1/ Thread:✍️New blog post - The best metric for determining quantitative product market fit
I think cohort retention rate is the most important product market fit metric, and I recommend using it along with other product market fit definitions
growthengblog.com/blog/the-best-…
2/ A good product market fit metric:
-Will tell you when the product is good enough to work acquisition channels
-Minimizes false positives and false negatives
3/ NPS is a bad product market fit metric. You don't need good NPS to become very successful:
Apple: 47
Google: 11
Microsoft: 45
Facebook -21
4/ Other survey based metrics are better, but have a few flaws:
- response bias, not getting samples from users who don't respond
- single snapshot in a long user journey
- responses don't always accurately predict true behavior
5/ Distribution shouldn't be a requirement for PMF. SEO and referrals are common distribution channels that work for most companies.
I've never heard about a company and thought "there are no distribution channels that work for this startup"
6/ Cohort retention rate: given a group of users who joined around the same time, the % of those users that stay long term
Build a cohort retention triangle chart to track progress over time
7/ Find the retention rate of some comparable products that have been able to grow to determine the right benchmark for you
Consumer: floor 25%, ideally 40% or higher
B2B/Enterprise: floor 70%, ideally over 80%
8/ Cohort retention rate:
- no response bias, captures all users
- full user lifecycle data
- measuring actual user behavior
9/ You will definitely "feel" PMF or great retention rates eventually, but maybe not at first.
Need to have both good PMF and decent acquisition rate
end/
- Actively measure your cohort retention rate using a “triangle” cohort retention chart
-Find the retention rate of comparable successful products and set a product market fit goal
-Improve your product and watch retention improve with new cohorts!
growthengblog.com/blog/the-best-…
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