Product-market fit is the level at which the product meets the demand in the market. For the perfect product-market fit, customers understand its usefulness and get to terms with its value. When they value the product, they will be repeat customers or spread the information to other customers. 

As much as most companies create products to meet demand, not all products are needed in the market. Some products are useful, but customers do not derive much value from them. In some instances, the customers do not understand the value of the product, which is common with new technologies.

Product market fit is needed for a company to thrive because it is directly related to its growth and profitability. That is why many venture capitalists demand that startups give evidence of a product-market fit before investing in the startup. It would help if you had the right product-market fit to prevent your company from having cashflow problems. 

There are only one in twelve businesses that survive to the end of the road. A need for the product defines its success. Up to 42% of startups fail because of a lack of a product-market fit. Those startups felt that customers do not need their products, and that made them irrelevant. That means that before developing a product, you should ensure there is a need for it, and find the product-market fit.

Finding the perfect product-market fit takes time, making it costly as it will need 6-12 months. Through our service, we can do it 70% faster, which will help them save money.  Both time and money are important factors if you want to be the next unicorn or you want scalable products. Many startups do not address this early enough or realize it when it’s too late. This brings problems with expansion, and thus it is better to address that in the early initial stages like creating an MVP.

Product-market fit EXAMPLE I

One of our customers has a solution to assign a software to clients and had a problem because the success rate when calling perspectives from IT companies was low like 1-8%. After a short analysis, we discovered that they were going too wide in contacting HR departments. They focused on a big area with their main message being they have a software to assign better developers to projects (the software analyses skills and assigns accordingly). Of course, this is a problem, but not necessarily a pain point for HR departments as the main pain point for HR companies is lack of enough skilled personnel for the projects. Our solution on how to create a better market fit is to focus on recruitment vacancies to identify the skills gap to better use the skill their developers have. To call HR dept and tell them that thanks to the solution they can better use the skill they have by 10%, meaning they will cut the recruitment costs by 10%; hence it solves their main problem. This understanding of customers helped to rapidly increase the success rate as they have the right message to the right customer and they focus only on the best customers for them.

Can product-market fit influence the success of your business?

Understanding PRODUCT-MARKET FIT – what is it, and why is it important?
Photo: Austin Distel

Just as mentioned before, it is hard for your product to make it if it is not aligned with the customer persona. It is crucial to keep in mind that you may need different personas for different markets. You need to understand your customers, their situation and their buying intentions.

Some of the ways in which a product-market fit will influence the success of your business include:


The right product-market fit will have an impact on the success of your marketing efforts or advertising. If your product-market fit is not correct, it is very easy to advertise to the wrong target group, attracting the wrong buyers leading to a high churn rate and low retention. It is only with the right product-market fit that you will achieve an accurate market messaging, leading to the right value proposition to avoid burning money. 

Low customer acquisition costs

When you have the perfect product-market fit, customers will see its value, leading to freebies such as free media coverage and word of mouth advertising. They will drive up your sales at no extra cost. When your marketing budget is spent well, it will give you an upper hand when you need to talk to investors. 

Growth Rate

How your company will grow will depend on your product-market fit. If it is right, you will achieve efficient growth with proper resources and the right positioning.

Churn rates

When you have low churn rates, it is an indication that you have the right product-market fit and vice versa. It means that clients will be happy with the product, which begins with having the right buyer persona.

How do you know you have the right product-market fit?

Understanding PRODUCT-MARKET FIT – what is it, and why is it important?
Photo: John Schnobrich

Many startups struggle but are still unable to pinpoint the source of the problem. As mentioned earlier, mostly it is because of the lack of a product-market fit. So how do you know you have a product-market fit?

Faster growth

When you have the right product-market fit, you will grow fast since customers will see value from your product, and hence, they will come back for repurchase, and they will also spread the word through word of mouth, leading to faster growth.

Low churn rates

When you have a high churn rate, you will notice that you do not get any repeat customers or get a low subscription rate. That is because customers are not able to derive value from your services.  When you have a product-market fit, customers will be happy with the product or service, and hence there will be a low churn rate. 

