How to evaluate Product-Market-Channel fit in an internet business?
Evaluating Product-Market-Channel Fit (PMCF) is crucial for understanding how effectively your business is reaching and engaging with its target audience through chosen channels.
The following are the measures of PMCF evaluation, moving from leading indicators and inputs to output measures.
1. Channel Alignment:
Assess if the chosen channels align with your target audience's preferences and behaviors. Are your potential customers actively using these channels? This can be determined through market research, customer surveys, and analyzing demographic data of channel users.
2. Engagement Analysis:
Examine how your audience interacts with your product on these channels. High engagement rates, such as likes, shares, comments, and click-through rates, indicate a good fit. Use analytics tools to track and analyze these metrics.
3. Conversion Tracking:
Are the channels leading to conversions? Track metrics like conversion rates, sales generated, and lead quality. This will help in understanding if the channels are just creating awareness or actually driving sales.
4. Cost-Effectiveness:
Evaluate the cost-effectiveness of each channel. Are the customer acquisition costs (CAC) reasonable in relation to the lifetime value (LTV) of the customers acquired through these channels? This analysis is vital for sustainable growth.
Conclusion:
Just because a product/service is useful for one market/customer persona, doesn't mean it is useful for everyone. That is to say, a startup achieves PMF for a specific product and for a specific market.
Similarly, a startup might have PMCF for one or more channels. However, PMCF has to be measured for each channel separately.
Additionally, it has to be tracked regularly given the change in scale, targeting, messaging, etc., can also alter PMCF.