12 Steps to Product Market Fit
One of the common challenges that startups face is “How to achieve Product Market Fit.” This post will walk you through 12 steps (or client) process, to help you find “Product Market Fit.”
The process is essentially having 12 people trial your product and provide you with feedback. Which sounds really obvious, but trust me, there is a little more to it than that.
Benefit of 12 Steps
The benefits are… that at the end of this, you end up with:
- Between 1 and 12 potential customers
- Between 1 and 12 testimonials
- A list of exactly “Who you need to sell to”
- Where you can find them
- What content you need in order to sell to them
Ultimately it creates a very lean, very targeted, very efficient lead generation and sales machine.
With that in mind, let’s start looking at the details. Now, the example that I’m going to use is a “Machine learning contract reviewing software.” Which sounds a little bit of a mouthful. But essentially, what this piece of software does is it has a bank of all the contracts that your company has previously signed and what it does… is it learns the clauses that you have agreed to historically.
So, when a new contract comes in, it can review that contract and it will immediately highlight clauses that are different to ones that you’ve agreed to in the past.
In theory, you will spend less time reviewing contracts and you become more efficient.
Now, when I had this explained to me by the founder in question, my question was…
“Who do you sell to?”
His response, “We sell to attorneys or if you’re based in the UK, solicitors.”
That to me seemed a little bit vague and it seemed pretty typical of the starting position that most companies hold.
My followup question was, “What type of attorneys?”
He didn’t know, he didn’t have any preference and that’s a pretty typical starting point of what I call your “first phase persona.”
Your “first phase persona” normally comes from the fact that your company is solving a problem that you’ve experienced. So often, you want to sell to people like you and it just so happens that this founder was an attorney in a previous life, so that’s who he was selling to.
We started chatting and I said, “Okay, let’s look at this in more detail. Let’s talk you through the 12 Step Process.”
To begin with, let’s go and find some attorneys. But let’s make sure that they all practice a different kind of law. Let’s say theoretically that one practices Corporate Law, one practices Family Law and one practices Property Law.
You go and get them all to trial the product, but there’s one caveat before we start this.
Before reaching out to people, you’ve got to have something to offer them. Typically that has to include what your product does, what you’re looking to achieve, what will success look like and what are you going to give them in return.
Now, the key thing here is “what are you going to offer in return.” Typically people will go to, “Oh I will pay them.” Which I’m not a big fan of, because it can skew the results and you’ll have to ask yourself the question “Are they really using my product because they see value in it and they think it could be useful to them” or “Are they doing it because you’re offering to pay them?”
To me a far better offering is to say “We will give you the product free for 12 months if it’s a value to you” and “If it’s not, then we just really appreciate the feedback.”
Alternatively, you may want to say something like “we’ll offer you the product free for six months and then “we’ll give you a further 12 months of a 50% reduction on pricing.”
You’ll have to decide what works best for your business. But these are all pretty valid options and remember, even if you give it to 12 people for free for a whole year, that’s 12 people who are using your product, giving you feedback and are going to give you testimonials that you can then use to sell to far more than 12 people.
Finding Market Fit – The Offer
Let’s assume we’ve got our offering dialed in. I’m going to reach out to my first three attorneys and we have them trial the product. Remember, each of the attorneys will practice a different type of law.
Hypothetically, when we go back for feedback, we found out that the person who got the most value was the attorney that studies Property Law. That might be because they’re dealing with property and they’re signing more contracts. So to them, the value is more obvious.
At which point we would say “Okay, in the next group of three attorneys, we’re only going to focus on property attorneys. But, we’re going to look at another variable. This time, let’s look at the size of the company.”
Let’s take one property attorney that has less than 10 employees, another one that’s 11 to 30 and another one that’s 31 plus. Then we run the process again.
This time, let’s imagine that the company with over 31 employees has the most value and that’s because they have the most contracts to review. Therefore, it saves them the most time and it’s the most obvious business case for them.
Mid Point Review
Great… we have now gone from targeting attorneys, to property law attorneys with over 30 employees. We are starting to get specific about our audience and where the value lies.
We must now continue to refine our targeting.
Finding Market Fit – Last 6 Steps
The next step is, to look at another variable.
This time, we are going to target the person inside the organization that’s pushing the product. We can ask questions like “Is it a senior attorney? Is it a junior? Is it the admin assistant? Who is the person that’s driving this inside the organization and how does that impact the results?”
The findings that we see best results when a senior attorney is driving product usage, isnt a surprise. That also takes us to 9 of the 12 steps.
At this point, you can probably guess what we do next… look at another variable. That will take us through to step number 12.
Just because we have got to step 12, doesn’t mean you have to stop the process here. If you feel there are additional variables you can test… feel free to continue.
If you have tested all the required variables, you can combine your learning to form a “positioning document”. The “positioning document” will detail the exact targeting and market where your product has achieved “market fit.”
Now, at this point… where are we at? We’ve gone through 12 people that are using your product. Ideally, you’ve now gotten to the point where you know exactly “Who’s going to love what you do.”
You’ve got these 12 people, who you can get feedback from.
You’ve got these 12 people, that you can get testimonials from.
You can reach out to them and find out even more about them. Answer questions like “What do they read for news? Which social media channels do they use? When do they use them? Are they using LinkedIn on their commute to work in the morning? Are they reading some specific industry magazine on their lunchtime?”
More importantly, you know what’s most important to them in making a decision. So, you know what content you have to create, in order to sell to companies and people like them.
Maybe you need to create a demo that shows a specific type of contract being reviewed. Now you can do that, because you know and it’s backed by data. It’s no longer just an opinion and that is the value of this 12 step process.
I hope that’s been valuable to you and I hope that you can apply it to your own company.
If you have any questions about how you can use it in your own organization, feel free to reach out & ask us a question. We’re always happy to help.