Finding Product Market Fit

In part one of this story “The Marketing Funnel That Made Billions” I shared my backstory and a few little teasers about Piggy's success. In this part, I'm going to focus on the most important part of the marketing funnel and how we found our product market fit.

If you recall our coupon & cash back extension Piggy, well our startup didn’t start out that way.  When we started out, our company was actually called "For the Schools." It’s product was still a coupon and cash back extension that would automatically populate coupons and cash back for shoppers at any participating retailer online. The twist was that the cash back didn't go to the customer, but to schools and charities of the customers choice.

The product at its core was the same, but the way it was used and marketed was fundamentally different.

When we first thought up the product, For The Schools, we thought it would sell itself. We had what we thought was a brilliant organic marketing strategy. Attend PTA and PTO trade shows across the country and convince them to be our boots on the ground warriors. We would attempt to sponsor the events (our budgets constrained us to a table and in person meetings) and work hard at convincing individual PTA and PTO clubs to sponsor us at their school. They in return would get their parents to sign up and so on.

How Did We Come Up With For The Schools?

My partners and I were no strangers to those quintessential school fundraisers. You know the ones, "Buy this candy bar!" or some coupon booklet you’d maybe use but ultimately was destined for the trash. These fundraisers were touted as essential to save a school program or field trip.

As business owners, we had immense respect for those young, tenacious souls knocking door to door, braving rejection, peddling their goods. That spirit, that hustle is remarkably underrated in America today. Truly, the resilience in those rejections, the guts to face no’s? Priceless life lessons for the kids, and perhaps a tale for another day.

The idea for this company wasn’t mine, but when I heard the idea, I thought it was brilliant. Imagine if we could get the redirect links from every .edu site and PTO parent championing this! The SEO value of the backlinks coming from schools would be a game over for everyone else. It would be a no brainer.

Now instead of peddling junk, schools could just get their parents to shop as usual online, and the commissions from their sales would go directly to a classroom, program or etc. The math was clear, it’s time for these schools to get out of the dark ages and ditch the pizza and candy bar hawking. Let people do their thing and earn money for their school, community and charity without doing any hard work.

For The Schools - Go To Market Plan

The logic seemed sound enough for us to get started. Our plan was to target the organizations currently backing existing school fundraisers. We would attend local, regional and state PTA | PTO trade shows. They held a very captive and active audience. This fit within our marketing budget of just a few flights and hotel rooms away. And yes, budget-stretching meant we often bunked together in cheap motels and took terrible red-eyes on airlines Spirit. Side note: I learned flying back from Vegas on spirit on a red eye is a terrible idea.

So with the product near completion and our flights booked, we went out to the market. My partner and I, despite being introverts, would go far beyond our comfort zone. We did everything we could to make sure we were getting the most out of efforts. We would push our table back and stand in the event isles stopping attendees before they had a chance to know who or what we were. We literally talked to 98% of the people at the shows, including the event workers. We’d strategically place ourselves next doorways, so no matter what you had to talk with us to leave.

After we sifting through countless names, it struck me, why not keep it authentic, direct, and relatable? When it comes to company names, they don’t need to have power or meaning, think of Amazon. What does Amazon have to do with shopping? We didn’t have the money to market our brand though, we had to be direct and uncomplicated.

If you are from the South, you can probably relate to the “Donuts” or “Nails” businesses in every little strip mall. They are literally named Donuts or Nails.

Think about it,  if you are looking to get a donut, well do you go to the place called Winchell’s or Donuts? How would you know Winchell’s sells donuts if you’ve never been made aware of who they are? It's like picking between a familiar, uncomplicated "Donuts" sign or an unfamiliar name "Winchell’s". While Winchell's is considered superior by those in the know, if you haven't been exposed to their marketing or had the experience of getting a dozen donuts from them after a Sunday mass as a kid, you might never know who or what they are. To me, “For The Schools” was an obvious answer for us. As it turned out, it luckily worked, everyone loved it!

