A tweet from GrowthHackers caught my eye recently — “Our #product market fit and NPS are off the scale, but we’re struggling to grow. Any ideas why?”
Like most tools in a well-stocked tool chest, a specific tool is only good for a specific problem or use. Product/market fit is no different. It’s not a panacea for getting products right, where “right” is defined as commercially viable and successful. The product is only one piece of the puzzle, and many entrepreneurs are surprised by how many other pieces impact their products’ market success.
So let’s run down the potential causes for the “why are we struggling” question posted on GrowthHackers:
- You have happy ears – You don’t actually have a good product/market fit. It’s one of the many frustrating realities of product marketing, but what customers say they want, and what they actually want or will accept aren’t always the same. Many, many consumer products, from cars to movies, have been launched following extensive consumer testing, and flopped badly. Getting product/market fit right is part research, and part really knowing your customers and the problem you’re addressing. And being a very, very active listener, and your own worst (best?) critic.
- It’s a tiny market– Niche marketing can be a great idea, but the smaller the niche, the more market share you need to have, to build a viable business. The smaller the market, the less sales in any given period, all other things equal. It’s a fine balance between a large enough market TAM in which you can build a successful company, and a small enough focused targeted SAM that you can generate sales with affordable customer acquisition costs (CAC).
- No one cares– A variant of the point above. The apparent market may seem huge. But the problem you are solving is so far up Maslow’s corporate or personal hierarchy, that potential customers are out of time and/or money before they get around to thinking about the problem you solve. The problem lacks urgency for the broader market. Once you have mined the very few who do care, there is usually no amount of marketing and sales effort and money to get the rest to care.
- Your competition has a better (or cheaper) product– An obvious cause, and often ignored, whether out of ignorance or hubris. The best entrepreneurs know their competitors’ products as well as their own, and are honest and frank with themselves and their team about the competitors’ advantages. This also sets the groundwork for surpassing a competitor’s offering – you can’t address it if you don’t admit or know the advantages exist. Any company can find a few customers who just didn’t know about a better offering, and are satisfied with what you have. But the broader market does, and sales will stall as the competitor’s advantages become more well known
- It’s a crowded, noisy market– A little different than the competition issue. Its not so much that there is a direct competitor vying for the same dollars, it’s that there are many adjacent and apparently overlapping solutions vying for the same dollars. The social marketing apps market, and the local marketing apps market are two great current examples. Marketers and local merchants alike are overwhelmed with offerings all purporting to get more audience, increase conversion rates, and generate revenue lift. So many to choose from, so little time to figure it out. Random customers may find your product and love it, but most can’t hear or find you in the crowd.
- You have lousy distribution– Products that “sell themselves” are a very rare beast, rarer than unicorns! Distribution (a.k.a. sales) is often the most important determinant in company success. It’s well known thatOracle did not have the best database product back in the days when there were a dozen plus RDBMS companies. But they had the best sales team. Siebel was not the first CRM system in the market, but they built out a channel partner strategy that was second to none, leveraging third parties to eventually dominate the market for a time. Amazon rarely has the lowest price, but every retailer on the planet is scared to death of them and their distribution capability. Better distribution will trump better products most of the time.
- Your business model/go-to market are wrong– I was actually an investor in a company with the very question posed at the beginning of this blog. Fabulous NPS, super happy customers, very real and measurable value, but customer acquisition lagged badly. The problem, it turned out, was that the product required an enterprise or complex sell, meaning several people in the prospect organization need to agree and support buying the app, because it touches or affects several different functional groups. Yet the business model they were following was a“freemium” model – users could download and use the product for free, and only had to pay when the users wanted the richer, more capable, more scalable premium product.
Unfortunately, freemium is best suited for products where an individual user can make an autonomous purchase decision, usually to enhance their own personal productivity. When it’s an organizational decision, relying solely on an internal advocate who downloaded and loved the product, rarely gets the deal done. There was a fundamental mismatch between the nature of the product and the type of business model employed.
At the end of the day, the challenge posted on GrowthHackers arises when the market has been misread in some way, often in ways that don’t have much to do with the product feature set. What other reasons have you observed for flagging adoption, when the product/market fit is apparently good?