Iterating to Success
Maybe you have a product in market, but you are struggling to grow the customer base. Or your product has been live, but you can’t get the unit economics above the water line. Possibly you have a freemium model and customers love the free product but won’t convert to the paid premium level. These are all signs that you haven’t found Product Market Fit yet. There is nothing wrong with this, it just means you have more work to do before you are ready to scale. It’s time to dig in and do more customer research to figure out what is working and what needs improvement. You will probably have to iterate on your product or service to make it more appealing, or you may need to switch up your customer targeting.
The first step is diagnosing the problem. The best way to do this is with a detailed customer outreach. You probably want to pick up the phone and contact a good cross section of your users. You’ll need to understand who they are and group them by demographics, usage, or some other characteristic. You will also want to understand what they are using your product for today and also what they hope your product will do for them in the future. You should try to figure out what other products they have tried in the past, and what other products they may be considering now. You can also use this time to survey your customers on new features that might get them to pay more or to question them about potential price changes.
The next step is usually to make your product better. Remember from a prior post, I said that Product Market Fit means you have customers that are getting real value from your offering and are willing to pay a market rate for it. Take what you learned from your customer discovery and look for ways you can improve your product so that you can get the unit economics corrected. If you are still subsidizing the pricing or giving away too much for free, now is the time to add features and learn whether your customers will pay more.
If your customer discovery led you to believe that everything is perfect with your product todayh, then you are in a great position. You’re going to have to strap in and start raising your price until you hit a market level. You are not going to be able to raise money to scale your business if the unit economics are underwater. Now is the time to fix this.
Hopefully from this iterating work you will be able to get to Product Market Fit. The one area of caution is that lots of founders when they are trying to figure out product problems think they can spend their way out of the problem. Spending more money on customer acquisition is not going to work in most cases. If your current customers are not happy enough with the product, the odds are not great that new ones will love what you are offering.
Thanks for reading today’s post, I hope this helps you find a way to improve your product offering and get to a place where you are ready to scale.