Over the course of that spring/summer, I spoke with hundreds of schools, regional, and state members of the PTA. Maybe it was thousands among my partner and I, it was a lot of hustling. We had such wide reception from our PTAs and PTOs that we started getting put in front of regional members and eventually the head of the PTA. We were flying pretty high. I thought any day now, someone was going to write a check for $100M and we would be the biggest name in American retail, like Amazon. Yeah, I like to dream a lot, and I mean a lot!

Our GTM Seemed To Be Working

Our product was getting better and better, people loved us and now we were sitting with the President of the PTA. I’ll never forget that meeting. She, the President of the PTA, was telling us how important it was for us to be there for the long haul and sponsor several events, etc., etc., etc. Me being young and naive, I looked at it like, "You have no idea. If the national PTA sponsors us, schools will never be looking for funding again."

Then, like the very first time you get hit in the face as a child, WHAM! She hit us with the strongest hook I've ever seen and just like that, she knocked me right out of my dream and back into reality. What she wanted from us, there was no way we would ever be able to afford a national sponsorship without some guarantees from them. Back to the ground floor we go.

Initially we were having so much success with these trade shows, I even had the idea that I would sell my house, move my family into a camper, and be a traveling group of gypsies hitting every PTA event throughout the nation. Luckily, my partners were there to tell me what a foolish idea that was. I distinctly recall one of my partners' wives laughing considerably at my idea. Yep, that pretty much put the nail in the coffin, luckily she didn't think I was serious, phew!

So with all this boots on the ground and well reception, why is this titled, “Finding Product Market Fit”? It sounds like you nailed it?

How We Missed Product Market Fit

Despite the positive reception we received from PTAs, PTOs, teachers, and admins, very few of them actually signed up themselves, let alone pitched it to their parents. We struggled with this, and we were beginning to think our product didn’t have a market fit. We iterated the product and tried to come up with unique ways to pitch it at tradeshows with the aim that we’d drive installs.

One thing that started to be very prevalent to us. Our tool was designed for computer browsers: Chrome, Safari, Edge, and Firefox. Our market would speak to us with their phones in hand, hardly anyone dragged a computer with them. We could’ve made a mobile app perhaps, but during that period, mobile shopping was almost non existant outside of Amazon. We thought of developing a mobile app simply to push them to desktop, but how would we know we were marketing them at the correct time? The tech just wasn't there. Of course this rapidly changed as we all know and eventually, we developed the first auto coupon technology and patented it for mobile devices.

Target Your Audience When It Matters Most

We faced a pretty challenging puzzle: how could we prompt users to add our extension to their desktops? We tried various strategies, from gathering contact details, encouraging sign-ups at the event, distributing marketing assets to PTO’s and PTA’s, to giving away branded tumblers. All of this aimed at getting an initial install and helping make it as easy as possible for them to champion FTS with their parents.

Even after trying all of those additional and different tactics, our traction was minimal at best. We thought with the reception and foot traffic we had, we should’ve had thousands of installs and schools hopping on board. But it wasn’t happening, and with the 'back to school' season nearing, we needed to hurry or we’d be stuck for another year.

Timing Is Critical To A Successful GTM Strategy

If schools integrated "For The Schools" for their classroom supply lists, we could have potentially generate sales in the millions by October. Remember, parents were already buying these supplies, and often through platforms like Amazon. Why not let their schools benefit by earning that extra 3-10% from these purchases?

We were scratching our heads. We had a product that, on paper at least, should've been an instant hit. But the schools weren't biting. What was the Box Tops for Education program doing right that we were missing? They had an endless amount of champions: teachers, parents, and more, but we couldn't seem to replicate that with a far superior idea and product. I always thought the amount of time it took and dollars spent to make practically nothing back with box tops was just insane. Literally one classroom order of school supply boxes alone would be enough to dwarf any fundraising activity a classroom would have with BoxTops for a year.

