Success Through Product Market Fit
THE WORLD NEEDS INNOVATIONS.
BUT ONLY THOSE THAT ARE ADOPTED BY THE CUSTOMER.
Many innovative products, services and business models are not successful. Why?
A post-mortem analysis by the German High-Tech Gründerfonds has investigated the reasons for failed investments. The most common reason for failure was a lack of Product Market Fit.
A similar conclusion was drawn in a study conducted by the Tech Market Intelligence Platform CB Insights. In first place in the “Top 20 Reasons Why Startups Fail”, the survey also found “No Market Need”, i.e. the missing Product Market Fit.
Three reasons why the Product Market Fit of innovations is often insufficient for success.
MISSING TEST PROCEDURES
Every product is tested for functional safety and UX. This is necessary, but not sufficient. Success depends on whether a product provides added value for the user compared to the status quo.
Up to now there has been no test for value added. Hence innovators had to rely on their gut feel and experience.
MISSING CUSTOMER KPIs
Companies work with KPIs that describe the behavior of users they have already acquired, such as downloads, daily and monthly active users, churn rate and other key figures from the analytics toolbox.
In the early phase of diffusion, however, knowledge about the non-users is more important than knowledge about the customers already acquired. Only customers that have been acquired can convert.
MISLEADING CUSTOMER UNDERSTANDING
Most business model development frameworks assume that a customer will use a new product if it solves a pain point.
They overlook the fact that every new product not only solves Pain, but also creates new Pain.
“Never change a running system” describes the reality: The decisive factor is not the solved pain point, but the relationship between the solved Pain (the GAIN) and the expected NEW PAIN.
1. SCALE THE USER
We translate the customer view into a key figure that companies can use to link customer feedback with management processes.
PAIN GAIN TEST
On the basis of the PAIN GAIN customer construct, we have developed an agile test procedure that can be used across all industries. The PAIN GAIN TEST measures the GAINS and the new PAINs of an innovative product among the target group and shows levers for improvement.
PAIN GAIN INDEX (PGI)
From the ratio of GAIN to new PAIN we derive a key performance indicator (KPI), the PAIN GAIN INDEX (PGI), which correlates with the customer acceptance and use of an innovative product by the target group.
COMPARISON OF PRODUCT IDEAS, TARGET GROUPS, TARGET MARKETS
UScale has conducted a large number of PAIN GAIN projects in various industries and has gained a lot of experience. The PAIN GAIN TEST is ideal for comparing and prioritizing different product ideas. Alternatively, an innovation can be tested and evaluated with different target groups or in different target markets.
Further information on the PAIN GAIN TEST can be found in our WHITE PAPER on Product Market Fit.
2. SCALE THE BUSINESS
We manage the Product Market Fit in all phases of the life cycle.
1. THE EARLY PHASE
Usually there are more ideas than money and time for implementation. The PAIN GAIN TEST takes over the prioritization and shows which idea has the highest potential for success and which ones not. This helps innovators and investors to direct the scarce funds into the best ideas with the greatest future market success.
Requirements Definition is more than a list of functions to be implemented. The PAIN GAIN TEST shows developers which features must be prioritized and what is important.
3. MARKET LAUNCH
Innovative products often have many advantages and solve several problems. The PAIN GAIN TEST identifies the USPs that are most relevant to the target group’s purchase and usage decisions. Thus marketing learns which messages resonate best with customers and users.
4. MARKET PHASE: DIFFUSION AND CONVERSION
Innovative products are only economical if diffusion is fast. The PAIN GAIN TEST provides the levers for successful diffusion and higher conversion in the field.
Examples and case studies can be found in our WHITE PAPER on the Product Market Fit.
We prioritize innovative ideas from the customer’s perspective. With our university partners, we developed an agile method that can be applied across all industries.
We take over the due diligence from the customer’s point of view and thus provide the decisive information for the validation of the business case of planned investments.
ENGINEERING / IT
We support the requirements definition of projects and backlogs so that developers can focus on the functions that really count from the customer’s perspective.
We show the decisive drivers and barriers to marketing. This gives marketing the perfect basis for the agency briefing.
We show the sales force how to address new target segments most successfully. This way, diffusion and conversion accelerate. Sales becomes significantly more efficient and effective.