How to Assess Product Market Fit with the Sean Ellis Test

How to Assess Product Market Fit with the Sean Ellis Test © Shutterstock | BloomuaThe article introduces you to the Sean Ellis Test for assessing Product Market Fit. Further, the article explores the benefits and limitations of the Sean Ellis test, and finally discusses in detail how to properly apply the test for a positive outcome in your business.INTRODUCTION TO THE SEAN ELLIS TESTThe term ‘Product Fit’ is used interchangeably with ’Market Fit’. For the purposes of this article, we shall prefer the term ‘Market Fit’.Market Fit can be described as the precise point in time which your businesses product evolved to become attractive and satisfactory to a segment of the market and, hence, you are able to scalably grow your business.In a lot of ways, finding your market fit allows you to quickly focus on your businesses growth as opposed to spending most of your time and money reinventing your product over and over in order to find that perfect fit. Unfortunately, most businesses will normally get stuck in that state. Without a m arket fit, it will be difficult for your business to get that much needed boost that inspires the necessary growth in your business.Sean Ellis runs a project known as Growth Hackers whose purpose is the assistance of startups in their post market-fit period. As a mandatory condition of taking on clients, Sean Ellis would conduct a qualitative survey on samples collected from a business’s consumers in order to determine whether their product or service has achieved a market fit. This is what was to become known as the Sean Ellis test.The main question of this survey as well as the options given was:  How would you feel if you could no longer use the product/service?Very disappointedSomewhat disappointedNot disappointedWhere you found that over 40% of your consumers responded that they would be Very Disappointed if they could no longer use your product, then there was a good chance that you were in a position to attain a sustainable and scalable consumer acquisition rate on your pro duct or service. This 40% mark was determined through the comparison of results acquired form hundreds of startups. Those startups that received a 40% and above responses of Very Disappointed were able to establish a sustainable scale of business. On the other hand, those startups that fell significantly below the 40% mark always seemed to struggle to attain the same sustainability.There are numerous definitions for ‘Market Fit’ and ‘Product Fit’ and this can make it a difficult concept to get your hands around. Do not worry; this article will discuss how the Sean Ellis test is applied to determine market fit in further detail. As a result, we hope that you will have grasped the concept of market fit by the end of the read.By applying the Sean Ellis test, you have a quick way of determining your business’s market fit. Where one has acquired sufficient good-fit consumers (at least 40%); they will be in a position to make informed decisions on matters concerning their busine ss’s product or service. For example, whether to heighten product/service development, or scale-up the sales, or even the evaluation of their marketing strategy.Sean Ellis recommends reserving the survey for:Consumers that have experienced the core of your product or serviceConsumers that have experienced your product or service at least twiceConsumers that have experienced your product in the past two weeksLearn what Sean Ellis has to say about growth hacking and high speed testing. BENEFITS AND LIMITATIONS OF THE SEAN ELLIS TESTPrior to looking into how the test is really applied in business, let us explore the upsides and downsides of the test.BenefitsSimplicity. I think we can all agree that the simpler the metric the more people will be inclined to apply it. Even the best informed businesses end up with a collection of performance assessment tools and metrics, but have no real understanding of how to apply them in helping their business grow. The Sean Ellis market fit test, h owever, avoids this issue and presents a metric that is easy to understand, calculate, and analyze; a metric that is generally easy to use.Consumer Oriented. A lot of people consider the determination of market fit a complex activity. In essence, it should be quite simple. It all boils down to finding out if people are interested in the product or service that you are offering.Many businesses fail not because they are poorly managed or that they lack enough funding. Most businesses fail because they persist in the production of products or services that no consumer is in need of. The Sean Ellis test aids your businesses by keeping it on its toes and reminding you what the biggest determining factor of any business’s success is; the Consumers. As opposed to fixating on a lot of irrelevant data, the test goes right to the source and tells you exactly how your product and services are being received in the market.It is not unusual to lose track of our consumers’ needs and focus on intimidating terms such as ‘Market Fit’ and ‘Product Fit’ when the issue is really about ensuring that your consumers are satisfied with what you are offering.LimitationsFails to Harmonize Intention and Action. In the test’s defense, this is a problem that can be found in any survey out there. This is because there is always a difference in what people will say and what people will actually do. Because of this, the test does not really guarantee that the responses gathered in the survey, actually predict to pinpoint accuracy the consumers’ actions. If your business solely depends on the test to guide it its growth, you will be exposing that business to a myriad of risks. As much as surveys are handy, it is much safer place your bet on what your consumers are actually doing; pay attention. Therefore, the Sean Ellis test at the end of the day will only be effectively used as a compass for market fit and not its determinant.Does not guarantee Success. As mentioned above, th e Sean Ellis test is only an indicator that you are moving in the right direction; that your business is in the safe zone in terms of reception by consumers. However, a positive response (40% and above) does not instantly indicate that your business is going to be a success. Your product or service’s market fit may be a little more complicated than the test may make it appear. It is completely possible for your business to pass the 40% mark and still crash and burn in attaining a truly stable place in the market.Therefore, the Sean Ellis test is only effectively applicable as a confirmation that your current approach stands a chance of success, but it is not proof or guarantee of success in the long-run. Again, in the test’s defense it is impossible for any test to give you a Yes or No guarantee; especially when we are trying to predict the future; to peer and see if a business will find its own stable place in the marketplace. Although the Sean Ellis test for market fit is not perfect, it definitely plays a major role in evaluating the health of your business. It allows you to check the reception from the very people that determine your success or failure; your consumers.Watch Sean Ellis talking about product market fit and scaling a company. HOW TO ASSESS YOUR PRODUCT MARKET FIT WITH THE SEAN ELLIS TESTIn the business world there is the prevalence of discussions on market fit and how it can be attained, but not nearly as much discussion on how to measure market fit for businesses. We get lost and fascinated by fancy terms and forget that the most important thing is the