Finding true product-market fit is a rare accomplishment that holds the key to unlocking revenue.

By Allison Long Pettine
May 18, 2023

Over the past five years, we have worked with and spoken to numerous founders at Ad Astra Ventures and Crescent Ridge. When the topic of product-market fit arises, almost every founder whose product generates revenue claims to have achieved it. However, the reality is that the majority of them have not.

During a recent visit to one of our portfolio companies, Esas Beauty, they excitedly declared, "We finally understand what it means to have real product-market fit, real revenue. It's as if our business has been unlocked!" If you do not share this level of enthusiasm about your sales and marketing efforts, it means you have not achieved product-market fit. Personally, I have been fortunate to learn about PMF through my partner, Vidya Dinamani, who is one of the most brilliant and strategic product leaders I have ever met. If you are a founder without someone like Vidya in your life, I recommend searching for such a person as soon as possible because it will transform your business.

So, how can you determine if you have PMF?

  1. Lower CAC: A distinguishing feature of PMF is being highly specific and confident about the customer's needs that your product solves. While this may sound simple, it is incredibly challenging to achieve. It requires time, testing, and the ability as a founder to set aside your own assumptions and empathize with the customer's mindset. Jenna Ryan, CEO of Uqora, focused on PMF right from the start with her UTI prevention line of supplements. She realized that demographic segmentation alone (age, gender, geography) would not be sufficient. Instead, she delved into her customers' mindset and behaviors, enabling her to identify the specific types of people who suffered from UTIs and needed her product the most. With this knowledge, she refined her messaging to address this specific need and thought creatively about where to reach her target audience. For Jenna, this led to the discovery that radio advertising was a highly efficient and effective channel for her initial go-to-market strategy.
  2. Higher LTV: Spoiler alert: achieving real PMF is not possible if you are selling a commodity. Don't waste your time searching for PMF in such cases; you won't find it. However, if you have a truly unique product that fulfills a deep need, you should observe increased engagement from your existing customers over an extended period. Alicia Long, founder and CEO of Nutr, not only experienced high customer engagement but also managed to increase her average order value (AOV) by launching Nutr Blends based on her understanding of her customers' needs. This not only allows Alicia to better serve her customers but also has a positive impact on their customer lifetime value (LTV), establishing a strong financial foundation that enables her to prioritize quality and sustainability—two aspects her customers care about as well.
  3. Efficient sales funnel: With true PMF, you should have a clear understanding of who your target customers are and equally important, who they are not. This translates to faster deal closures and a higher success rate. Doug Hecht and Laura Munkholm, co-founders of Walla, were among the rare founders who achieved true product-market fit even before creating their product. With decades of experience in the boutique fitness and software industries, they recognized that fitness studios were desperate for studio management software that genuinely helped owners become financially self-sufficient. They had a waiting list of 30 customers on the day they launched their SaaS product, with a 75% success rate in closing deals. They continue to utilize their PMF skills to refine their ideal customer profile. While other SaaS companies employ a "spray and pray" sales technique, their methodical and targeted prospecting is yielding fruit. They know the single, deepest problem of each customer profile, giving them the confidence to close sales and the courage to tell a potential customer no when they aren’t the best solution. 
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