Every company, big or small, must crack the product-market fit to find success and scale. Because without that you won’t know whether or not the product you are building solves a real problem that the market has.
Speaking at a Masterclass on day one of TechSparks 2019, YourStory's flagship annual event, Vikrama Dhiman, Head of Products, Gojek Transport Products, spoke about “cracking the holy grail of the product-market fit”.
“If your question is not around how can I scale my acquisition, or how do I ensure more people get exposed to my product, then your question is around product market,” he said.
The lifespan of an organisation or a startup doesn’t matter when it comes to product marketing. A company can be a few weeks old, or even a few years old, because according to Vikrama, perfecting the product marketing is the task that should span the entire product lifecycle.
“The first lesson was to start with the market and analyse it before building the product” he said, adding that a team ought to focus on the market instead of the product, because it was all about getting the market right.
“To know if the market is right, You need to put out the product first,” he elaborated.
In an ideal situation of product-market fit, customers should buy products as fast as the team can make them, or customer usage should grow as fast as the team can serve it. In addition, a team needs to understand and develop certain technology or a product that solves the customer’s problem apart from developing a product that the team thinks is suitable.
Vikrama also spoke about a few things that founders need to look for in the product market:
How well can the team retain customers despite the number of customers signing in? Here, one should notice and understand how other people can be attracted as customers through the first customers, because, through this, getting the product-market fit is quite easy.
Validation of the business model
This is another important aspect to look at. One may not be able to control the acquisition cost, but it is possible to control the lifetime validity of customers. If the cost of acquisition is high, the validity of the customer needs to be high as well.
Vikrama added, “Signups happening with the referrals of existing customers is also quite important for the validation of business.”
According to Vikrama, the product-market fit lies between two aspects: the target customer, and features and UX. Also the company’s features and UX essentially don’t talk to the customers, but what ends up connecting is their need with the value proposition you are providing.
For example, Instagram, YouTube, and several other products have a service like upload-and-shoot videos. What differentiates them are the customers using them. “To give an example, TikTok, which is like Instagram, is often regarded as the Instagram of Bhojpuri people,” he said.
Basically, a company’s value proposition is something that ends up talking to its customers, with what is being pitched by the company being the deliverables.
A startup in an early stage needs to understand the service as an essential approach. The second is early traction, and the way to balance these two is building the solution. How rapidly a startup can build solutions to iterate and test this is critical, he said.
One of the most used terms is the Minimum Viable Product, in which one needs to focus on the viable product in the MVP. Here “viable” is determined by your customers, and the first viable product won't work as one must do multiple iterations to make it work to bring customers on-board.
Regular observation is also important to understand every single acquired customer since day one. This helps analyse the sort of changes noticed in customers, and understand which channel works, pitch, and client meeting worked.
Getting a monopoly has become harder over the years, he said. It's often hard to do business because of certain barriers, like rules and regulations, due to which only few businesses that comply with norms succeed. If one needs to do business, one must provide end-to-end solutions or practice vertical integration, by providing end-to-end service.
Owing complementary key processes is important to the success of any startup. Vikrama says, “ For example, if you own an e-commerce business, you also need to own logistics as well to provide a user-friendly experience. There are two types of markets:consumption and non-consumption in which needs don’t exist. For instance, before Facebook, the need to be online and check-in wasn’t there, but now users can go to social media and do things, as it became a need to post, check-in or share what one is doing at the moment”.
One way to define the addressable market is that the startup or the company can assure that they can create value for the investors. “So, out of Rs 10,000 earned I can give back ten percent of the saving to x customers in the market. This comes under the macro market value,” Vikrama added in conclusion.
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