How to Survey for Product Market Fit in 24 hours
With all the buzzwords surrounding entrepreneurship like venture capital, acceleration, growth hacking, etc., there is always one phrase that stumps most entrepreneurs in their track! PRODUCT MARKET FIT!
This topic was fascinating to me to the point where I have been researching it since 2016 and built a startup tool to measure it. That was how VenturX was created, a startup that focuses on leveraging data to help early stage startups get from product market fit to funding. We focus on the most important KPIs for young companies such as product market fit.
At VenturX, we’re creating tools to help early-stage startups succeed; the first thing we always suggest is assessing the product-market fit. Not only is it the number one reason why startups fail (according to a report by CBInsights), but also the hardest to achieve because it can seem daunting to collect all the data needed in order to prove that their idea addresses a real need. The initial assessment of product market fit doesn’t necessarily require huge amounts of time or money. In this post, we’ll lay out four straightforward steps that you can follow to get a solid first look at how well your idea fits a market need.
What exactly is product market fit?
“Product/market fit means being in a good market with a product that can satisfy that market.” — Marc Andreessen, Entrepreneur & Co-founder of Silicon Valley Venture Capital Firm (Source: http://web.stanford.edu/class/ee204/ProductMarketFit.html)
4 steps for assessing product-market fit
1. Determine Your Target Audience
If you don’t know where to start, ask yourself who are you selling to and who needs your product/service?
From researching entrepreneurs for the past year, I learned that the hardest step is surveying those first 5 customers. To do it in 24 hours, can you find an event or location where your target audience happens to be? Remember you are doing research and not selling to them.
Example: For VenturX, part of my target audience is venture capital investors. I knew that they could often be found at startup competitions where they serve as judges. I knew that attending an event like this would be ideal to get the most amount of research done in 24 hours.
“If you can do 5 [customer interviews], you can do 35” — Robert Bennett, Viatec Accelerator
Tip: Not everyone likes talking to strangers, so why not bring a friend who LOVES it!! If you are in Montreal, send me a message or comment below and I’ll take the first 5 people to go surveying for their startups!
2. Ask the Right Questions
I asked multiple startups how they were currently researching product market fit and they all told me they input information into a spreadsheet and never used it again. Their issue was that they were collecting only qualitative information and had no way of comparing answers. If they had quantitative information, they would be able to compare the target market’s level of pain and benefit.
The solution? Rather than asking purely open-ended questions like “What do you think of this idea?” get them to describe the pain your idea addresses and the benefit it provides and asks participants to rate them on a numerical scale. Here’s an example of how your survey might look. If you’d like a copy of the survey, shoot an email to email@example.com with the subject line “Product Market Fit Survey” and I’ll send it your way.
Example of Pain: Startups who are not ready for funding take up a lot of the investors’ time with everything from initial pitches to due diligence and follow ups. Investors often end up telling these startups to keep in touch, that it is not a good fit at this time, or to come back later.
Example of Benefit: What if you had a solution that would replace your current application process and cut your due diligence in half? You would see the best startups who have reached their product market fit level and score higher than their industry benchmarks.
TIP: Always ask about the pain before the benefit. If you only talk about your solution, it is no longer research, but rather a sales pitch!
TIP: If you are unsure of your pain and benefit statements and only have limited time at one event to get all those responses, then bring two different pain and benefit statements, and compare responses to both.
3. Track Answers
Currently, most startups are manually tracking their answers on a spreadsheet. The benefit of spreadsheet tools is that it’s familiar, and you can manually create graphs from the data and present them to your team.
Another option is to use the startup tool that we’ve created at VenturX, that takes in your survey data and automatically calculates a product market fit score. It takes 30 secs to get a score like the one below! You can try it out at www.venturx.ca.
See Example of my score when I interviewed Early Stage Venture Capitalists regarding their Pain and Benefit.
TIP: Do not let your target audience see other people’s answers or else it might influence their answers too.
4. Rinse and Repeat
It is normal that you do not get a lot of 9’s and 10’s on your first iteration, but the important thing is to stay consistent. Do not change your pain or benefit statement after just a few responses. (You’ll know that you are on the right track when you consistently get high scores (9’s or 10’s) when you survey.
Example: I had to narrow my target market to only early stage venture capitalists, rather than all VCs. If I expand my product with more features, I will have to rinse and repeat this process all over again with a new product market fit survey for a new audience!
Once you’ve completed these steps, take a step back and look at your results. Whether your scores are low or high, you’ve certainly achieved something. You now have a quantified score that either validates your idea or tells to you to try a different target market or tweak your angle. Either way, stay strong, motivated, and persistent, and keep on quantifying!
So there you have it! Steps on how you can quickly and efficiently find your product market fit and get a real analysis of what your market is really looking for. Product Market Fit is one of the key KPIs that VenturX helps startups track and improve on in real time. For more information about this topic or other startups KPIs, please visit www.venturx.ca
VenturX is a web platform that helps entrepreneurs through their journey from idea to launch and beyond. VenturX uses data-driven analytics to score and connect startups and investors at Seed and Series A financing.