Have you achieved Product-Market Fit? Do you have your Value Proposition? And what is the difference anyway?
Value propositions and Product-market fit are related. You can’t have one if you don’t have the other.
Product-market-fit is a development milestone. In the Lean Startup approach, you reach that milestone when you’ve iterated through a build-measure-learn loop and have found the sweet spot for your product, when it responds clearly to the needs of your audience, the feedback you are getting is positive and your product adoption becomes much easier and starts to accelerate. In other words, you are no longer pushing a square peg in a round hole!
Value proposition is a fundamental building block of your business model, a foundational element for all your marketing, communication and sales tools. Value proposition is a statement:
- of the benefits your customers get from your offer, and you differ from the competition
- of why they should buy, from you
- of how your customers are getting their ROI from your offering
An example – the original iPod
Product-Market Fit: when Apple decided to enter the portable music player, they went through build-measure-learn loops to arrive at their final design. They tried models with different UI models and mechanisms.. They acquired and improved music management software to facilitate the transfer of music files from a Mac/PC to the device. They also looked at different models to buy new songs to add to the library and device. And at some point, the loop produced the product-market-fit equilibrium they launched with: a device based on a tiny hard drive, capable of storing 1,000 songs, managed with a scroll wheel interface, connecting to a Mac/PC music library managed by dedicated, simple to use, software (iTunes) with access to an online store for the purchase of individual songs at $0.99 in addition to whole albums.
Value Proposition: the original iPod value proposition would have been “Fit 1000 songs in your pocket, with a simple UI to manage your music on the device and your PC, and a store with millions of individual songs available for $0.99)”.
Some other great value propositions
- Pizza Hut: “Fresh, hot pizza delivered to your door in 30 minutes or less, or it’s free”
- Square: “Accept credit cards and increase your business revenue, without the hassle and expenses of dedicated equipment and fees, using your smartphone”