Do You (Still) Have Product-Market Fit?
Startups think a lot about product-market fit (PMF). Established companies? Not so much.
This is a missed opportunity.
Established businesses tend to assume that a track record of financial sustainability indicates having reached and maintained PMF. This is not necessarily the case. Companies must evaluate PMF with each new market expansion or product innovation and continuously re-evaluate.
The concept of PMF is relevant whether you sell products or services and whether you’re a 100-year-old or 100-day-old company. Every company I work with is trying to grow. Growth requires improving current offerings, expanding to new markets, or offering new products or services—none of which can occur without a foundation of successful PMF.
Purpose-driven businesses especially benefit from PMF. When we offer true value and solve real customer needs, we don’t need aggressive or manipulative sales and marketing tactics to acquire customers. As Peter Drucker says, “The aim of marketing is to know and understand the customer so well the product or service fits him and sells itself.”
So What is Product-Market Fit?
While the general concept of selling products that meet a market need has existed since the industrial revolution, Marc Andreessen popularized the phrase in his 2007 blog post, “The only thing that matters”. His description: “Product-market fit means being in a good market with a product that can satisfy that market.”
But what is a good market? And what is a product? Let’s break it down with my own definitions as they pertain to PMF:
This includes not just traditional products, but also services, experiences, information, and ideas offered or sold as concrete units (digital, physical, or conceptual) that deliver value to the customer. This definition is particularly important in the services sector where the salable unit isn’t obvious. Service examples include a month of consulting advice, unclogging a drain, or a year-long access to software.
The most critical element of this definition is sharing a common problem. Industry verticals aren’t markets. They are often too large and don’t necessarily share a common problem. Your market must be big enough to deliver your revenue goals, but specific enough that you can offer a valuable (and concrete!) solution to the shared need. Market specificity should set you up for a compelling “right to win.”
Your market ideally speaks the same language, shares common triggers, and is a set of individuals vs. entire organizations. Examples include health-conscious Gen Z consumers who track their macros, sustainable children’s apparel shop owners, or B2B SaaS Product Managers using Jira for project management. As your business scales, so too can your market. For example, Dropbox started with tech-savvy creatives who needed to share large files, and now, it serves nearly anyone needing digital file storage.
Product-market fit exists when a specific market consistently chooses your solution to solve their shared problem because it delivers superior value at an acceptable price.
How Do You Know if You Have Product-Market Fit?
Traditional PMF metrics, such as organic growth, Net Promoter Score (NPS), customer lifetime value (CLV), repeat or retention rates, are useful indicators of success. But they don't tell you why customers value your offering, how to improve it, or how sticky you are.
My favorite indicator is a question from authors Sean Ellis and Morgan Brown in their book, Hacking Growth:
The authors’ benchmark (based on working with over 100 tech startups) states that if more than 40 percent of your answers are “very disappointed,” you have achieved PMF.
To avoid catering to everyone, the authors suggest improving the product using the “very disappointed” group’s suggestions rather than input from those who are “somewhat disappointed” because it focuses your improvements on your best customers’ needs.
While the 40% benchmark may vary across organizations, this question is helpful for all businesses. It strips away attributes that may muddy the data, such as brand perception, strength of customer relationships, aggressive sales or marketing tactics, and switching costs.
Instead, the metric exclusively focuses on product value. It helps you understand how replaceable you are. For example, someone may be “very satisfied” with your quality or service but “not disappointed” if they couldn’t use your product anymore because of suitable alternatives.
Ask this question (followed by “why?”) every time you revalidate existing PMF. It’s also an extremely helpful question to ask after initial pilots for new product launches or expansion into new markets. Being able to answer this requires a handful of customers to have actually experienced the product or service. Sometimes, businesses pour tons of resources into product launches without first validating PMF.
How to Ask:
In customer reviews and customer advisory board meetings
Through formal customer research (surveys, qualitative interviews, and pilot programs)
During trade show conversations and industry events
Via prospect discovery meetings and market interviews
How to Improve Product-Market Fit
If you don’t have PMF or you have lost PMF (due to market changes, new competitors, or cuts that have resulted in lower quality or performance), you must modify your product or market. It’s an iterative process of refinement to maximize value creation for your customer.
