit story
Any company whose product does not fit the market will struggle.
I know, because that’s where we were a few years ago.
We had developed what we thought was a great product. It was a desktop dashboard application, and we were selling it to the IT organizations of big companies.
We had established a certain measure of success—enough to encourage us to keep on going. But we had to work really hard for every sale.
Our sales cycle was long (a possible sign of a problem) and we felt we were in a continual struggle to get our product sold. The path forward was not clear.
At that point, I was one of those people asking other CEOs:
“How do you generate leads? What is your sales process? How do you market your product?”
I was convinced we had a great product, and I was perplexed as to why it was not selling.
As we lacked a clear vision for how to speed up the sales cycle, we continued to spend a lot of energy pushing our product. Until the day I realized I had been asking the wrong questions.
This realization occurred when one of our customers—someone who liked our product—asked us to change it.
Everyone in his company, he said, was starting to use tablets and mobile devices. A desktop dashboard wouldn’t work for them anymore. Could we find a way to move our dashboard to the cloud so that it worked with mobile devices?
It was obvious to us that cloud apps and mobile were up-and-coming trends. And so, with considerable effort and some trepidation, we moved Klipfolio from the desktop to the cloud. As we did, we also shifted our focus to small and mid-sized businesses—use cases, product features and pricing.
This was our turning point. When we launched, our product was in demand. Selling was no longer like pushing a rope. And instead of asking other CEOs about how to increase interest and sales, I started asking questions like:
“How do we scale up? How can we make this process more efficient?”
In retrospect, I should have worried about product value and fit, not sales.
There is no real definition about what constitutes product/market fit, but one popular metric is that you have product/market fit when 40% of your customers say they’d be disappointed if they didn’t have access to your product.
No matter how you come at it, the issue is fundamental and has to be addressed.
Three hard questions that help determine product/market fit
Too many young companies spend years trying to push what they think is a valuable product instead of asking themselves why anyone needs their product in the first place.
You could have the most robust, best designed and least expensive product in the world, but it will flop if it doesn’t meet a need somewhere.
We were lucky in that we had a customer who nudged us in the direction of good product/market fit.
We could have done it ourselves if we’d taken the time to examine the issue honestly—something Jim Collins, in his book Good to Great, addresses in the chapter on brutal honesty.
Now that we know what we know, we make a habit of asking ourselves whether we still have a good product/market fit.
It’s something every company should do.
We do it by asking ourselves a few very pointed questions:
1. Knowing what you now know, what would you do if you were to start fresh?
Rid yourself of all of your baggage and obligations. Pretend you are starting from scratch, but with all of the knowledge you have accumulated over the years. Ask yourself truthfully, if you had to start from scratch:
- What would your product do?
- What would be different about it?
- Why would people want to buy it?
- Would it even be the same product?
As you answer those questions, imagine that money is no object. Set your imagination free. Ask yourself what you would do if you were targeting a specific behaviour or a specific device.
The point of this exercise is to gain insight that will help you come up with good product/market fit.
Give up the idea of going down a road just because it’s the road you’re already on. Be creative and, above all, be honest.
Try it. It’s incredibly liberating.
2. Ask your customers: If you had a magic wand, how would you design the next version of our product?
We always make a point of getting customer feedback. We’ve found it to be very useful.
Customers use your product; they are aware of its advantages and its points of frustration. So their feedback is very important. Let them blue-sky and imagine an improved (and perhaps very different) version of your product.
Again, you may be surprised by their ideas.
3. Play the "extreme" game
This is another creative brain game where you try to come up with a response to some of the most extreme problems or issues you can imagine.
For example, you could ask the following three questions:
- What would it take to get a customer from zero to success in 60 seconds?
- What would we have to do to design a product we could give away for free?
- What would we do if we could only interact with our product by speaking to it?
The questions needn’t be totally realistic, and the answers may well be beyond the realm of possibility. So be it. The point of the exercise is to get your brain to break out of well-worn paths and move onto new and perhaps more fertile ground.
You may stumble onto something valuable. Who imagined 30 or 40 years ago that you’d be able to download books onto a tablet, turn on the lights at home by talking to your portable phone, or have your fridge tell you it’s time to buy more milk? Meaningful insights come from setting your imagination free.
Why companies get stuck
We were lucky to have a client spark the reflection we needed to allow us to rework our product so that it became a good fit for the market we were going after. And thankfully we were open to change.
But all too often companies get stuck and remain there for years. Here are a few reasons why:
They are experiencing "mediocre success syndrome"
One of the things that keeps people from trying to find the right product/market fit is that they are experiencing what I call "mediocre success."
In other words, the company is generating enough sales to meet payroll and pay the bills, but not enough to generate a break-out success that tells them loud and clear that they are going in the right direction.
It’s easy to spot failure on the one hand, and runaway success on the other. But mediocre success muddies the waters. You are meeting with success, after all. On the one hand you know you aren’t a complete failure, but on the other you don’t know what to do to turbocharge your growth.
That’s essentially the situation Klipfolio was in before we took our dashboard to the cloud. Every so often we’d have a great sales month. That got us excited, and we’d spend a lot of energy trying to replicate that success.
But at that point it was all about push.
Once we developed the cloud version of Klipfolio, people started finding us.
We were no longer pushing our product, it was pulling in customers. And that feels very different… believe me.
They forget the world changes
One of the realities of business—and in fact of the world in general—is that things keep changing.
New opportunities like the cloud come along.
Competitors show up or disappear.
The economy changes.
Even if you’re doing really well, even if you have a fantastic product/market fit, there is no guarantee you’re going to be in just as good a position a year from now. What if someone new comes along? Look at what Uber is doing to the taxi industry. Or what the Internet has done to newspapers’ revenues.
For optimum product/market fit, you have to be aware of what’s happening in your industry and in the world, and be ready to anticipate changes in how your product fits the market.
Reinventing yourself is hard
Entrepreneurs put a lot of energy into their product or service. They are proud of what they’ve created and it’s hard on the ego to be told your product does not fit the market.
But if you can get over that—and the whole point of Who Moved My Cheese? is dealing with change—it is possible to refocus a company and make a successful go in changed circumstances.
Think of HP, BlackBerry, IBM or General Electric. At some point each of them had to face the hard fact that people didn’t want what they were selling anymore.
And so they changed—for better or for worse.
The bottom line is that entrepreneurs have to be brutally honest about what they’re trying to sell. You can’t avoid it; the market will be brutally honest if you’re not.
So while every entrepreneur can and should be enthusiastic and upbeat about what they’re selling, it’s equally important not to fall in love with your product or service.
Love is blind, and to find success you have to have your eyes wide open. You can’t make excuses for your product or kid yourself about why it’s not flying off the shelves.
If you don’t feel that pull, if customers are not beating a path to your door, then you probably don’t have the right product/market fit.
And if you’re going to have a shot at success, you need to spend time figuring out how to stop trying to push a rope and start feeling the pull of good product/market fit.
Allan Wille is a co-founder of Klipfolio, and its president and CEO. He’s also a designer, a cyclist, a father and a resolute optimist.