What is Product-Market Fit?

Written By Linda Hale
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We just completed the summer cohort of I-Corps in July, and I had an opportunity to watch the final presentations in-person at the Bounce Innovation Hub. It was fun to meet some of our entrepreneurs in person and learn more about the ideas and technologies that drove them to I-Corps in the first place. We don’t allow the participants to focus on their technologies during the program, so the finale is usually an eye-opening experience for everyone. ​

I-Corps focuses on Customer Segments and the Problems those customers face. When emerging technologies can solve those problems for the customer segment, we call that Product-Market Fit. 
 
Most businesses fail because they didn’t take time to identify product-market fit before spending time and money on product development. I-Corps provides a safe space to delve deeper into the motivations of a customer segment PRIOR to expensive R&D, working prototypes, or software platforms. Once you identify your customer and the problems or pains they face, you will be able to identify your technology’s unique value proposition, which will guide your product development process. 
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For those who haven’t participated in I-Corps, let’s define some of the topics above and explain why they are so important to startups and emerging technologies. 

Customer Segment – This is the specific group of people who have the problem that your technology or idea solves. Notice that I used the term “people.” Your customer segment is NOT a building, a business, or an organization. Customers are people. Your initial customer segment is the relatively small group of people with a common problem that your technology or idea solves. ​

For example, if your technology provides a less invasive breast cancer diagnostic tool, your customer segment isn’t hospitals, or breast health centers, or surgeons. You want to drill deeper to identify people within those organizations who care about less invasive breast cancer diagnostic tools. 

You could gather great data from:

• patients who have undergone breast cancer diagnostics 

• diagnostic technicians who work with those patients 
• breast health doctors who order diagnostics, and 
• sales reps who distribute the current solution 

Once you identify the specific people who have a common problem, you are more likely to learn limitations associated with the current solutions and what could motivate your customer to consider a new solution. 

Problems and Pains - What problem is so painful that your customer says, “my life would be so much better if someone would just make this problem go away.” Is there something risky, frustrating, or time-consuming that causes physical, financial, or emotional pain for your customer? And remember, problems and pains may be different for different customer segments. 

Using our breast cancer diagnostic tool example:  

• The doctor may find that patients fail to follow-through with the prescribed procedure or complain about the process or the recovery time.  
• The diagnostic technician may be crunched for time, especially with nervous patients, potential biohazards, and required reporting associated with the current method.  
• A sales rep may share drawbacks to the current technology and provide information about customer motivations.  
• The patient may experience physical, financial, or emotional pain. (BTW - Patients don’t generally choose their diagnostic tools but understanding their problems and pains can uncover information that could motivate the people who decide on diagnostic tools.) 
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Product Market Fit – When your technology can solve a specific problem or ease a particular pain for a customer segment who is motivated to pay for a new solution, you have the basis for product market fit. 

Value Proposition – a concise statement describing the exact value you bring to your customer. Your value proposition will likely change depending on your specific customer segment, or it may change over time as you learn more about your customer. 

When developing a Value Proposition, avoid generalities like "saves time" or "costs less." Everybody wants to save time and money, but most are also risk averse. They have learned to manage the status quo and are often reluctant to change. Your value proposition should quantify the amount of time or money that will motivate your customer to risk making a change.  

Sticking with our breast cancer diagnostic tool example: 

• Value to the doctor: Diagnostic tool XYZ will double patient compliance by providing a pain-free, recovery-free experience that is covered by most public and private insurance. 
• Value to the diagnostic technician – Pain-free Diagnostic tool XYZ will reduce set-up, clean-up, and reporting times by 50%, allowing them more time to focus on patient care and professional development. 

Your customer segment may also have motivations that extend beyond time and money. Try to learn more about hassles that disrupt workflows and make their job or life uncomfortable or inefficient. The more your value resonates with your customer, the more interested they'll be in learning more about your solution. 


Don't hesitate to reach out to the UARF team if you have questions about your startup or technology. We would be happy to discuss Product-Market Fit or any topic that can help you progress toward commercialization. 

For more information about our business startup resources, please visit our website - UARF - UARF Home (uakronuarf.com) 
Fall I-Corps Applications are now open I-Corps Application - UARF (uakronuarf.com) 
Want to get a head start? Participate in our self-directed Starting Line Program while you wait for the fall cohort to start. Starting Line - UARF (uakronuarf.com)