How to create a product-market fit

If you feel your startup does not have a product-market fit, do not worry about it, as you can fix that. There are steps that you can take to discover and create your product-market fit. They include:

  1. Fill a need

Most of the time, a product is created to fulfill a need. It is your responsibility as an entrepreneur to maximize that. You can either take the step of doing iterations of the minimal viable product (MVP). If you do not see the need or feel that priorities of the market have changed, then it is your responsibility to customize or make changes to the product so that it is suitable for the market. 

  1. Build a unique value proposition

Why would customers choose you over competitors? Because they feel there is a value they can get from you. That means you should strive to show customers they can get a unique value from your product. It would help if you also had a competitor analysis to understand your competitors to develop a unique selling proposition and win a marketing strategy.

  1. Get the right target niche.

One of the easiest ways to know your target niche is identifying who can relate well to your value proposition. You might have to do customer research to know the kind of people who might be interested in your products. There is undoubtedly a niche or demographic that will need your product more.

  1. Build your persona

It is not enough to know your niche market; you also need a definition of the ideal customer for you. What are their habits? What influences their buying decisions? What is their budget? What trends influence them? Once you define your ideal customer, it will be easier to put yourself into their shoes, affecting how you customize the product.

  1. Do a test in the real world.

As much as you may have all your facts right, it is only through testing that you can prove your hypothesis works. That means you should be ready to do tests as much as possible. When doing the tests, it does not end on the product and the marketing campaigns, marketing messages, experimenting with the product in different markets, etc. You need to translate your technology to the language of your customer. During a test, strive for as much customer feedback as you can as that will give you a heads up on what to do. If you do a test and still don’t feel you are getting much value, repeat the previous steps.

“You need to translate your technology to the language of your customer.”
Sulma & Sulma

How to measure product-market fit

Even though you might have created the perfect product-market fit, it does not end there. You need to keep track to measure its performance to know if there are any adjustments that you need to make. Some of the metrics to track to measure the performance include:

Churn Rate

It is the customer percentage that leaves your service over a certain period. If you are experiencing high percentages, it means there is something off about your product-market fit. Regardless of how perfect the product is, it will experience some churn rate. It should be reasonable and not so high. That means you also need to work on the Net Promoter Score to keep your churn rate low.

The retention rates

You can measure that by identifying how long a customer subscribes to a service or the repeat customers’ rate. A low retention rate or short subscription rate means that you need to work on your product-market fit.

Customer Life Time Value

The customer LTV is the total amount of money you expect from a customer the whole time they have your product. It is the primary determinant that companies use to decide how much they can spend on customer acquisition. When you have a high LTV, it is even better for you as it means your product-market fit is perfect.

Customer Surveys

It is only through the end users that you will know if you have the right product or not. That means customer research is inevitable. Directing the right questions to the right people will help you a great deal.

Mistakes to avoid when creating a product-market fit

Understanding PRODUCT-MARKET FIT – what is it, and why is it important?
Photo: Sangga Rima Roman Selia

Ignoring pricing

Even though you may have the perfect product-market fit, you should strive to price intelligently to balance pricing. The price has a significant influence on the performance of the company. It should be a reflection of the product value. It should not be too cheap or too expensive. 

Lack of flexibility

When creating a product-market fit, nothing is a straight line. That means you should be willing to make changes to get your target. You should be ready to change your messaging, pricing, and value proposition from time to time. 

Treating product-market fit as the end goal and not a process

Many companies fail to know that product-market fit is a continuous process. That means you should treat it as an end goal but rather a process. You should also not be complacent once you achieve it but be willing to roll up your sleeves when required.

Not measuring well

As much as you have to measure to know if you have the right product-market fit, you should avoid getting opinions from the wrong places. It would help if you targeted opinions from your perfect buyer persona.


As we clearly know by now, product-market fit is paramount for the survival of any company. At Sulma & Sulma, we help companies find the perfect fit in a short time. We have a team of experienced experts that ensure that so that your business can remain profitable. We have experience across different industries and products; hence we can quickly help you find a unique selling point. We have many happy customers, and you can join the band and become one of them.

Let us talk about possible cooperation, or sharing our knowledge and experience by performing our workshop for you. Contact us here.

Author: Marcia Osundwa