Lack of PMF usually comes down to four common pitfalls:
1. Lack of Customer Understanding
You can’t solve a problem you don’t fully understand. Most companies think they know their customers but may have dangerous blind spots, especially as the external market shifts. In some cases, businesses have too broad a customer base which prevents them from identifying the primary problem they address.
Example: In her first job, positioning guru April Dunford called users of an unsuccessful startup product. The first 20 people said they hated the product or couldn’t remember using it. The 21st said it changed their life. After 100 calls, 94 users had no interest. Six said the product was life-changing. Thanks to those six users, instead of killing the product, her team clarified the product’s specific use and refined its features.
What to do:
Create a monthly “customer connect” program where leadership directly engages with customers (no sales agenda!)
Map the complete customer journey, focusing on pain points, use occasions, and triggers
Implement feedback collection systems at key touchpoints (particularly after purchase and first use)
2. Wrong Customer
Catering to the wrong customer is doomed to fail. You must validate a real problem for which a customer will pay for a solution.
Example: Dinnr, a meal-delivery app, created meal kits for special-occasion home cooking, delivering pre-portioned ingredients and recipes for romantic dinners. Their assumption failed when they discovered that target customers preferred buying ingredients locally or ordering ready-made meals.
What to do:
Analyze your most satisfied customers to identify common characteristics and use cases
Exit or deprioritize segments where you can’t deliver exceptional value
Reallocate resources to segments where you have a clear competitive advantage
3. Wrong (or Outdated) Solution
Your solution may not effectively solve the customer’s problem, even if there’s a clear market need. For established businesses, a solution that may have worked ten years ago is now outdated and doesn’t reflect the changing needs of the customer. Kodak didn’t evolve to meet digital photography needs, and Blockbuster ignored streaming; both became irrelevant.
Example: EventVue built a platform for conference attendees to network before events. Organizers loved the concept but weren’t willing to pay for what they saw as a non-essential feature, revealing a fatal flaw in the business model.
What to do:
Analyze how customers currently solve their problems (including non-traditional competitors and workarounds)
Identify which features or benefits drive the highest and lowest satisfaction before investing in improvements
Validate that your solution delivers better outcomes than an alternative
4. Poor Solution Quality
No amount of marketing can compensate for a product that doesn’t deliver on its core promise. That promise is an always-moving target as the competitive environment changes and customer expectations evolve.
Example: Tesla’s early Roadster, while revolutionary, had significant quality issues that limited adoption. They had the right customer (luxury performance car buyers interested in sustainability) but needed to improve quality before achieving true PMF.
What to do:
Implement quality metrics that directly tie to customer success measures
Create rapid feedback loops between customers and product development
Focus improvements on product elements that create real customer value
Rethinking Product-Market Fit for Purpose-Driven Business
Traditional PMF frameworks overlook a critical third dimension: values. When we expand beyond just product and market to include values, we create a more comprehensive model that considers impact on all stakeholders—employees, community, environment, supply chain. Alignment with customer values and societal needs creates a foundation for sustainable innovation and growth.
This expanded approach reveals common PMF failures in established companies:
Selling what exists rather than creating what's needed
Using marketing to mask poor product-market fit
Ignoring the negative externalities of their solutions
Failing to evolve products as values and needs change
Consider Instagram’s recent launch of its Teen Account, a response to years of criticism about negative social impact. This example shows that companies must evolve beyond traditional PMF to consider broader societal impact and alignment of values.
Product-market fit isn’t a destination—it’s an ongoing journey of alignment between your solutions and evolving customer needs. For purpose-driven businesses, this journey must balance commercial success with positive impact. True PMF allows your marketing to focus on authentic connection and value communication rather than manipulation or artificial demand creation.
Regular PMF assessment gives you early warning signals when market needs shift, helping you adapt through innovation rather than aggressive marketing. By maintaining strong PMF, purpose-driven companies can grow sustainably while staying true to their mission and values.
