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10 considerations when testing product-market fit

Published: Nov 25, 2022

Who is your target customer?

Target customers are the people your company aims to serve with its products and services. They're the reason your business exists. If you're an entrepreneur, chances are you've been asked to identify your target customers. The best way to answer this question is to think in terms of market segments. A market segment is a group of people within your target market who share similar characteristics and who are likely to respond favorably to your products and services. By identifying target market segments, you can more effectively tailor your marketing efforts to reach the people most likely to buy from you.

What problem does your product or service solve for them?

A happy customer is the best sales tool that you could ever have, so focus on the positive things they have to say about you and your brand. If you've received good reviews and feedback on your products, you can use them to help influence the purchasing decision of your target audience. Tell your customers' stories using their own words and use their endorsements as social proof to help convince people to purchase your products or services.

How does your product or service compare to your competitors'?

When you're pitching your business to a potential investor, or a possible buyer, you need to know exactly how you stand out from the competition. If you can't easily answer the question "How does your product/service compare to other similar products/services?", you need to figure it out. Find your competitors, look at their offerings, and do your best to differentiate yourself. Use your company values to guide you. What is it that makes your company unique? What is it that makes your company stand out from the crowd? What is it that makes you better than your competitors? When you can answer these questions easily, you will have no trouble pitching yourself to investors or buyers.

How are you marketing your product or service?

It's easy to get lost in the weeds when answering this question. There are so many different tactics and channels to consider: paid ads, PR, content marketing, SEO, email marketing, social media, and the list goes on. Don't get bogged down by the details. Instead, try to keep the answer simple and straightforward. For example, "we focus on content marketing and SEO." Or, "we focus on paid ads, PR, and social media." The goal is to give the interviewer a high-level overview of how you're marketing your product or service.

How easy is it for customers to find your product or service?

The answer to this question should always be optimistic and focused on your product's unique selling point (USP). For instance, if you're an entrepreneur in the fashion industry, you could argue that product discovery is easy for customers as they can simply look at the products in person. Even if they can't see the products in person, they can always look at pictures of the products on social media. This is because social media is a big part of the fashion industry and almost everyone uses it. You should always highlight the USP of your product and how easy it is for customers to find that USP.

How often do customers use your product or service?

The answer to this question can help you identify the frequency of your customer's interaction with your product or service. It could also help you identify the most common channels and how you can improve them to better serve your customers. You need to ensure that your customer experience is as seamless as possible so that even if a customer only has contact with your business once, they'll have a positive experience that will encourage them to come back.

How much are customers willing to pay for your product or service?

It's important to understand your target market to answer this question. How much are customers willing to pay for your product or service depends on how much value your product or service provides to them. For example, a customer may be willing to pay $100 for a pair of glasses if they provide them with the ability to see clearly. However, if the same customer could receive the same value from a pair of glasses that only cost $50, they may be more inclined to purchase the cheaper pair.

Understanding your target market and the value your product or service provides will help you determine how much your customers are willing to pay.

What is your customer churn rate?

The customer churn rate is the percentage of customers who stop doing business with you. It's a crucial metric for any business, as it tells you how well you're serving your customers and how likely they are to continue doing business with you.

If you're not sure how to calculate your customer churn rate, here's how: take the number of customers you lose during a given period (divided by) the total number of customers you had at the beginning of that period. For example, if you lost 50 customers in a month and had 1,000 customers at the start of the month, your customer churn rate would be 50/1,000, or 5%.

What is your customer lifetime value?

When answering the question "What is your customer lifetime value?", you should be thinking about how much money each customer spends with your business over the course of their lifetime. This does not just mean the amount of money they spend on their first transaction. It also includes any additional spending they do with you in the future. To calculate this number, you will need to have access to your customer records, as well as your sales data. Once you have that information, you can use a formula to calculate the total amount of money each customer will spend with your business.

##How much do you spend to acquire a customer?

When answering this question, remember that you do not need to provide specific numbers. The interviewer is looking for insight into your marketing strategy and how much you're willing to spend to attract new clients. While you should never lie on a job interview, you do not need to give out specific numbers.

Your response can be something like, "It really depends on the industry and the client base. Typically, it costs us $50 to $150 to acquire a new client, but we are always willing to spend more if it means we can get a great client." This answer provides insight into your marketing strategy while not answering the question directly.

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