What is Product/Market Fit (PMF)?

Product/Market Fit (PMF) is the perception that a product can meet the needs of a sufficient share of customers within identified market segments to sustain a viable product business for the duration of the relevant planning horizon. It indicates that a product has found a market that is willing and eager to use it. PMF should be a critical KPI incorporated into multiple product development processes, including product discovery, performance monitoring, and portfolio management. It helps prioritize product features and improvements that align with market demands.

Achieving PMF is crucial as it signals that a product has the potential for sustained market success. It allows for scaling up product development and go-to-market (GTM) strategies. Without PMF, a product is unlikely to succeed in the long term. PMF is measured using a set of conditions that include metrics, targets, and vectors. These conditions are often based on key performance indicators (KPIs) such as customer acquisition rates, customer retention rates, average deal size, and customer feedback.

Common misconceptions include:

• PMF is a single event that happens after launch. In reality, it must be maintained throughout the product lifecycle.

• PMF is only relevant to startups. In fact, all products need to achieve and maintain PMF.

• PMF is based on intuition. It should be based on clear, measurable KPIs.

• Achieving PMF guarantees a successful product business. While it is a strong indicator, it doesn't guarantee success due to other factors like poor GTM execution.

PMF must be continuously monitored and maintained as the market evolves. This involves regular tracking of PMF conditions, adapting strategies based on market feedback, and ensuring that the product continues to meet customer needs. History is littered with companies that lost PMF: 1.) Nokia with feature phones 2. Blockbuster with 3. Siebel. These companies failed to adapt to market changes and lost their PMF.