Why is Product-Market Fit So Important When Developing a Product?


When it comes to SaaS businesses, finding a product-market fit is essential for them to be successful. A product-market fit is when a corporation creates a solution that meets the needs of customers in the marketplace. A company needs a clear understanding of its target audience and what they need out of its product to create something that satisfies these needs.

To find this elusive product-market fit, many startups turn to tools like customer discovery, market research, and user Testing. These tools help companies learn more about their target audience and their needs so they can start creating products that meet those demands. Once a business has found its target market, it needs to develop an effective plan for growing it. It means creating products that appeal to users and ensuring they are easy to use and provide value. It also means marketing these products effectively so potential customers know about them. If done correctly, these steps should lead to success for the SaaS business.

What is product-market fit?

Product-market fit is the degree to which a product meets the needs of a particular market. A company has a product-market fit when buyers in that market widely adopt its products.

Product-market fit is essential for any company that wants to build a successful business, especially in the early stages when resources are limited, and every decision can make or break the business.

There are several reasons why having a product-market fit is so important:

  1. It allows you to focus your scarce resources on areas that will significantly impact your business.
  2. It helps you attract more customers and grow faster.
  3. It increases your chances of success and survival as a company.

Some examples of SaaS product-market fit 

  1. Spotify built a music streaming service that appealed to the masses by matching listeners with similar musical taste profiles. They then used this data to personalize recommendations for each user and quickly grew their market share.
  2. Airbnb developed an online platform that allowed people to find and book lodging anywhere in the world, quickly becoming popular among tourists and locals. By understanding their users’ needs and tailoring their products accordingly, they built a trusted community of users who continue to use their services today.
  3. Slack became one of the fastest-growing companies because of its SaaS product – Teams – which helps teams communicate better and work together more efficiently.

Importance of Product Fit for SaaS businesses?

Product market fit is essential for SaaS businesses because it allows them to assess whether their product can meet the needs of their target market. It also allows them to validate their business model and ensure that they can generate revenue from their creation. With a good product-market fit, it is easier for a SaaS business to be successful in the long term.

A business that provides SaaS software relies on the customer to use the software regularly. As customers become increasingly accustomed to using SaaS applications, it becomes more work for them to move away from them. Additionally, as technology advances, customers are more likely to switch from desktop computers to laptops and mobile devices, requiring businesses that provide SaaS software to be constantly aware of new platforms and devices. Finally, with so much competition in today’s market, it is vital for a business providing SaaS software to have an innovative product that can differentiate itself from its competitors. Why is it so important for SaaS businesses?

The rise of SaaS has fundamentally changed the way businesses operate. The ability to deploy software as a service (SaaS) lowers costs and allows companies to work from anywhere in the world. This trend is only going to continue as more and more businesses shift their operations online.

Steps to executing a successful SAAS product-market fit:

1. Evaluation of the customer problem:

SAAS companies should consider what problems their users are trying to solve or how they use their products.

2. Evaluation of existing solutions:

Once the problem and solution are understood, it’s essential to decide if any existing solutions can be used as starting points for a potential SaaS offering. If so, it’s necessary to review those offerings closely to understand how they work and their deficiencies.

3. Analysis of the competitive landscape:

Understanding the competition in terms of technology and customer base is essential. This information can help create a roadmap for how best to compete and grow over time.

4. Product discovery:

Once the requirements for the product have been identified and evaluated, it’s time to begin looking at possible applications that could meet those needs within the organization or market segment targeted by the company. This process is often referred to as “product ideation,” which involves developing novel ideas for products or features that appeal to customers or address specific pain points on their behalf.

5. Launch your product

Track product performance metrics and adjust to continue moving closer to your desired outcome (profitability, market share, etc.).

How to measure Product-Market Fit?

There is no one-size-fits-all answer to this question, as the best way to measure product-market fit will vary depending on the specific situation and company. However, some standard methods that SaaS founders can use to measure their product’s fit include market analysis, customer feedback surveys, interviews with customers and users, competitive intelligence research, and customer segmentation.

Conversion rate and usability are two important metrics to track when measuring the success of a SaaS product. If the conversion rate increases and users continue to interact with the product, it can be inferred that it meets users’ needs. Similarly, if usability improves, this may indicate that users find the interface easy to use, which could lead to higher conversion rates.

Here are several factors that will indicate that your product has become market ready.

1. You have a working product.

It means that you have a prototype or demo version of your product that potential customers can use. If you are still in the early stages of development, this may not indicate market readiness, but it is a good sign that you are progressing and will eventually release a product to the public.

2. You have signed up a significant customer base.

Once your product is ready and released to the public, you must attract and build your user base. It is important to note that having a large customer base does not mean your product is ready for market; however, it shows that there is demand for your product and that you are executing well on your business plans.

3. You have conducted market research.

Before releasing your product to the public, it is essential to research what other products are available on the market and what people want from them. This information can help you identify gaps in your offering so that you can address them before launch (for example, if most competitors focus on features rather than price). Additionally, conducting adequate market research can help you understand how much money you will need to invest in bringing more users onto your platform.

You can check out our recent blogs for detailed information.


For a product to be successful in the market, it needs to solve a problem for users. Product-Market Fit is one of the essential pieces of this process because it indicates that you’ve found your target audience and a way to solve their problems.


Because with a solid product-market fit, it’s easier to acquire and retain customers. And with customers, it’s possible to make money.

The good news is that there are ways to increase your chances of finding product-market fit. One way is by validated learning, which involves testing your assumptions about the market and the product with real users before launching publicly. This helps you avoid wasting time and resources on building something no one wants or needs.

Another way to increase your chances of success is by talking to potential customers and getting feedback early on in the process.