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Questions and Answers
What is the main reason businesses invest in customer retention efforts?
What indicates that a brand is successful in fulfilling the needs of its customers?
What is the consequence if customers only remain with a brand due to its pricing?
What is a significant component that determines how well a product will do in the target market?
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What is the goal of conducting surveys about user referrals?
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What is the five-step model known as in the context of business growth?
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What is the most accurate indicator of success in the context of pirate metrics?
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What is the significance of investigating in-app stats?
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What is the rate of adoption an indicator of?
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What is NPS an example of?
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Study Notes
What Is Product-Market Fit?
- Product-market fit is when a product and market are perfectly matched, resulting in customers recognizing the value of the product, reduction in churn, and customers becoming promoters.
- It means most customers come from referrals, there is a steady inflow of customers, and the product efficiently solves an important problem in a profitable market.
Product-Market Fit vs. Go-to-Market Fit
- Product-market fit is ensuring there is a demand for the product before bringing it to market.
- Go-to-market fit is determining the best way to reach customers after identifying a market that is willing to buy the product.
Achieving Product-Market Fit
- Determine your Ideal Customer Profile (ICP).
- Research underserved customer needs.
- Define your value proposition.
- Lockdown your Minimum Viable Product (MVP).
- Build prototypes.
- Test your MVP with customers.
Measuring Product-Market Fit
- Net Promoter Score (NPS): measure the proportion of promoters minus detractors.
- Lifetime Value (LTV) to Customer Acquisition Cost (CAC) ratio: ensure the revenue from customers is higher than the cost of acquiring them.
- Churn Rate: measure the rate at which customers stop doing business with the company.
- Retention Rate: measure the percentage of customers retained over a certain period of time.
- Virality: measure the willingness of customers to recommend the product to others.
Pirate Metrics (AARRR)
- Acquisition: measure the number of new customers acquired.
- Activation: measure the number of customers who start using the product.
- Retention: measure the number of customers retained over time.
- Referral: measure the number of customers who refer others to the product.
- Revenue: measure the revenue generated from customers.
Examples of Product-Market Fit
- Netflix: continuously enhanced its product to adapt to changing consumer preferences, ensuring a successful product-market fit.
- Google: introduced AdSense, satisfying a previously unsatisfied need in the search engine market, leading to $209 billion in yearly revenue.
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Description
Learn how to establish a good product-market fit by determining your ideal customer profile, researching customer needs, defining your value proposition, and more. Test your knowledge on building successful products.
