product-market-fit

Overview

Based on The Lean Product Playbook by Dan Olsen. Olsen's PMF Pyramid is a structured framework for diagnosing and improving product-market fit. The pyramid has five layers - each layer must be solid before the next one matters. Most teams skip to layer 4 or 5 (features, UX) when the real problem is layer 1 or 2 (wrong customer, wrong need).

The PMF Pyramid (bottom to top):

1. Target customer
2. Underserved needs
3. Value proposition
4. Feature set
5. UX

Workflow

Step 1: Validate the target customer (Layer 1)

Who exactly is this product for? Be specific:

• Demographics or firmographics
• Behavior patterns (what do they do today?)
• Psychographics (what do they care about?)

If the answer is "everyone" or "anyone who needs X" - the target customer is not defined. Narrow it.

Test: can you describe a specific person by name and context? "A solo founder building their first SaaS product, pre-revenue, doing all support themselves." That's a target customer.

Step 2: Map underserved needs (Layer 2)

What needs does the target customer have that are not being met well today?

Olsen's importance-satisfaction framework:

• List 10-15 needs/jobs the customer has
• Rate each: How important is this? (1-5)
• Rate each: How satisfied are they today with existing solutions? (1-5)
• Underserved needs = High importance, Low satisfaction

These are your opportunities. Build for underserved needs, not just any need.

Step 3: Define the value proposition (Layer 3)

For the top 2-3 underserved needs: what is your specific claim about how you serve them better?

Format: "For [target customer] who [underserved need], [product name] is [category] that [key benefit]. Unlike [alternatives], we [key differentiator]."

If you can't write this cleanly, the value proposition isn't clear enough to test.

Step 4: Audit the feature set (Layer 4)

Map current features to underserved needs. For each feature ask:

• Which underserved need does this serve?
• Is this feature good enough to be a key differentiator?
• Is this a table-stakes feature (must have but not differentiating)?

Remove or deprioritize features that don't map to the top underserved needs.

Step 5: Assess UX (Layer 5)

Does the UX deliver on the value proposition clearly?

• First-time user test: can a target customer reach the core value in under 5 minutes?
• Does the onboarding communicate the value proposition before asking for effort?

Step 6: Measure PMF

Sean Ellis test: survey users with "How would you feel if you could no longer use [product]?"

• Very disappointed / Somewhat disappointed / Not disappointed
• 40%+ "very disappointed" = strong PMF signal
• Below 40%: go back to layers 1-3 before investing in growth

Step 7: Identify the layer to fix

PMF problems are almost always in layers 1-3, not 4-5. Diagnosis:

• Low retention - likely layer 2 (needs not underserved enough)
• High churn after onboarding - likely layer 3 (value prop not landing)
• Users use it but won't pay - likely layer 1 (wrong target customer) or layer 3

Anti-Patterns

1. Optimizing UX before validating the need Bad: Redesigning the UI to improve retention when users are churning because the core need isn't met. Good: Fix layers 1-3 before investing heavily in layers 4-5.

2. Target customer too broad Bad: "Our target customer is small business owners." Good: "Our target customer is solo consultants doing $10-100k/yr who invoice clients manually and lose track of unpaid invoices."

3. Importance-satisfaction done in a meeting Bad: Team guesses importance and satisfaction scores internally. Good: Survey or interview actual target customers for real scores.

4. Chasing the 40% number with the wrong segment Bad: Averaging "very disappointed" scores across all user types. Good: Segment by target customer. 40% among your core segment is the signal that matters.

Quality Checklist

• Target customer defined specifically (not "everyone")
• Underserved needs mapped using importance-satisfaction framework
• Value proposition written in structured format
• Feature set mapped to underserved needs - orphaned features flagged
• UX assessed: can target customer reach core value in under 5 minutes?
• Sean Ellis PMF survey run or planned
• Weakest pyramid layer identified and prioritized for improvement