Product-market fit means you have found a market that wants your product. The sign is that sales and growth no longer depend on force and heavy advertising; customers come back on their own and bring others with them.
Signs you have reached it#
- Users keep using the product and few of them churn.
- Customers recommend the product to others on their own.
- Demand outruns the team's capacity; support and sales are overwhelmed.
- If the product were discontinued, users would be upset and want a replacement.
Signs you have not#
If you have to offer a big discount to win every new customer, customers leave after one use, and feedback is vague, you have probably not reached it yet. Growth without this fit is usually expensive and fragile.
Example#
Suppose you run an online store management service. When sellers renew their subscriptions without you pressing them and recommend it to their colleagues, it means the product solves a real problem.
Why it matters#
Before this point, heavy spending on advertising and hiring is usually wasted. After it, investing in growth makes sense.
Common misconception#
One good sale or a few early customers does not mean fit. You need to see a repeating pattern, and in a specific segment of the market.