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Product market fit describes the event that a company develops a proven offering, whether through sales and other metrics, to meet the needs of a specific customer base.

Product market fit is critical for long-term business success, and serves as a significant milestone for startups. It provides validation for the company’s offering — and for the company as a whole — while setting the stage for future growth.

Companies struggling to find product market fit should take a market-in approach to identify customer problems and develop a differentiated solution.

Why Is Product Market Fit Important?

Before you build a product that you can confirm people will buy, both you and your team cannot afford to focus on other important strategies such as growth. In this case, these initiatives may be counterproductive if you haven’t first determined that your product appeals to a sufficient market to sustain itself and generate a profit.

How To Find Product Market Fit

Lack of product market fit is one of the biggest reasons — if not the biggest reason — why startups fail.

Clearly, the issue of how to find product market fit should be a priority for all founders and entrepreneurs. The market-in approach makes the matter easier because it relies on research and data to guide your product development and go-to-market strategy.

To get started, ask yourself these four questions:

  • How big is your market?
  • Who will be your customers?
  • Who are you replacing?
  • Is anyone else disrupting this market?

Today, an increasing number of new companies are founded by innovative technologists who have an idea and run with it. Few may happen to find product market fit with this approach. But your chances increase when you rely on research data to help understand your market and how you can stand out from the competitive crowd.


How do you know when you have product market fit? No single collection of metrics can confirm to any business the moment it achieves market fit. Some founders give credit to their intuition; and mention that when there’s a buzz around their product, it’s partially reflected in their sales.

If you’re looking for a more reliable answer, sales is a good place to start. However, there are several other metrics that can be implemented to serve as strong indicators.

When surveying potential customers or allowing them to test your product, does a certain piece indicate they will switch to your product?

Are some users who have rejected similar products on the market willing to try yours?

When user testing, do people group your product accurately with the right competitive offerings?

Do users demonstrate an understanding of your product’s differentiators or unique value proposition?

How do your underlying metrics (such as retention rates of users) measure up against those of your competitors?

Chen’s signals represent a mix of both qualitative and quantitative metrics. This is by design. Whatever methods your team uses to gauge success, you will want to include a mix of both as well. For example:

Quantitative measure:

  • Churn rate
  • Growth rate
  • Market share


  • Word of mouth

Sales Yield 

How much revenue are you generating, and how much are you paying sales staff to generate it? It’s a great sign once the former outweighs the latter.

Retention and Churn

Sales alone don’t matter if your customers purchase once and don’t stick around. Net retention rate not only measures how well you hold on to existing customers but also how successful you are at growing your business with them. If you’re a SaaS or other subscription-based business, you should also pay attention to renewal rate and its counterpart, churn rate.

Net Promoter Score

If you truly have found product market fit, people won’t just buy your offering. A Net promoter score measures how likely customers are to recommend your company, product or service and this can be measured with surveys or other data collection techniques.


Now, you should have a clearer understanding of the importance of product market fit. While measuring product market fit is important for all companies, there is no single, best path to achieving it. Unfortunately, to save the time, energy, and resources, this is where many business owners/entrepreneurs make the mistake of relying on the data gathered by others in a similar or different space.

You are trying to prove that your offer and product is better than your competitors, so why would you depend on their information?

If you are looking to cut costs and save on your time, consider utilizing the help of a professional. Here at MCDA CCG, INC., our services can provide you with ongoing support and accurate market-driven data to give you the ability of making important decisions. With a no-obligation discussion for you to learn more, why wouldn’t you pick up the phone?

Contact our team headquarters in Placentia, Orange County, California, to see how we can help with your product market fit today!

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