8 Tips for Generating Product/Channel Fit

distribution product/channel fit unit economics

Product/market fit is not all that matters!
If you want to get from initial traction to sustainable high growth, you must also generate product/channel fit.
8 Tips for Generating Product/Channel Fit
1.    Product/channel fit means you have found a channel through which you can sell your products and services in an economically viable manner. Make sure this channel is not only viable from an economic perspective but also scalable.

2.     You should test and improve your go-to-market strategy and channels as you test and improve your products until you have found a channel that works.

3.    Keep in mind that most startups do not get one channel to work. You must find that one channel. Do not accelerate growth before you have found this channel.

4.    Work on generating product/channel fit in parallel to product/market fit. You do not want to end up with a product your marketing and sales people cannot or do not want to sell.

5.    If you sell to a customer segment with a rather low willingness to pay (which usually entails low customer lifetime value), make sure you think about low-touch/no-touch distribution channels where customer acquisition costs are usually rather low.

6.    Product/channel fit is not binary. It can go from ‘not yet found’ through ‘weak’ all the way to ‘very strong’. You should answer the question whether you have found product/channel fit from various angles. CAC, payback period, and customer cohorts generate great insights in this regard.

7.    You can measure product/channel fit by assessing whether the customer acquisition costs you incur using a specific channel make sense in light of the customer lifetime value associated with the customers you acquire through this specific channel.

8.    Similar, a short payback period in terms of a short period of time you need to recoup your customer acquisition costs can be a good indicator.

Before you accelerate growth, generate both product/market fit and product/channel fit. If you have generated both, you should also see your unit economics moving into the right direction - up.

*picture by Claudio Schwarz 

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