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Executing Steady Product/Market Match


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Mar 22, 2024
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Should you construct a home or manufacture a crate of shoelaces, you’ll be able to fairly effectively predict how a lot you’ll earn. Output and outcomes are tightly coupled. Should you construct the 1.0 model of a brand new digital software, this isn’t the case. On the one hand, odds are it is going to be value zero and even lower than zero; however, if you happen to do join with demand, scaling up in digital is gloriously cheap. Output and outcomes are loosely coupled.

This basic financial actuality is the premise for each framework or observe related to tech and innovation: design pondering, Lean Startup, and agile, to call just a few of the headliners. Lengthy well-liked with enterprise capitalists, the idea of ‘product/market match’ is nice at explaining the distinction between the minority of digital merchandise which are prepared for explosive progress and those who aren’t.

The issue with it’s that whereas it does an awesome job of explaining what occurred with a product after the very fact, it’s not actionable for product managers grinding their option to product/market match week to week, quarter to quarter. Sean Ellis’ ‘40% rule’ provides that if you happen to survey prospects and 40% could be ‘very disenchanted’ if the product went away, then you’ve got product market match.

Nonetheless, this definition depends on what prospects say vs. what they do, which is deeply problematic for quite a lot of reasons- one of the apparent being that it requires the usage of a secondary instrument, some type of survey. Surveys are each comparatively cumbersome to manage and their outcomes will at all times be confounded by choice bias- are the customers that resolve to reply actually consultant of all of your customers? And the way do you utilize this in a case the place you wish to check the partial impact of a brand new function or buyer expertise?

If that definition is just too broad then the secondary alternate options that counsel at all times taking a look at very particular metrics like how typically prospects return to your web site (or app) are too slim: how particularly do you apply that definition to merchandise with completely different pure cadences: tax prep software program vs. a social media app, for instance? What if modifications to the UI naturally shift person habits from quarter to quarter?

A Working Definition of Product/Market Match?​

For the merchandise I’m engaged on as an advisor and founder, I’ve discovered I want a definition of product/market match that does these 5 issues:

1. Depends on What Customers Do vs. What Customers Say​

Leaning on what customers do vs. what they are saying is a longtime lesson discovered from product design. It’s additionally an space the place (lately) working as a professor in a stats group has helped me a lot- in science communicate, behavioral observations are a lot much less topic to ‘confounders’ which make inferences and therefore choices a lot much less dependable.

For instance, take into account the case the place you simply needed to get in contact with technical help to resolve a problem with a product that you simply usually like, however the help individual was horrible. When the corporate sends you a post-call satisfaction survey, you is likely to be inclined to reply that no you wouldn’t suggest the product to a pal, regardless that, actually, you’d. Or take into account the alternative case- you remorse shopping for the product however the help individual simply did the perfect they probably might and also you when that survey comes, you wish to say one thing good, regardless that you wouldn’t really suggest the product.

This doesn’t imply {that a} good tackle product/market match is simply in regards to the numbers. If a group can’t readily pair qualitative and quantitative proof, they’re going to lose the thread. We actually have a time period for this in analytics/information science: ‘floor fact’, and a very good definition of product/market match needs to be relatable for each varieties of observations, qualitative and quantitative.

2. Will be Simply Applied with Normal Analytics Instruments​

I need a definition that’s leveraging all my information on customers, vs. only a few periodic survey responses. I’m a giant fan of agile and steady design and customarily making the query of ‘Is that this working the way in which we would like?’ one thing that groups can simply verify on at any time when they need. Whether or not the product group is utilizing Google Analytics, Mixpanel, KISSMETRICS, and many others., I need to have the ability to body just a few focal observations about person habits and use that as our true north week to week, quarter to quarter, to determine if what we’re doing is working or not.

Not solely do I need to have the ability to make use of all of the (helpful) information I’ve on person habits because it is available in, however I additionally wish to comparability with what I’ve discovered to date, and it is a downside with the too slim metrics: they’re so particular that incremental modifications to the person expertise (UX) or the extra normal buyer expertise (CX) make it exhausting to check and apply your present classes discovered. And that is significantly necessary within the case of leveraging main vs. lagging metrics.

3. Leverages Main vs. Lagging Metrics​

Irrespective of the way you slice it, surveys are a lagging indicator and can make for slower, dearer choices, which isn’t what you need in a hyper-competitive, innovation-intensive surroundings. How do you leverage what you’ve discovered about main metrics like engagement ranges so to make a name on a brand new function, buyer section, or lead supply as quickly as doable?

4. Simply Extends to Testing New Options, CX’s, and Segments​

Profitable ventures both get fortunate or iteratively check their option to success. I don’t know find out how to be reliably fortunate, so I deal with testing- so did notable startups like Dropbox and Aardvark and so do sturdy franchises like Google.

