How do you improve product market fit with customer feedback?
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— The LinkedIn Team
Product market fit is the degree to which your product satisfies the needs and wants of your target customers. It's a key indicator of your product's potential for growth and success. But how do you measure and improve it? One of the most effective ways is to collect and analyze customer feedback. In this article, you'll learn how to use customer feedback to improve your product market fit in four steps.
Define your value proposition
Your value proposition is the core benefit that your product offers to your customers. It's what makes your product unique and desirable. To define your value proposition, you need to understand your customers' problems, goals, motivations, and preferences. You can use various methods to gather this information, such as surveys, interviews, user testing, analytics, and reviews. Once you have a clear picture of your customer segments and their needs, you can craft a value proposition statement that summarizes how your product solves their problems and delivers value.
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It’s important to create a Segmentation analysis to determine which customers to target based on criteria like revenue and customer characteristics. A structured feedback loop from a variety of customer segments can reveal different insights critical to improving products and help adapt target messaging of the value proposition.
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Understanding customers, their challenges, desires and pain points forms the groundwork for honing a value proposition, which is a reflection of unique benefits of your offering. This understanding aids in meeting market fit. Specific outcomes, points of differentiation and concise language, along with avoidance of buzzwords, refine the proposition. Depth is added with the inclusion of tangible & intangible benefits and pricing per customer segment. Regular testing and adjustments made based on customer feedback keep the value proposition relevant in an evolving market. Ultimately, a strong value proposition serves as a differentiator in a competitive landscape, facilitating the capture of the most beneficial customer segments.
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Validate your assumptions
Once you have a value proposition, you need to test it against reality. You need to validate your assumptions about your customers and your product with actual data and feedback. You can use different techniques to validate your assumptions, such as landing pages, prototypes, minimum viable products (MVPs), and experiments. The goal is to measure how your customers respond to your product and its features, and whether they are willing to pay for it. You can use metrics such as conversion rates, retention rates, referral rates, and net promoter scores (NPS) to gauge your product market fit.
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Product value proposition validation ensures product-market fit, aligning with customer needs. Key strategies could also include: 1. Pre-Purchase Options and Crowdfunding Campaigns, assessing market interest. 2. A/B Testing for Landing Pages, validating assumptions and optimizing product presentation. 3. Evaluating Customer Lifetime Value (CLV) Against Customer Acquisition Cost (CAC), assessing business model viability. 4. Understanding the 'Why' of the Business, providing further validation. 5. Interaction and Observation, validating assumptions about product usage. 6. Using Analytics for Decision Making, ensuring growth. Successful validation leads to customer-centric innovation and product development.
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When you think you know the answer, you fail to ask the right question. Validating assumptions is KEY. When evaluating the techniques you can use to validate assumptions, don't forget about high touch, 1:1 phone interviews with customers. Not only will you uncover the insight you need, your customers will l feel valued, their feedback worth more to you than an online survey.
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Iterate based on feedback
Validation is not a one-time event, but a continuous process. You need to collect and analyze customer feedback regularly and use it to improve your product. You can use various tools and methods to gather feedback, such as surveys, interviews, reviews, ratings, support tickets, social media, and online communities. You need to identify the common themes, patterns, and insights from the feedback, and prioritize the most important and urgent issues and opportunities. You need to use the feedback to make changes to your product features, design, pricing, messaging, and marketing strategies.
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To enhance product validation beyond iterating on feedback, several steps can be taken. Detailed feedback analysis methods such as sentiment and keyword analysis can provide an understanding of customer sentiment and prevalent themes. Aggregating data from diverse feedback sources, followed by coding and refining helps prioritize actions. Sharing summarized feedback with the development team informs about customer expectations. Diverse channels for feedback collection provide a comprehensive customer opinion view. The method of feedback analysis such as manual, script automation or third-party software can be chosen based on needs. The key is taking appropriate action based on analyzed feedback.
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Also consider finding opportunities to watch customers using your product. There are points during the process when insight specialists can ask about a step that is being taken and gather information on the "why." You may learn more from the observation session than if you asked them for direct feedback. Explaining how a customer is using a product rather than only defining a target deliverable can guide developers towards uncovering different solutions.
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Monitor your progress
The final step is to monitor your progress and measure the impact of your changes on your product market fit. You need to track and compare your key metrics and indicators over time and see how they change as you iterate based on feedback. You need to evaluate whether your changes are increasing your customer satisfaction, loyalty, retention, referral, and revenue. You need to also look for signs of product market fit, such as word-of-mouth, organic growth, positive reviews, and low churn. You need to celebrate your wins and learn from your failures.
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In addition to monitoring and measuring product market fit, it is also worthwhile to monitor competitor reactions or responses. External changes can also impact your product market fit.
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Monitoring progress is indeed the final yet vital step. Tracking key metrics over time provides an overview of the changes and their impact on product-market fit. Evaluating whether our changes are increasing customer satisfaction, loyalty, and other important indicators helps us better understand our performance. Observing signs of product-market fit like positive reviews, low churn, and organic growth are all indicators of our success in improving our product-market fit.
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Here’s what else to consider
This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?
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Consider a “Customer Zero” approach where you invite your brand’s employees to test out and provide feedback of the product before testing with a customer base. This can eliminate multiple initial considerations by the time it gets to a controlled group of customers.
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Look into your competitors products and what their customers most have issues with and then improve your own product to prevent such issues
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