At the early stages of companies, we spend significant efforts to attain product-market fit or PMF (customers love the product and are paying for it). I posit that you must attain PMF before you begin to scale your company, if not, you will waste your marketing budget, and at the end, will be unable to retain customers.
When companies fail to attain PMF, most times, it is not that the product and the market (customers) cannot attain sustained transaction equilibrium, what actually happens is that the founder has not worked first to attain a Product-Channel Fit (PCF). We do ignore PCT which I think is a critical prerequisite to PMF.
You have built that product with Facebook as the channel. As you are about launching, Facebook changes its algorithm, making your product class harder to be distributed. If you do not understand that, you may think that your market is off when the real issue is that the channel is the problem. Of course, most times, we have no control on the channel; we can only control our product. So, everything falls back to the product.
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It is painful when you see fintech companies in Nigeria with mobile app-only strategy. I have no idea how they plan to attract mid-size companies . Those companies will never allow staff to access their financial resources via smartphones. If you check, the startups have missed the distribution channel fitness. (Most mid-size firms prefer to use a dongle to lock laptops or desktops to access their banking resources).
Pay attention to your product channel fitness even as you architect your Product-Market Fit.
To win in markets, you need to have a great product-market fit. It is a spot where the frictions in markets and the “forces” (the products and services) you are creating to overcome them attain equilibrium.
[Bear with me for using big grammar. My grandmother, Lechi, truly liked them because it showed that I was learning in secondary school. How do you come back from school without saying something she could not understand, after all the school fees? ]
So, when Peloton, an experience exercise company, which helped people do exercise at home, was raking it at the peak of the pandemic, I wrote: “before you invest, think beyond Covid-fit to market-fit”. In other words, that product must not just do well during Covid pandemic, but also when normalcy returns.
A new course in Tekedia Mini-MBA extrapolates this to include Model alongside Channel, Product and Market. The convergence of these four factors are catalytic in a company’s ability to scale. I hope to welcome you to Tekedia Institute as we study Product Development and Roadmapping.
Comment on Feed
Comment: Great words Ndubuisi Ekekwe , the reason for a startups inability to attain PMF may just be because the right channel hasn’t been discovered yet.
However, what do you have to say about companies that achieve false PMF? Where the supposed PMF attained is actually detrimental to scaling.
The startup had seemingly ticked all the boxes and customers are buying the product yet it’s failing to attract mainstream customers while using that model. What do you advise at that juncture sir?
My Response: From my perspective, there is nothing like “false PMF” – it is either you are there or not. What happens is this: most times, we use marketing blitz to cushion PMF. In other words, you sell $100 for $70 and think people are buying. But once you stop that promo, those customers go. Yes, you are unable to retain them, and if you are unable to retain customers, do not bother to scale.
In a course I am developing on this for Tekedia Mini-MBA, I added the power law of distribution to show how the greatest companies get up to 70% of their customers from a single channel. For Tekedia Mini-MBA, more than 80% of our learners come from LinkedIn (we have stopped updating Twitter).
Comment 2: so is it safe to say…. beyond finding the right distribution channel for a product , it’s also important to put it up against the varying conditions along the distribution channel ?
My Response: Absolutely. Those varying conditions are part of the factors. Zynga did well under Facebook Desktop. But when FB moved to mobile, Zynga faded. Of course, the company went back and acquired mobile-first gaming startups, to re-initiate growth. This is a dynamic game and never static.
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