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So your baby is born, and it’s perfect! You’re enthusiastic about it, your family and friends love it, and you feel it’s going to conquer the market. Then, potential customers don’t. The sad truth is, that a high number of young B2B SaaS companies fail because they don’t manage to sell their products fast enough.
Instead of trying to attract customers by offering your product with a huge discount or even free of charge, target people who will actually pay for it. How? Find your product-market fit (PMF). Along the way, you’ll establish who wants to buy from you, why, and for what price. If you’re new to business and want to succeed on the market, read further. We’ll give you clear instruction and all the dos and don’ts, you need to know before you kick off the search.
Why bother with a product-market fit search?
Just being on expert on your product isn’t enough. It won’t sell it. You also need to
know your customers.
Searching for a product-market fit lets you understand the market and gives you access to your first customers.
It’s highly unlikely that you’ll bring the same value to everyone. There is always a customer group that benefits from your product significantly more than others. Therefore, focus on a big enough single industry - the low hanging fruit - in the beginning. Once you exploit and succeed in it, you can start adjusting your product to other industries’ needs.
Having the understanding of who is or isn’t your customer, and for what reason, will kick start your business. Yes, figuring out who your ideal customer is NOW, is hard. However, in a number of months, searching for PMF will help you identify who your customers are, what value proposition works the best for them, and how much they’re willing to pay for your product. So, get strapped in….
How to reach the product-market fit phase:
We'll dig deeper into these topics in the follow-up articles, but for now, in a nutshell:
1. Designate a person with the responsibility for finding the product-market fit.
It’s usually either the founder or a real trailblazer of a salesperson; someone who will keep their eyes open, will be able to evaluate the market and loves finding the right direction.
2. Start with writing all your value propositions down and then move to reaching out to potential customers from various industries.
Try to talk to different types of personas (decision-makers vs business users) and test different value propositions. Remember, not everyone is the right customer for you, and that is OK. Why?
Let’s say your product is Tableau (a data visualization tool). The hasty assumption could be that all Excel users will benefit from it, and therefore will become your customer. In reality, it’s likely the majority won’t need your product as it might be too complex or advanced for their needs. Reaching out to this type of potential customer won’t generate any business. Instead, narrow down your scope to several industries and company types that you know deal with a high volume of data and know the pain of processing it. With these, you’ll find a topic to discuss.
3. Do your run of talking to potential customers and learn WHY they want to buy your product.
When you’re talking to potential customers, keep these 3 questions in mind:
- Is the problem I am solving real?
- Is the problem for companies big enough to want to solve it?
- Is anyone willing to pay me for solving this problem?
… and wisely pick questions to get answers to these three areas.
Why you should never ask non-users for feedback:
In the several months of searching for a product-market fit, it’s all about getting your foot in the door, collecting feedback, and adjusting your product, marketing activities, and everything around it, accordingly.
Go out there for sales, not for people’s opinions!
Just asking potential customers for feedback won’t work. On the other hand, asking for money in exchange for your product provides you with honest feedback. The “realness” of your product kicks-in in meetings, not in discussions with your circle.
Let’s take a look at 2 scenarios we believe everyone is familiar with:
In the first one, you sit on a couch in your living room and your partner comes to you holding a new pair of shoes and asks if you like them. Most of us would reply “yes” and proceed with watching Netflix.
The second one would be you and your partner in a shoe store. Your partner finds and brings you a pair of shoes they like and asks you “Do you like them? If yes, would you get them for me?”
In which of these scenarios do you think you’d get more honest feedback? We all know it's the latter. It’s the same in business. Always have a sales discussion and listen to what customers tell you.
Focus on getting potential customers on board...
Soon after you begin with outreaching, people start meeting you. In this phase, the aim is not to sell your product for the highest price possible. Instead, focus on improving your sales skills and understanding your customers.
Practice makes perfect; with every single closed deal, you understand your customers better. Soon, you’ll see that closing deals will get easier and easier, and after several successful deals, you will gain confidence in sales. And that’s the time to start testing and finding the optimum pricing.
However, at the same time, be sure not to undervalue your product and never offer a proof of concept, or the product per se, free of charge as you will never reach solid engagement from the other side.
Concentrate on turning meetings into opportunities based on a strong customer commitment, without being overly optimistic: address and handle objections but see your sales pragmatically.
Your product won’t fit everybody so disqualify opportunities where the must-have criteria for a successful sale are not fulfilled. Otherwise, you waste precious time. Remember to use sales qualifying techniques! (like BANT or CHAMP) There should be no “gut feeling” when qualifying opportunities.
Isn’t there an easier alternative to reaching out?
Yes, we get it, searching for a product-market fit is a lot of work. Just the idea of how much needs to be done might make you lean towards inbound marketing, as it sounds easier.
However, we found PMF outreaching far more effective than inbound marketing.
Setting up a fully working inbound machine can easily take years. In the beginning, the leads coming through it, might be mostly irrelevant, hence won’t generate any valuable discussions or sales. Moreover, outreaching is always more targeted throughout most industries.
Inbound marketing is a nice addition to outreaching but it should not be the cornerstone of your activities during PMF. After you reach your product-market fit, you know who your customers are and what value proposition resonates with them. This is the time you can start pursuing and optimizing (adjusting channels, targeting, messaging, positioning,...) your inbound marketing activities.
You’ll see outcomes soon:
Remember, no one is going to meet you to see what you have to offer. People will meet you to solve their pain. After a round of meetings, you’ll start hearing “YES” to your product, opening your first opportunities, and finalizing your first sales. Great!
To understand where your market is, it’s important to measure conversions throughout your funnel, i.e. from a lead to a deal. With some potential customers, you can have a high conversion rate from a lead to a qualified lead, however conversions from a qualified lead to an opportunity might be close to zero.
This means this group feels the pain, however, your solution isn’t the right fit. Hence, you should focus on a different potential customer group where you are able to convert qualified leads into opportunities and eventually into deals.
Wrapping it up …
Searching for product-market fit is about going boldly to the market and meeting potential clients.
If the search is properly prepared and consistently measured, the collected feedback will help you move forward faster and more efficiently. Discover and solve the problem in the market and stabilize your sales - make them repeatable, scalable, and profitable to move to another chapter successfully - scaling of your sales team is waiting for you!
Struggling? Let us help you.
Do you feel like it’s the right time for you to pursue the product-market fit but you’re not sure how to do it? Book a consultation with us. We’d love to work together. And read the rest of the PMF related articles ;)