How African Startups Achieve Product Market Fit in 2024
February 8, 2024
Adam Wakefield
Product-market fit pyramid

Product-market fit pyramid

One of the most pressing challenges for African startups is achieving product-market fit —developing products that truly resonate with their target audience. Without this alignment, startups often struggle to gain traction and establish a strong foothold in Africa, leading to potential stagnation or failure. The process of aligning your product with market demands is a complex one. 

Failure to achieve product-market fit can result in wasted resources, lost opportunities, and an inability to address potential customers’ pain points. You can establish a strong connection with your startup’s target audience by achieving appropriate product-market fit. This can increase customer satisfaction, retention rates, and brand loyalty. In this article, we will discuss product-market fit in detail. 

What is product-market fit? 

Product market fit is the critical stage for a startup, where you identify a target market and develop a product that can satisfy that market’s demands and needs. 

Marc Andreessen developed the concept of product-market fit. In his essay, he explains that achieving product-market fit is crucial for the success of startups. He described this as the point where the product finally resonates with target customers, culminating in widespread adoption. Andreessen emphasises that you shouldn’t categorise product-market fit as a one-time event. Instead, you should take it as an iterative process. You must collect customer feedback and study evolving market conditions to adjust your product roadmap accordingly. 

For example, consider M-Pesa, a Kenyan startup. M-Pesa achieved product-market fit by addressing the needs of its target demographic in Sub-Saharan Africa. M-Pesa provided a new way of paying money for the country's underbanked. Anyone with a mobile phone could use M-Pesa to send/receive money online, pay bills, and use other financial services. 

The solution resonated with its users looking for a simple, secure way to use basic financial services. Over time, M-Pesa expanded to other parts of Africa, such as South Africa and Tanzania. 

Why is product-market fit important? 

According to CB Insights, 35% of startups fail due to a lack of market need. Product-market fit is important for African startups for the following reasons:

Validation of the business idea

Achieving product-market fit helps a startup validate the viability of its business idea. It proves that the startup’s offering aligns with the target market’s preferences. Product-market fit is also a reliable metric for investors who can plug the startup’s funding gap. 

Customer acquisition and retention

Product-market fit ensures the startup addresses a real market need or problem. This, in turn, leads to increased customer acquisition and retention as the product resonates with the target audience.

Sustainable growth and scalability

With a solid product-market fit, startups can build a strong foundation for sustainable growth and scalability. The increased revenue and earnings after achieving product-market fit can help to pay for expansion efforts. This allows the startup to scale its operations, enter new markets, and optimise its processes. 

Product-market fit is the North Star for African startups, which sets them on a path to sustained success. 

How to measure product-market fit 

There are two approaches for measuring product-market fit for your startup: qualitative and quantitative. Following these approaches to measure product-market fit is important because it defines whether your product resonates with market demand. 

Qualitative approach 

The qualitative approach dives into subjective customer experiences via non-numeric data to understand customer behavior. This includes collecting insights, opinions, and perceptions about your product. You can collect qualitative data via the following: 

  • Customer interviews and surveys: Interviews are one-to-one interactions that let customers share in-depth experiences. Conversely, surveys offer a broader reach, fetching opinions from several people at once. Use open-ended questions to allow your customers to express themselves freely. For example, “What features do you like the most in our product?”
  • User feedback and reviews: Keep an eye on what users say about your product on different platforms. Read reviews to get positive feedback and helpful criticism. For example, you can try social media monitoring tools like Hootsuite to analyse reviews on popular social media platforms. Or, you can use review tracking platforms like Trustpilot to collect and manage customer reviews. Customer sentiment analysis tools, like IBM Watson, use natural language processing and AI to analyse online reviews to determine customer tone.
  • Media coverage and publicity: Media coverage and publicity also serve as qualitative indicators of product-market fit. Rising attention from media publications and frequent social media mentions often signals interest in your product. For example, you can use real-time monitoring tools like Critical Mention to track TV, radio, and online mentions of your brand. 

The qualitative approach is helpful because it’s similar to conversing with your customers about what they think and feel relating to your product.  

Quantitative approach 

Quantitative methods involve using numerical data to assess product-market fit through specific metrics:


Product market fit net promoter score

  • Sean Ellis’s method: A survey question - "How would you feel if you could no longer use the product?" - helps determine the product's value to users. A high "very disappointed" response rate indicates a strong product-market fit.
  • Net Promoter Score (NPS): NPS assesses customer satisfaction and loyalty. It involves a straightforward survey asking users about their likelihood of recommending the product. Based on their responses, it categorises users as Promoters, Passives, or Detractors. The NPS is then calculated by subtracting the percentage of Detractors from the percentage of Promoters, resulting in a numerical representation of how customers feel about the product. 
  • Usage metrics: Usage metrics contain quantitative data related to user interactions with a product. Metrics may include the number of active users, session durations, and feature utilisation rates. Analysing these metrics provides numerical insights into user engagement patterns and identifies popular product features.