Let’s say you’ve got three new buyer segments you assume is likely to be the subsequent supply of progress for you- how do you check that? How do you determine how a lot you’ll be able to pay for an acquisition? Is a brand new function enhancing product/market match or is it step one in a journey like Evernote’s the place a mish mash of function craters product/market match? I need to have the ability to observe, infer, and act on main indicators the place I really feel I’ve dependable classes discovered on the downstream behaviors, like the connection between engagement and retention.

For instance, take into account the pattern instance under: Should you roll out one thing new, sturdy preliminary acquisition can masks deadly quantities of churn if you happen to’re not trying in the suitable locations.


5. Readily ‘Cascades’ with OKR’s or Related​

It is a larger deal at scale, however it’s necessary for particular person groups that they will readily perceive and facilitate alignment with the corporate’s bigger objectives. For instance, if the corporate’s topline goal is to turn into the main CRM for B2B manufacturing corporations and their goal outcomes for the present quarter are to extend income by 45%, what does that imply for the group offers with a really particular a part of the product, like interfacing with third occasion information companies? Or a chatbot for buyer help?

The concept with utilizing OKR’s or an analogous metrics-driven strategy is that the corporate can describe their progress to product/market slot in particular phrases on the firm degree after which decompose or ‘cascade’ that description to the precise work of particular person departments and groups. For this, periodic measurements on general how blissful prospects are isn’t straight actionable for them.

A Third Definition of Product/Market Match?​

OK, OK I’ll lower to the case: a 3rd definition of product/market match that I choose is to border it by way of person behavior- particularly, the person behaviors that represent a person ‘win’ on product/market match. I discover that this definition delivers the 5 issues I’m after pretty effectively:
1. It permits me to depend on particular person habits vs. generalized, circumstantial survey responses

2. I can instantly implement it with any customary net/app analytics suite (Google Analytics, Mixpanel, and many others.) and repeatedly observe progress (or not progress) in direction of product/market match

3. It permits me to right away and repeatedly observe main metrics for tighter, sooner actionability. For instance, if I do know (or at the very least I’m able to assume primarily based on prior observations) {that a} sure degree of person engagement results in a sure degree of retention and monetization, then I can extra instantly put money into scaling up a brand new function or CX that improves person engagement.

4. Since I’m observing particular person behaviors, I can readily check the precise impact of a brand new function or CX and, for the explanations above, make faster, extra assured choices about whether or not to ‘pivot or persevere’.

5. If the operation is working at scale, I can facilitate alignment to the corporate objectives with particular person groups by way of team-relevant metrics, which supplies them the type of outcome-focused definition of success they need for freedom of motion and autonomy.

The general framing I take advantage of do that is ‘buyer expertise (CX) mapping’. For a given job you do for the person or downside you clear up for them, the thought is to border their journey in qualitative phrases after which establish a focal metrics (dependent variable/DV) for every of these.

The instance right here reveals how a group constructing an app for HVAC (heating, air flow and air con) tech’s to order substitute components would unpack and measure their goal CX:


Every step within the buyer expertise has a focal dependent variable (DV) primarily based on noticed person habits and a ‘line within the sand’ threshold that consistently pushes the group to prioritize relative to a profitable CX. Every little thing the group’s attempting out is framed as a testable unbiased variable (IV) relative to the focal DV.

The place’s the half about product/market match? Nice query! It’s particularly outlined because the Retention behaviors. For instance, a person person accrues to product/market match in the event that they pay >$80/month and are retained for >14 months. This has the helpful function of creating it very apparent the place it’s worthwhile to be on main DV’s like Acquisition: given a sure definition of Retention, you understand how a lot you’ll be able to pay for an Acquisition.

In closing, I’ll provide this: I like to construct stuff and I hate worrying about product/market match. However simply blithely making issues doesn’t make for a very good enterprise, until you get fortunate. So, I’ve to ensure what I’m doing is driving towards product/market match, and you already know that saying about how boring knives lower extra folks than sharp ones (as a result of they’re clumsy)? Nicely, that’s type of how I really feel about coping with product/market match: I need one thing that’s operationally decisive and simple to implement so I can deal with what I like doing, which is designing and constructing merchandise. For this, I’ve discovered that CX Mapping delivers what I need: one thing that’s extra fast and steady than the 40% rule however which nonetheless offers me extra operational context than simply taking a look at a particular measurement like returning guests.

Should you’re inquisitive about attempting it out, I can’t assist however suggest this pleasant little quantity which provides much more element: Hypothesis-Driven Development.


I’d wish to thank Colin Zima for his assist enhancing this put up and in addition to absolve him for any of its shortcomings. Colin is a serial founder and product government who’s had a number of exits, together with most lately as CPO of Looker, now a part of Google. He’s at present determining how extra customers can get on the information they should do their jobs higher at Omni.
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