Identifying the right product market fit
In the lean startup world there are several techniques to hone in on the right product market fit. These techniques are used to evaluate the following,
- Measure the customers interest in the offering. Validate interest in the product. This may be done using the following techniques:
Fake feature, Dry wallet, Crowdfunding, Landing page, High hurdle.
- Identify existing market opportunities. This may be done using the following techniques:
Problem interviews, Family tree.
- Uncover the problems in the customer journey. This may be done using the following technique:
- Articulate a market problem unfamiliar to the customer, and how the proposed product might solve it. This may be done using the following technique:
Let’s take a look at each of these techniques individually,
Measure customer interest
Fake Feature approach
In this approach one provides a front end interface to a feature that does not actually exist yet.
Eg. The Uber pool feature was initially just introduced as a button without the actual “pool” functionality implemented (it simply got you a regular individual UberX ride). However putting this button helped Uber measure the market demand for this feature.
Dry Wallet approach
Dry Wallet approaches are a mechanism to measure market demand for a product or a service, when one does not actually have the product yet.
Eg. Customers attempt to purchase a given product, however when they enter the committed stage of the journey they can be informed that a product is out of stock or coming soon. This allows one to demonstrate customer desire for the product or service. Customers contact information may also be collected to identify early adopters. This strategy is also used a good fit for selling a subscription-based physical product, to validate market demand.
Posting ideas on crowdfunding websites allows one to gather feedback from the market. Interest from investors and customers will show that people are interested in the solution.
In this approach a Landing page for the product is created and is used to pitch the product idea. The product itself may not be ready but the Landing page simulates what the experience of the completed idea would be like. This allows you to test the validity of your idea in the market, convey the product idea and generate a pre-market buzz. It allows early adopters to sign in and be notified when the product becomes available.
In this approach a hurdle, such as an upfront commitment or registration, or perhaps slightly higher cost that the customer is willing to pay, are placed in front of the customer, to test how much the customer really wants or needs the product. This approach could be used to test for offerings that differentiate based on niche, quality or a customized service.
Identify existing market opportunities
In this approach one attempts to understand the current solution that the customer is using to address a current problem, and the issues with the existing solution, and attempts to identify alternatives for a better and more frictionless experience.
Family Tree approach
Use cases where someone is solving the problem manually or with a lesser efficient system. This helps prove that a market need exists for the service.
Uncover the problems in the customer journey
Provide a highly customized service for a small group of customers, to allow learning a real customer journey and to identify the problem areas. The services may be provided manually at first, to understand the problem areas and friction points, and intent is to finally automate this service.
Eg. AirBnB started out as a Concierge MVP. In the initial days AirBnB took pictures of their apartment, put it up on a simple website. This allowed them to identify some of the problem areas when providing this service. Once they had were able to hone in on a good customer journey and started achieving scale they then transitioned into the AirBnB product offering.
Articulate a market problem unfamiliar to the customer
In this approach a short video is used to provide a simulated product walkthrough even though the actual product is not fully ready yet. This allows one to educate the customer on a problem they did not know they had, and how the product seamlessly solved the problem.
Eg. Dropbox used this approach and had a short video on their website, before the dropbox product was officially ready. This allowed the customers to identify that file synchronization between different devices was an issue, and educated the customer on how the product seamlessly solves the problem.