consumers. Well this article sets itself apart. This section of the article presents you with a procedure to follow in the proper application of the Sean Ellis test for market fit.As mentioned above, the question posed by the Sean Ellis test is, How would you feel if you could no longer use the product? The very first question you should ask yourself is how many participants are necessary for you to get conclusive results. The answer to this is not definite. Of course the more participants you get the better, but this does not imply that you should wait until you 1000 participants to commence analysis; a sample from about 50 participants could give you just as accurate a result as the 1000 participants would give you.The next question you should pose to yourself is who needs to participate in the survey in order for the results to be as accurate as possible. Of course, your first instinct may be to send the survey out to anyone who appears to be among the most engaged consumers from your perspective, but is this really the best approach? The question is a controversial one and many people will weigh in different opinions but the best advice, I would assume was already given by the inventor of the test, Sean Ellis himself.As mentioned in the introduction part of the article, for the best results, the survey should be administered to; persons who have experienced the c ore of your product; persons who have used your product at least twice; and persons who have used your product in the last two weeks. Hopefully this makes the question of suitable participants a little less complicated by narrowing down the categories to these three.As a pointer in administering the Sean Ellis test, remember that the test is not only limited to whole products, but can also be used to assess the market fit of product features. This is where a product or service has already achieved market fit and you are looking to find out how to improve its performance even more.[slideshare id=8599055doc=marketfit-110714151312-phpapp01w=640h=330]Analyzing and Interpreting ResultsOnce you have administered the Sean Ellis test and you have a stack of responses, the next step is to analyze the results. In order to use the findings to your advantage, you should understand and be able to interpret them. Your intention here should be to find the commonalities in the responses from your p articipants.Not DisappointedWhere you find that a majority of your consumers indicate that they would not be disappointed if they were unable to use your product or service, you should immediately realize that you have a big problem. This is not a problem you can simply ignore is you are concerned about the persistence and success of your business in the market.If customers are unconcerned about your product or service:You are not providing the consumers with products or services they needSome features in your products or service are not resonating with the consumers needsAs such, it may be time to administer a follow up survey on:How you can improve your products and servicesWhat product/service features the consumers appreciate the mostWhat product/service features the consumers like the least.In other words, dig through all the responses that you gathered and ensure that you find out why the consumers are so unconcerned about your product or service.As an additional pointer, prio r to conducting a follow up survey, profile the participants who responded with Not Disappointed and determine if they fall under a common category of consumer persona. This will enable you to determine whether you should create a sub-product that is particular to their persona as opposed to doing a complete overhaul of your product or service. All in all, prevalence in this response indicates that there is quite a bit of work to be done on your business.Somewhat DisappointedWhere you find that a majority of your participants respond with ‘Somewhat Disappointed’, your business and product is ‘Somewhat Close’ to attaining market fit. When there is a prevalence of responses of this category, place emphasis on finding out what made this part of your consumer base only partly disappointed in the loss of your product as opposed to extremely disappointed.Dedicate you efforts to finding out what differentiates this segment of ‘Somewhat Disappointed’ consumers and ‘Very Disapp ointed’ consumers; what is causing this divide. You could contact and interview the participants in this category and find out what would make the product even more satisfactory to them.Very DisappointedIf a large portion of your participants indicate that they would be extremely disappointed, it goes without saying that you should breathe a sigh of relief. It indicates that your product or service has attained market fit. As such, your business has already begun to or has even already solidified its place in the market. However, note, as mentioned previously, this is not a guarantee for long-term success.To solidify your market fit and ensure that you realize long-term success, invest your efforts in optimizing your marketing approaches and strategies. Do not spare any resource that fuels the momentum that you evidently already have; do not get complacent, push for even greater results.[slideshare id=59855569doc=howtofindproduct-marketfit-160322025044w=640h=330]REASON TO PERSIST IN USING THE SEAN ELLIS TESTNow that you have acquired the desired results after several efforts in the optimization of your product, you may think it is time to seize applying the test. However, even after attaining a market fit, the Sean Ellis test may still be a very valuable tool to your business. You might have attained market fit a few months ago and your product or service is still receiving a healthy buzz around it, for example on the media and social media.It may feel that your product or service is being quite successful, when in fact your product has began to lose its place in the market. You will not realize this if you have not been regularly monitoring the reception from the consumers, and what better test to apply that the test that guided you to success in the first place? Do not fool yourself; review your market fit regularly.Therefore, staying focused on whether your business is nurturing successful products or services is incredibly important for your business’s long-term success. You can even use the Sean Ellis test to test for the market fit of products that you have not even launched yet by surveying a specialized group of people. This is achievable by hiring a group of testers for your new products.A lot of organizations already hire tester who get to experience their products and give feedback prior to mass release. This saves the business a lot of time and effort and avails a rough assessment of the product’s probability of success even without having to engage in the hustle of launching, distribution, and marketing.IN CONCLUSIONMarket fit is one of the biggest determinants of a product’s/service’s success and a critical contributing factor towards the rate of growth of any business. However, defining market fit can be quite challenging for many businesses. I hope that this article has given you an insight into what market fit is, as well as its place in your business.You can end up spending a lot of valuable time developing an d reinventing your products and services, a process which is exhausting and expensive. The best and easiest way to determine whether your product is receiving the necessary reception from the consumers in order to attain market fit and increase your chances of long-term success is applying the Sean Ellis test.