✔️ How to Make Sure You Have Market Fit...
4 dimensions of market fit with Brian Balfour's framework: Ensure your startup's success by aligning your product, channels, business model, and market for optimal growth and engagement.
We often speak about product-market fit, which is just building the right product, the one the market needs most right now. And, generally, the market rewards you by buying it.
Startup guru Brian Balfour actually breaks market fit into 4 distinct categories. Each with its own exercises, measures and methods.
So, if you’re pretty far along and have a product already, this is one to pay attention to. (And if you’re still building, keep it in mind as a place to build towards.)
Nailing all 4 Market Fits
1. Market-Product Fit
How to Check: It’s sorta the opposite of product-market fit, in that this time you check to ensure that the market you’re targeting is the ideal fit for your existing product.
Do some surveys to gauge how well your product meets their needs – try the “bait” survey to find your superuser. And then look at customer satisfaction, retention rates, and your Net Promoter Score (NPS).
How to Get It: If you don't have Market-Product Fit, consider pivoting your product features based on customer feedback. Niching down on a specific segment of the market should do the trick. Find a few segments to test and see if you get better feedback, retention and NPS scores among those niches.
2. Product-Channel Fit
How to Check: Analyse the effectiveness of different marketing channels (Google VS social networks, Facebook VS Linkedin, Instagram VS TikTok, email VS app etc.) in reaching your ideal customers.
Look at your customer acquisition cost (CAC), conversion rates, and engagement levels in each channel. Your best channels are the ones where you have the best possible CAC.
How to Get It: To improve Product-Channel Fit, test different marketing channels and strategies. Optimise your messaging for each channel and focus on those that bring the highest quality leads at the right cost.
3. Channel-Model Fit
How to Check: Now you need to check if your business model works with your sales and distribution channels. How profitable is each channel for you? And then, how scalable is that channel?
Consider the lifetime value (LTV) to CAC ratio you get from each channel. You ideally only want to spend a low percentage of 20—30% of LTV as CAC, so look at the channels where you think that’ll be possible. Then, also analyse channels based on sales cycle length – the faster you can get to the sale, the better.
How to Get It: If you’re spending too much to acquire new customers, there’s only one of two options: 1) Find different channels that work better with your business model, or 2) Adjust your business model, pricing strategy or sales approach to better leverage existing channels.
4. Model-Market Fit
How to Check: Assess if your business model is sustainable and scalable in the market you’re currently targetting. If you niched down, check that the niche is big enough, reachable enough and able to pay in your competitive landscape.
If yes, great, go for it. If not, you’ll have to find a way to increase your potential market to unlock growth.
How to Get It: If you lack Model-Market Fit, you could try and discover a newer, larger market – though that’s easier said than done, and takes you back to Step 1.
More often than not, model-market fit might require you to pivot your business model. Maybe you can change your revenue model, target a different market segment, or adapt your operations to better suit the reality of the market (i.e. slim down operations until you are profitable in the current situation).
See how to reverse-engineer startup success.
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