Finding the optimal product-market fit, quick!
Here you are: you’ve spent months developing an MVP but don’t feel confident about launching yet. If only there was a simple way to measure product-market fit…
Rejoice: the world of startups is turning towards a new indicator, the Net Disappointment Score… The NDS is proving itself to be a good indicator of product-market fit and a great KPIs for startups, labs and other innovation-driven teams.
So how does it work?
The NDS asks how disappointed you’d be if you could no longer use the product you’ve just tried. As you can guess, it all starts with a few questions in a simple survey of your existing product user:
1. How would you feel if you could no longer use [product xx]:
2. What type of people do you think would most benefit from [product xx]?
3. What is the main benefit you receive from [product xx]
4. How can we improve [product xx] for you?
As you can see, it’s a pretty simple Product in Use type of survey, but with the benefit of being more actionable and having a single KPI you can use to steer product development and share as a proof of concept with potential investors. Why not do a full Product in Use survey? You could, but the NDS is cheaper and faster, and goes only to existing users, so that you can repeat it regularly and go faster by prioritising the features that users really value. If you like stats, you’ll know you ideally need a sample size of at least 30 users, so the methodology is better suited for B2C businesses where it’s easier to get a large number of users. For B2B, you might be able to find several users within the same customer company and get your numbers that way. If you don’t, then it might be worth doing a few more rounds of surveys to get signifiant enough results.
Ok, you’ve got your survey results, now what?
You want to look at 2 numbers from the first question: the percentage of “very disappointed” people, which needs to be above 40% to indicate a good product/market fit, and a Net Disappointment Score (subtracting the “ Not Disappointed” from the “Very Disappointed”), which needs to be positive to indicate a good level of customer engagement. If your first results meet these benchmarks, congratulations: you can probably still improve further, but your offer seems already a good enough product-market fit to launch. If they do not, well, celebrate as well: you just saved a lot of money and will get a clear direction to improve!
Indeed, step 2 of the process is to start cross-analysing the answers to question 1 with the answers to questions 2–4.
What we now want to do is segment and profile the users who would be “most disappointed”: they are your core market and should become influencers. Who loves your product? Can you identify and common points? Most importantly, what is the single thing they value most? This is your core value proposition (CVP).
You can also look at the answers from the “somewhat disappointed” group: do they like the same feature as the top group? Having a view of what comes second and third in terms of features will help prioritise your product development roadmap, to both increase loyalty amongst the top group — and turn them into raving fans and advocates- and increase your reach and market potential. Knowing what’s holding back the “somewhat disappointed” is key to improvement! You want to spend half of your development time doubling down on the key benefit (CVP) and half addressing objections (from the “somewhat disappointed”) to increase the size of the pie.
OK, you’ve got an idea of your core market and core value proposition, and your product roadmap is clear in terms of the next functionalities you should be adding. It’s time to move to implementation and work on V2 of your MVP, then repeat the survey, and do it all again until your scores are good enough for launch. Keep tracking your scores and improving product-market fit.
Congrats, you’ve sorted the Value Prop. You just need to complete your business model by sorting your Value Delivery and Value Capture… but that’s for a different article!