Children’s Guide to Testing for Product Market Fit
by Jayme Mendal
It’s an elusive goal, a moving target…I’ve heard some call it the holy grail. Yet I’m convinced that 90% of people who throw the term around have no idea what it actually is. “Product Market Fit”. The buzz word is used so often, but how should first time entrepreneurs think about actually assessing product-market fit?
I began this project overwhelmed by my lack of knowledge of technology and e-commerce. As a result, and not by choice, I was forced to keep things SIMPLE…and I’m glad I did. I tried to distill assessment of Product Market Fit down to the bare bones…something I can chew on to gain meaningful (albeit simple) insight, which can inform actual decisions, which hopefully drive my business one step closer to that holy grail.
SterlingKane.com is a vertically integrated e-commerce brand of high end men’s leather goods. Simply put, we sell our own brand of products through our own branded website. Assuming we drive the type of buyers we expect to be visiting our site, one of our most important metrics become conversion rate – how many people who land on our site buy something? I learned that Google Analytics can be configured to automatically measure this, but it is even easier to just manually measure using the visitors reported by Google Analytics and using your hands to count the number of sales you get over a specific time period. Don’t get caught up trying to automate a link between Analytics and some conversion metric! We just took the number of sales we made over the time period (which hopefully you should know!), and divided by the number of visitors that Google Analytics told us visited our site. And Voila… 0.7% conversion. So what?
This gives us a starting point, but in order to get a sense for Product-Market fit, we need more info. So we did two things. First, we looked for benchmarks. An average e-commerce conversion rate is 1-2%, so we know we’re not too far off. The next question is why are we low? To answer that, I used a survey with visitors who did not convert into customers. I simply collected visitors’ e-mail addresses and sent out a SurveyMonkey link. The survey was not some involved, conjoint, double blind, study. It asked a few basic questions, the most important one being: Why didn’t you buy? We found that 50% of people didn’t buy because we priced too high and another 20% because they didn’t like a specific feature of our products.
With this information, I still have no clue how close I am to ‘Product Market Fit’, but I know two concrete things I can do to get a few steps closer. I used this information to introduce new, lower priced products, without the feature that turned off a large set of prospective customers. Fingers crossed, but I expect conversion to bump upwards once these changes take effect, putting me just a tad closer to that holy grail.
So with these basic tools – Google Analytics and My Hands to calculate conversion, and SurveyMonkey to understand ‘why’, I was able to gain some meaningful and make concrete improvements to my offering which I expect drive the business in the right direction.
It’s an elusive goal, a moving target…I’ve heard some call it the holy grail. Yet I’m convinced that 90% of people who throw the term around have no idea what it actually is. “Product Market Fit”. The buzz word is used so often, but how should first time entrepreneurs think about actually assessing product-market fit?
I began this project overwhelmed by my lack of knowledge of technology and e-commerce. As a result, and not by choice, I was forced to keep things SIMPLE…and I’m glad I did. I tried to distill assessment of Product Market Fit down to the bare bones…something I can chew on to gain meaningful (albeit simple) insight, which can inform actual decisions, which hopefully drive my business one step closer to that holy grail.
SterlingKane.com is a vertically integrated e-commerce brand of high end men’s leather goods. Simply put, we sell our own brand of products through our own branded website. Assuming we drive the type of buyers we expect to be visiting our site, one of our most important metrics become conversion rate – how many people who land on our site buy something? I learned that Google Analytics can be configured to automatically measure this, but it is even easier to just manually measure using the visitors reported by Google Analytics and using your hands to count the number of sales you get over a specific time period. Don’t get caught up trying to automate a link between Analytics and some conversion metric! We just took the number of sales we made over the time period (which hopefully you should know!), and divided by the number of visitors that Google Analytics told us visited our site. And Voila… 0.7% conversion. So what?
This gives us a starting point, but in order to get a sense for Product-Market fit, we need more info. So we did two things. First, we looked for benchmarks. An average e-commerce conversion rate is 1-2%, so we know we’re not too far off. The next question is why are we low? To answer that, I used a survey with visitors who did not convert into customers. I simply collected visitors’ e-mail addresses and sent out a SurveyMonkey link. The survey was not some involved, conjoint, double blind, study. It asked a few basic questions, the most important one being: Why didn’t you buy? We found that 50% of people didn’t buy because we priced too high and another 20% because they didn’t like a specific feature of our products.
With this information, I still have no clue how close I am to ‘Product Market Fit’, but I know two concrete things I can do to get a few steps closer. I used this information to introduce new, lower priced products, without the feature that turned off a large set of prospective customers. Fingers crossed, but I expect conversion to bump upwards once these changes take effect, putting me just a tad closer to that holy grail.
So with these basic tools – Google Analytics and My Hands to calculate conversion, and SurveyMonkey to understand ‘why’, I was able to gain some meaningful and make concrete improvements to my offering which I expect drive the business in the right direction.
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