What is Customer Fit? - Definition & Analysis

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  • 0:03 What Is Customer Fit?
  • 1:20 Problem-Solution Fit
  • 3:18 Project-Market Fit
  • 5:10 Value Proposition &…
  • 5:48 Lesson Summary
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Lesson Transcript
Instructor: Scott Tuning

Scott has been a faculty member in higher education for over 10 years. He holds an MBA in Management, an MA in counseling, and an M.Div. in Academic Biblical Studies.

Customer fit is when a product or service perfectly matches a customer's needs. This lesson explores this concept in great detail and takes a look at conditions that can improve customer fit.

What Is Customer Fit?

In a broad sense, customer fit can be defined as the alignment between a company's product and a customer's needs. As a company comes closer to perfect alignment with a customer's needs, there is an increasing chance that the company will secure a loyal customer.

A broad example of great customer fit includes the alignment between Apple and creative professionals like photographers and designers. The fit is exceptional because Apple identified creative professionals as an important customer segment, and they were effective at responding to customer feedback.

A few now-defunct retailers serve as contrasting examples. Service Merchandise and Circuit City are examples of retailers who initially offered customers a great fit, but their inability to correct a drift away from this fit rendered them unable to succeed in an incredibly competitive sector. Customer fit is achieved by offering a product or service that solves an important problem and does so with a solution that pleases its customers. Let's look at the cornerstones of customer fit: problem-solution fit and product-market fit.

Problem-Solution Fit

The first cornerstone of customer fit is problem-solution fit. This category of alignment is best defined as a company's ability to identify a problem worth solving and offer a great solution.

This definition is deceptively simplistic. To qualify as a problem worth solving, two distinct criteria must be met. First, the specific problem must be relatively widespread. Isolated issues are important, but not in this context. Even if the same issue is reported over a broad range of customers, engaging the problem is still contingent on the affected customers demanding that the solution come specifically from your company. Additionally, problem-solution fit requires that a small number of customers are willing to be early adopters who are willing to pay for the solution.

An example of a hit-or-miss problem solution fit is Microsoft's popular operating system Windows. Windows initially represented a great problem-solution fit for consumers who found it easier to use point-and-click icons rather than typing an endless number of inflexible text commands. Windows 3.1, Windows 95, Windows XP, and Windows 7 are all iterations in which Microsoft was effective at aligning with its customers. In contrast, Windows ME, Windows Vista, and Windows 8 are all iterations of the same operating system that were broadly rejected by consumers. It's a bit ironic that, in some cases, Microsoft was both the problem and the solution. Windows 7 was regarded as a good problem-solution fit, but the problem needing a solution was Microsoft's own Windows ME operating system.

Product-Market Fit

American entrepreneur Marc Andreessen defines product-market fit as ''being in a good market with a product that can satisfy that market.'' Product-market fit is the second cornerstone of overall customer fit. Similar to problem-solution fit, product-market fit requires that a fairly significant number of customers have a strong preference for your solution. Sometimes, product-market fit refers to a customer segment reporting that the lack of a product from your company is quite disappointing.

Consider venture capitalist Andy Rachleff's Law of Startup Success:

  1. When a great team meets a lousy market, market wins.
  2. When a lousy team meets a great market, market wins.
  3. When a great team meets a great market, something special happens.

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