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What is a company’s product market fit?

Product market fit is a concept that first originated in the world of Silicon Valley startups as a 'measure' of the success of a new company in any given sector.

Simply put, the product market fit is when a company offers a product or service that meets the expectations of its market and has achieved a satisfied target audience.

A business with a well defined product market fit will dispose of all the key knowledge that gives a company the ability to grow in its sector:

  • A specific type of buyer persona.
  • A clear and predictable customer journey.
  • A new consumer base willing to pay the full price of the product.
  • Consumers willing to continue consuming after trying the product for free or on sale.
  • A high degree of adoption, retention, and loyalty among customers.


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How to get the best product market fit for your business

As much as you might wish there was, there is no magic formula for finding a product market fit. We could list dozens of examples of product market fit that have very different details, as in the end everything depends on the type of product, target audience, market, region, and moment.

In short, finding the perfect product/market fit is what all startups and companies that launch their first line of products dream of: to become the next “unicorn.” To offer a product that a stable group of customers want and that allows the company to maintain profits and the project’s future growth.

Now, as the customer always comes first, the most important thing is to start with the customer. Many companies make the strategic mistake of forcing things in the opposite direction: they come up with a great idea for a new product... but they do so without stopping to consider if there is really room for it on the market and if it is covering any consumer needs.


Powerslide Case Study


It's normal to go through an initial trial and error period, and this period can even repeat itself in the future, when many businesses need to readapt to new demands or when a product that was originally impactful begins to lose its pull. At the end of the day, it is also key to analyze whether the product/market fit has prospects of working over the short or long term.

Therefore, the first aim to find the perfect product market fit for a business is to study the problems and needs that consumers have, and weigh up the different products that can fill that gap. All product market fit plans are based on a problem and a subsequent solution – not the other way around.

Steps to define your product/market fit

  • What are the goals of your company? Do you want to generate profits quickly? Do you want to get into the sector as a quality leader?
  • What problems and needs do consumers have in the sector you want to address?
  • Establish a product hypothesis: what products might fill those needs and goals?
  • Get feedback from the first consumers: what's their reaction? What improvements do they suggest?
  • Analyze the behavior of your customers and the market: is your product being recommended? How is it positioning itself compared to your competition?


BdB case study


How to measure your company's product market fit

This last point of a product market fit plan is essential in order to hit the mark and ensure that your company has achieved its goals. Measuring the right data will allow you to analyze the necessary iterations until you find out if your product is built for success.

Qualitative approach: gather consumer reviews

It is vital to undertake this approach from the earliest stage. Not only through product testing groups, which are usually formed before the launch of a product, but also through real customers who, because they are among the first, can provide honest, unbiased opinions about the advantages and shortcomings of your product.

Quantitative approach: pay attention to metrics

Although many metrics are useless on their own and without any context, when a business has hit the nail on the head in terms of its product/market fit, there is immediately a noteworthy growth pattern in the metrics:

  • Organic and direct traffic increase, because recommendations work and, as it becomes popular, your product is sought by more and more consumers on their own initiative. A great indicator is if 50% of your new clientele is generated organically.
  • Adoption by consumers is sustained over time, as opposed to the current trend of the “one-time consumer” that tries a product only to never return or change to a different, cheaper one. You should retain at least 40% of your buyers over time.
  • The cost of acquiring new customers lowers, as customers begin to appear on an increasingly more natural basis – without the need for most to come from paid campaigns.
  • The number of customers lost goes down and unsubscribes occur less and less often, because your audience trusts that you will continue to offer value and be of interest in the future.

In short, the key to achieving the perfect product/market fit is to listen to your target audience, analyze the market, and keep up with this work continuously so that your products always adapt to the needs and expectations of the market and your customers.

Because that strategy requires your entire team to focus their efforts on analysis and creativity, it is a good idea to get tools like a PIM system that will centralize and automate all your product data so that you can spend less time on the more technical, quantitative tasks and more time on what's important: improving the quality of your products and their content as it appears on any channel.


Frans Bonhomme case study

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