The quantitative approach provides clear and measurable data, such as percentages and ratings, making it easy to track and compare your product’s success.

How to achieve product-market fit 

African startups can achieve product-market fit with the following steps. 

Step 1: Determine your target customer

Study your target market’s pain points to understand what your ideal customer looks like. This can help you tailor your products/services accordingly. Here’s how to do it. 

  • Create a high-level customer hypothesis. This involves a broad assumption of your ideal customer and how they act. It includes data such as demographic information, potential needs, and preferences. You must consider factors like age, gender, location, and industry. 
  • Next, use market segmentation to categorise potential customers into unique groups based on their shared attributes and behaviors. Evaluate these groups and create buyer personas —  an ideal representation of your target customers. 
  • Study user feedback. Once you collect feedback from your new users, systematically analyse the data to identify patterns and recurring themes to improve your buyer personas. Over time, these refinements can get you closer to your target audience’s characteristics and behavior. 

For example, let’s say you are launching a fitness app. Your initial hypothesis concludes that your ideal customer is a health-conscious individual aged 20 to 35 who prefers high-intensity workouts. Market segmentation helps you identify two unique customer groups: college students and office workers. You can create buyer personas for each group and learn about their fitness goals, preferences, and pain points. 

With feedback, you might learn that office workers are looking for more time-efficient workout options due to their hectic routines. You can use these insights to develop your app accordingly. 

Step 2: Identify underserved customer needs

Underserved customer needs are what people want within a market, but no viable products are available that fulfill those needs. As a startup, they are your opportunities to fill a gap and offer value to your potential customers by addressing these pain points. 

You can determine these needs by thoroughly assessing the competitive landscape. This involves analysing how current products satisfy customer needs. You can test your competitor’s product via a demo, visit their customer support forums and discussions, and go through online reviews to find what frustrates their user base. Their pain points can be your product features, helping you define your customer base.  

You can also learn about these needs by reviewing customer feedback, interactions, and reviews to identify continuously unaddressed demand patterns. This will provide you with several ideas to prioritise via the following frameworks: 

  • RICE Framework: RICE stands for Reach, Impact, Confidence, and Effort. This framework helps prioritise by considering an idea’s potential reach, impact, the team's confidence in its success, and the effort required for implementation.
  • The MoSCoW Method: MoSCoW categorises tasks into Must-haves, Should-haves, Could-haves, and Won't-haves. It aids in distinguishing between essential and desirable features, enabling a clear focus on critical elements.
  • MoAR - Metrics over Available Resources: This framework prioritises ideas based on how they align with key performance indicators (KPIs) and what resources are available. It ensures that you focus on initiatives that contribute significantly to measurable success.

Identifying underserved customer needs isn’t just uncovering gaps; it’s about discovering any opportunity that lets you generate genuine value – a competitive edge that others lack.

Step 3: Define your value proposition

A value proposition is a concise statement summarising the unique benefits and value a product, service, or startup provides to its customers. You will then determine better solutions based on the customer needs identified in the previous step. Defining your value proposition is important because it concisely communicates to your customers how your product differentiates from your competitors, compelling them to buy. 

Focus on differentiation and highlight unique features and benefits that make your product more appealing. Take the example of an online store that has recognised the need for sustainable products and ethical sourcing. Their value proposition is an online marketplace that simplifies shopping and aligns with customers’ values by offering a curated selection of eco-friendly and ethically sourced products. 

Step 4: Specify your MVP feature set

The MVP feature set includes the essential and core functionalities of your product’s first working version. It is the minimum set of features that can address the identified customer needs, generate value, and test your product’s viability in the market. The MVP feature set also represents the value proposition you defined in the last step. 

By focusing on the MVP feature set, a startup can minimise complexity and reduce excessive development time, ensuring a faster time-to-market. For instance, if you create a project management tool, your MVP feature set can include: 

  • Task creation and management: Users can create, assign, and track tasks within the platform.
  • Collaboration: Basic team collaboration features, including comments and file attachments.
  • Project overview: A simple dashboard providing management with an overview of ongoing projects and their status.
  • User authentication: Secure user accounts and authentication to protect your data.

Defining the MVP feature set is like building the most important parts of your product in the early stage. It's a smart move because it helps you quickly test if your product is what customers want without spending too much time. 

