Swipe Files - 📂 The truth about Product-Market Fit

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News flash: the hard part about product/market fit isn't the product, it's the market.

Understanding your customers better than anyone else is a competitive advantage.

What I’ve found is that there are two types of companies:

• Companies that invest in customer research
• Companies that guess

In today’s market, features are mostly undifferentiated, there are more options to choose from than ever, and new startups pop up every day. The major difference between you and the next business is how well you know your customers.

Sure, you could make your best guess, assume some things based on what you know, or just operate based on past experience. But the fact is that we all know less than we think we do.

Your guesses, assumptions, or past experience could even be dead wrong. And that’s a scary place to be in.

The magic of customer research is that you don’t have to guess. In fact, your customers will tell you everything you need to know. You just need to ask.

Customer research helps you close the gap between what you know and what you think you know. Don’t you want to be able to predict what your customers will do or say, instead of just guessing?

A lack of customer research can be the cause of many startup woes:

• Customers are signing up but they’re churning out just as fast as they come in.
• Marketing experiments are expensive, inconclusive, or under-performing.
• Prospects are expressing a lot of interest but just aren’t closing into customers.
• New features and products don’t seem to be making a difference to revenue growth or product/market fit.

Customer research can help cure every single one of these issues. In fact, I'd go as far as to say that it can cure almost every business problem related to growth.

Customer research is necessary for every aspect of the business: product, marketing, sales, customer success, growth, operations. It informs the strategy for each of these components.

To illustrate, let's look at three case studies, all from the work of my friend Asia Orangio of DemandMaven.

Motivo

Here's how Asia used customer research to inform the growth strategy of a company called Motivo.

By interviewing Motivo’s existing customers (pre-licensed therapists across the United States), a very clear behavioral pattern emerged in how customers found Motivo, how they found competitive alternatives, and what the barriers to entry they were facing.

It was clear that customers and prospects leveraged the same formula to find a solution for clinical supervision, and it was by searching for clinical supervisors with their specific licensure in their state.

So they implemented landing pages for organic search, and leveraging paid search to test the effectiveness of the messaging.

From October 2018 to April 2019, Motivo tripled their MRR and doubled their monthly traffic — primarily through organic search.

Exposure

A very similar trend emerged with a company called Exposure.

By interviewing Exposure’s broad range of customers, patterns began to emerge in the way certain customers found and leveraged Exposure, including the features they valued most and their associated churn risks.

After completing the customer journey mapping process, it was clear that Exposure needed to optimize a few key landing pages, update new user onboarding, and the overall website — including refreshing the home page and the B2B case studies. It was all centered on a renewed focus on a specific type of customer.

As a result, the visitor-to-free-trial conversion rate of the home page increased by 68% — a remarkable improvement that directly translated into a 2% lift in monthly recurring revenue in less than 30 days.

Rindle

Finally, Rindle is a great example of how to customer research in a busy market.

First, they interviewed some of Rindle’s best-paying customers. These were customers who were generated either through sales efforts or inbound. Uncoincidentally, they also happened to be the most responsive and active in the Rindle platform.

By interviewing the first batch of paying customers, they discovered that the pain Rindle solved for their customers had less to do with pure “project management” and more do with workflow challenges and automation.

The next step was to re-align their marketing to cater more to “workflow automation” as part of their new positioning.

Re-positioning included:

• Completely re-writing the website’s messaging to focus more on value propositions related to workflow automation
• Producing new content related to workflow management and automation
• Writing an open ebook about project automation to help generate organic traffic from prospects searching for ways to automate their projects and processes, and contribute to both bottom-of-the-funnel activity and top-of-the-funnel awareness

They also removed the credit card required to start a free trial, smoothed the onboarding process as much as possible, and implemented an email sequence that booked demos with the founders for any free trialers who wanted a complete overview of the platform.

Rindle grew MRR by 6.7x, churn dropped from 30%+ to a very healthy 3.4%, and monthly free trial volume 3.5x within the year.

These are just a few examples of the power of customer research and why your market is the foremost important part of growth.

—Corey

p.s. over the holidays I created a short course on How To Beat Your Friends At Poker just for fun. Would love for you to check it out!

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