“Product Market Fit..!”
The Product Market Fit, or PMF in short, is one of the first holy grails that every entrepreneur strives to achieve. The second holy grail is also another “P” .. Profits. I will deal with Profits in a later blog post.
I will share my learnings of what constitutes a Product Market Fit for an Enterprise Healthcare product based on my journey of building HealthMacro’s DiagSmart product focused towards Diagnostics Labs and Radiology Centers.
I have travelled across 5–6 states spanning several cities, meeting hundreds of Diagnostic & Radiology Lab owners to come to this understanding.
An ideal product-market fit has the following characteristics.
Timeline: Usually for an enterprise product, it does take time (somewhere from 1.5 years to 2 years) to achieve a market fit after the product launch. Once one has achieved this, it means the following.
- Strong understanding of customer needs, budget and value chain:
Once you meet a customer, you know where he/she fits in the Price Chain. You have deep knowledge of his/her customers, competition, pain areas, revenues and annual budget.
- Acceptable across multiple segments:
Usually we build the first product with more features, and then realize customers do not want all or are not willing to pay for all features. So you segment it. Segment it based on # of users or # of features to make it affordable for a wide market.
We segmented it as DiagSmart Mini (lower end) to Basic (Value Product) with Enterprise and DiagSmart Premium models for top-end customers. Each model has differentiating values based on the price the customer is willing to pay.
- Strong understanding of your competitors’ strength and weakness:
Deep knowledge of your competitor’s strength and weakness, w.r.t. features and pricing, is key. You need to respect your competitor as you still discuss with customers when they will benefit from your offering.
In one instance, we had to segment the Product as a DiagSmart Mini to fend off competition with a lower price range model.
- Acceptable across regions:
In a country like ours, where there are no healthcare standards, in every region there will be local players who will have dominated the market with their product. Selling in newer regions and winning there is one important trait.
For our lab product, adherence to existing NABL lab format reports was the key to driving acceptance.
- Clear Value Proposition:
Your demo should do the work of showing how financially beneficial the product is to the prospect. You do not explain much. User experience is key here. Ensuring a flawless demo, where various customer stakeholders (owner, lab staff, finance, front desk…) find their needs met is key in the demo meeting.
Your rate chart should explain the cost in a simple manner and the customer chooses what he needs based on his budget.
Other Guidelines to ensure Successful Product Market Fit
Single Code Base
Once you allow a customization for a particular customer, it no longer remains a product. It becomes a project. You end up with multiple versions, resulting in larger teams to maintain it.
Hence a single code base is critical. There should be options turn on/off certain features/customizations, based on customer budget/needs.
You take inputs from the customer to the product, and based on the value to the product, you decide to add it to the road-map or not. All customers have one code base.
You have an efficient Customer Care or Post-Sales Support team to take care of all their needs, with a clearly tracked process. Customers know how to reach you and what to expect as turnaround time.
You should be able to support new cities/regions without having a local office/support center.
Customers get monthly newsletters informing them of the progress of the product and the company. They respond with their feedback, inputs.
Strong Testimonials and Referrals
You should start getting strong testimonials from customers explaining how your product or Service has helped them. They do not hesitate to recommend you.
Water-tight Agreement with Customers
You have strong water-tight agreements with customers protecting your business. There are clear descriptions of services, costs and timelines, termination clauses leaving nothing open ended.
Clear mapping of the entire Business Process
All processes Pre-Sales, Sales, Sales to Engineering handoff, Customer On-boarding process, Customer Care process are clearly defined. All processes are documented; clear training plans when you hire new folks. All members follow the same process.
In summary, you lead the customer/prospect overall in all aspects of business. You are not dependent on a few customers for their inputs/business. Customers respect you and trust you.
That’s when you have achieved “The Product Market Fit…”
This is the sixteenth part of a series by the author. Find the previous post here.