Step 5: Create your MVP prototype

An MVP prototype is a simplified model of your product that you create without fully developing it. It allows you to transform your conceptual ideas into a working model. You will prioritise features from the MVP feature set and use them to create user flows and wireframes. A tool like Figma can help you visualise the product’s interface and turn those wireframes into a functional prototype.


Product market fit app prototype



For example, if you're developing a social networking app, your MVP prototype might showcase essential elements like user profiles, a news feed, and basic user interactions. You don’t have to include features like advanced user tracking or search functionalities. 

Step 6: Test your MVP with customers

Testing your MVP is important to ensure your target audience finds it as a viable option. Select customers from your target market strategically. Employ screeners to ensure the chosen participants are closer to your intended user base. Screeners are a set of criteria or questions that you use to select and filter participants who match the attributes and behaviors of your buyer personas. 

For example, suppose a startup is developing a language-learning app for beginners. In this case, the screener questions might ask about the participant's language proficiency level, previous experience with language learning apps, and specific learning goals. Those who meet the specified criteria will be selected to participate in the user testing sessions.

You can conduct user tests in batches, observe user behavior, and ask open-ended, non-leading questions to gain in-depth insights for product refinement. Achieving product-market fit helps startup founders find a strong alignment between their products and customer needs, which can improve customer satisfaction. It also helps attract investors who can address your funding woes. 

Product-market fit examples in Africa 

Here are examples of African startups that have successfully achieved product-market fit:

Kobo360

Problem

Kobo360, a Nigerian logistics startup, recognised the inefficiencies in traditional logistics business models in the country. The logistics industry lacked centralised coordination, leading to fragmented transportation networks. This fragmentation resulted in inefficiencies such as suboptimal route planning and coordination, increasing transit times and costs.

Solution

Kobo360 uses technology to connect shippers with reliable and cost-effective trucking services. The platform optimises routes, reduces idle times, and enhances supply chain efficiency. By introducing automation, they streamlined manual processes and paperwork associated with logistics. This reduced errors and administrative burdens and contributed to faster and more reliable logistics operations. More importantly, it helped customers get faster deliveries at affordable rates. 


Kobo360 web page

Jumia

Problem

Jumia found its target audience struggling with a lot of pain points. Their product team realised customers were struggling to access a wider variety of products in retail. In addition, they needed diverse payment methods. 

Solution

Jumia achieved product-market fit by customising its e-commerce platform to meet the unique demands of the Sub-Saharan African market. The platform offers a diverse range of products, from electronics to fashion and groceries, addressing the varied needs of consumers. Jumia also integrates multiple payment methods, including the widely embraced cash-on-delivery option, mobile money integration, and card payments. Thanks to their focus on product-market fit, today, more than 2 million customers use Jumia for online shopping. 

African startups have clearly demonstrated that if they work on achieving product-market fit, they address the common pain points in the local region. 


Jumia web page

Product-Market Fit Frequently Asked Questions (FAQ) 

Who is responsible for achieving product-market fit? 

Achieving product-market fit is a collective responsibility that requires contributions from founders, product managers, and the entire startup team. Founders guide the vision, product managers translate insights, and the team iterates. It requires a shared commitment to understand and meet customer needs effectively.

When do you need to achieve product-market fit?

Achieving product-market fit is often associated with the early stages of a startup's development, typically with the seed and early-stage funding rounds. This is when founders focus on refining their product to meet market needs before seeking more significant investments for scaling.

How long does it take to achieve product-market fit?

The time to achieve product-market fit varies widely. Some startups may achieve it quickly, while others may take months or years. The duration depends on factors like industry, product complexity, and how the team adapts to user feedback.

What is the 40% rule product-market fit?

The rule explains that if 40% or more users find your product a “must-have” or are “very disappointed” if they do not have access to it, you have succeeded in building a viable product that aligns with your market. 

Now that you know the most commonly asked questions for product-market fit, let’s find out who can help you with all these steps. 

FFA can help your startup achieve product-market fit 

Product-market fit is the heartbeat of any startup’s success and represents the alignment between product and target audience. Achieving this balance involves understanding and meeting customer needs. It is an ongoing journey of refinement, where you receive user feedback and apply this to improve your product. 

New and inexperienced startup founders in Africa may struggle to achieve product-market fit. You need a partner with plenty of experience navigating the African startup ecosystem. 

Founders Factory Africa is that partner. 

We are a hands-on early-stage investor that provides startups with a wide range of resources, including funding, mentorship, networking opportunities, and more. Our experts will help you to achieve product-market fit, empowering you to capture your target industry with great success.

Begin your journey by applying here.