10 key metrics for evaluating your physical product-market fit

Welcome to The Innovators Insight.

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You're confident that your new physical product is the next big thing.

You've painstakingly fine-tuned its design, poured hours into its creation, and yet, the response from the market isn't as explosive as you anticipated.

Shelves still awaiting stock?

Let me be candid:

A groundbreaking product idea doesn't automatically translate to sales or adoption. Yes, having a cutting-edge, reliable product is paramount.

But to have customers eagerly unboxing your product, flooding your inbox with rave reviews, and evangelizing it to their peers, requires more than just a fantastic product.

It demands a precise understanding of the market, metrics, and an alignment with what your consumers genuinely need.

Ready to delve deeper?

Here are the 10 metrics you should be mastering to ensure your product isn't just great, but truly fits the market.

1. Net Promoter Score (NPS):

First, what is the Net Promoter Score (NPS) for your product?

This measures the likelihood that existing users will recommend it to others.

A high, positive NPS indicates you have something people value.

2. Monthly Recurring Revenue (MRR):

Monthly Recurring Revenue (MRR) also matters.

If your product depends on ongoing purchases, is revenue growing month to month?

Rapidly increasing MRR shows you have a product customers want long-term.

3. Churn rate

Watch churn rate too, which is the percentage of customers leaving per month.

Low churn means high satisfaction and retention.

4. Customer Acquisition Cost (CAC):

Next, look at Customer Acquisition Cost (CAC).

This is the average spent to acquire a customer.

The lower the CAC, the more efficiently you can scale.

5. Conversion rate:

Check conversion rate - the percentage of visitors becoming paying customers.

Optimizing conversion means your product resonates with your target buyer.

6. Customer satisfaction score:

You'll also want to track customer satisfaction through surveys or reviews.

Consistently high scores reflect a product that delights users.

7. Customer lifetime value (CLTV):

Consider how much profit you can expect from the entire future relationship with a customer.

Strong CLTV indicates repeat purchases.

8. Time to value:

For new products, monitor time to value, which is how long before a customer receives core benefits.

Faster time to value helps drive adoption.

9. Engagement rate:

Engagement rate, or how often users interact with key product features, is another good gauge.

High engagement equals a sticky product.

10. Retention rate:

Finally, analyze the retention rate, or the percentage of users who continue using the product over time.

Rising retention means you offer ongoing utility.

Final thoughts:

It's not enough to only look at the numbers, though.

For context, you need to understand why you’re tracking these metrics, how they interrelate, and what you plan to do about what you learn.

Crucial questions to ask include:

• Who are your competitors?

• What’s unique about your approach?

• How do users perceive your product?

• Does your product solve their problem?

• What are the pain points of your targeted audience?

All of these elements need to align to create a successful product-market fit. Good luck!

Until next time!

Whenever you're ready, there are 3 ways I can help you:

1. Raise crowdfunding: We can help you turn your product prototype into an investible asset. If you’ve got a working prototype, and need funding to scale, send me a direct message on Linkedin (click here) saying “funding” for more details on how we can help.
   

2. Validate your physical product concept: Got a concept (napkin sketch or full concept design) for a killer product? We want to see it. Click here to submit it for review.
   

3. Free Guide - Crowdfunding 101: How to prepare your physical product for a crowdfunding campaign. Click here to learn more.