Author: Andrew Goldner from GrowthX
So, what’s this product-market fit thing I keep hearing about from everyone? Think of it this way: you have an idea for or have already built a cool, innovative new product. Now what?
It’s time to start thinking about who will buy it, how much you should charge and the best way to reach your customer and get to a “Yes, thank you!” quickly.
Having product-market fit means that you’ve done the work with your customers and have figured out what steps you need to take to regularly get to that “Yes, thank you!”
In our words, product-market fit is when a known and repeatable set of activities intended to earn revenue creates a known, repeatable and intended set of revenue results.
If we had to boil down the process to find product-market fit into one sentence, we’d say, “Identify the person who’s willing to work with startups and who has budget, and find out what their highest priorities are that you can help them with.”
The Rise of the SDR
Back when Salesforce was founded, and early marketing team member, Aaron Ross, figured out that if he could make sure the sales team was selling, and not marketing, they would be more efficient at increasing revenue. In the process, he crerted a globally popular role that you have have heard of before: the Sales Development Rep, or SDR.
This is the person who communicates with customers to qualify them as a good fit, before they get access to a salesperson. That is, they look for the person who’s willing to work with startups and who has budget, and who have a priority problem that the company can solve.
Not-So-Predictable Revenue
Much of the early success that Salesforce had in scaling their revenue is attributable to Aaron and his team of SDRs. Aaron authored a very popular book with a catch phrase that’s also now known globally, Predictable Revenue.
But, that was a long time ago in startup years! Nowadays, the only thing predictable about running a persona-driven email campaign with 3-4 emails is lackluster results!
That’s because – thanks to Aaron’s popularity! – everyone is sending emails that are meant to create interest among your potential customers. Plus, the sheer number of startups has exploded.
The result? Getting someone to open your email and respond to it has never been harder. So, how do you find product-market fit in 2022?
Let’s start by identifying your top jobs as a founder:
- Product Development;
- Market Development; and
- Fundraising.
That’s a lot for a founder, even if you have a co-founder and an employee. That means being efficient is the name of the game.
Scaling your revenue activities without first identifying which of those activities are producing the intended results most efficiently creates a dangerous signal-to-noise ratio.
It’s counterintuitive, but to scale your startup, you first need to remove scale from your vocabulary.
Quality, Not Quantity
It’s time to move past high-level personas and identify your Ideal Customer Profile, or ICP. Your ICP is the bedrock that supports your entire path to product-market fit.
Are we talking about a target industry? Nope, get more specific. Companies with a certain amount of revenue? Nope, not targeted enough. How about a specific, target company? Nope, even more specific.
It’s ideal customer profile, not company profile. That means, we need to identify an actual person with the buying power and uncover what matters most to them.
Scale Down to Scale Up
Finding your ICP is uncomfortable for most founders because you will be disqualifying most revenue. But, not forever. Only, for now. And, it’s actually a good thing.
Do you really have enough free time to spend the necessary time simultaneously focusing on dozens of opportunities? Remember, it’s not just an auto-drip email campaign. This is not set-it-and-forget-it! You’ll need to be emailing, calling, reaching out via LinkedIn and generating useful content that all customers expect to find nowadays.
That’s why you need to do the work on your ICP so that you can spend all of your available time focused entirely on those customers who are most likely to have budget, have a priority problem that you can solve and who are poised and ready to do business with you, a startup founder?
We’re talking about ~ 25 highly targeted prospects. That equals ~ 50 sales tasks a week (researching, drafting, following-up, copywriting, Zooming, etc). That’s a lot of activity, so focus it on your signal and avoid the noise. Persistence among a small, targeted group is key.
The Reality of Product-Market Fit
As a founder, you have no more time today than founders of 10 years ago. But, nowadays, it takes more time and effort to acquire a new customer and figure out how to do it predictably.
To find product-market fit in 2022, spend your valuable and limited runway identifying Mr./Ms. Right Now – that is, your ICP – and avoid just doing activities that feel “scalable.”
We know it’s not easy. That’s why we created an ICP Starter Kit. It’s everything you need to take this important step for your business:
- An on-demand workshop with step-by-step instructions for identifying your ICP, along with a real-world case study drawn from our venture capital fund portfolio); and
- A downloadable template to apply what you’re learning to your company.
Click here to download it today!