The 'Aha' Moment: Listen When Your Users Speak

Then came an unexpected wake-up call. A user asked, "How much of the cash back can I keep?" My partners and I were initially taken aback. Wasn't the point to raise money for schools and charities? Why would you want to keep it for yourself? One maybe two of my partners thought the customer had a great idea. So we decided to alter our product so the users could decide how much of the cash back they want to keep. We made the change and saw a slight uptick in users. Interestingly, most were keeping at least half of the cash back or more for themselves. But even, despite this, we still weren't creating our champions; our Cost per Active Customer (CAC) was sky-high, and the business was teetering on the edge. For The Schools was dying and us along with it.

It was a sobering moment of clarity. It all makes sense in hindsight. Our customers loved our product, but they didn't like the charitable component. They just wanted to keep the cash back for themselves. They didn't have the technical know-how or the desire to get their schools involved. We may not have fully realized it, but when we did we had two choices. We could either abandon our product altogether, or we could pivot it to what the market really wanted and try again. Considering how strapped we all were for cash, the former sounded more appealing, but like true entrepreneurial warriors we chose the latter.

The decision to keep going was easier, because we knew how much the customers liked the concept of the product. I nor my partners weren’t giving up just yet. We had an idea, that idea was and still is to this day brilliant. We just didn’t have a refined Product Market Fit yet, but we were getting much closer now.

Why Product Market Fit Is So Important For Marketing

At the heart of every successful business lies the sacred concept of Product Market Fit (PMF). It's not just about having a great product; it's about ensuring that your product fills a specific need or void in a particular market segment. My journey with 'For The Schools' and 'Piggy' perfectly illustrates this. While both versions of the product were fundamentally similar, For The Schools didn’t fit the market, but Piggy did.

The Most Important Duo: Target Audience and Value Proposition

Two key components shape Product Market Fit: the target audience and the value proposition. 'For The Schools' had a noble aim, but its value proposition didn't resonate enough with its target audience. The value it promised (raising money for schools) wasn't compelling enough for the majority, leading to high Customer Acquisition Costs (CAC) and poor adoption. On the other hand, 'Piggy' hit the sweet spot by promising individual users cash back for their own pockets, an offer they wanted.

The Perils of Ignoring PMF in Marketing

Overlooking PMF is like trying to fit a square peg into a round hole; no matter how much force (or marketing budget) you apply, it won't fit. You can pour unlimited resources into promoting a product, but if it doesn't align with what the market truly wants or needs, your Return on Investment (ROI) will suffer. My experience taught me that had I indiscriminately spent on marketing 'For The Schools,' it would've been like throwing money into a bottomless pit.

But, when you have PMF and a massive budget to reach that audience with the right messaging. That’s how you have a record breaking 4 billion dollar  exit like our competitor did in 2019. Their success wasn't just because of a brilliant product but also because the product aligned perfectly with market demands. Their valuation at a 20x multiple is a testament to the power of PMF.

How Marketing Can Help You Reach Product Market Fit

In essence, product-market fit is the compass that should guide your marketing efforts. It's the bridge between what you offer and what your audience desires. A well-defined PMF amplifies marketing efforts, reduces customer acquisition costs (CAC), and maximizes return on investment (ROI). As you innovate and iterate, ensure that PMF remains at the heart of your business strategy. Only then can you truly unlock exponential growth and success.

Here are some tips for achieving PMF:

• Understand your target market. Who are you trying to reach? What are their needs and pain points?

• Create a product that solves a real problem. Your product should be something that people actually want or need.

• Make it easy to use. Your product should be easy to understand and navigate.

• Get feedback from users. Talk to your users with an open mind and get their feedback on your product. This will help you improve your product and make it more user-friendly.

• Do open door testing, iterate and improve. Don't be afraid to change your product based on small marketing tests. The goal is to create a product that resonates with an audience.

Once you have achieved PMF, you can focus on scaling your business and achieving profitability. However, it's important to remember that PMF is not a destination, it's a journey. You need to constantly be iterating and improving your product to ensure that it continues to meet the needs of your target market.

Here are some ways to use marketing campaigns or direct to consumer relationships to determine how you need to shape the product:

• Track your marketing metrics. Pay attention to things like website traffic, conversion rates, and customer churn. This will help you understand what's working and what's not.

• Run A/B tests. Test different versions of your product or marketing campaigns to see what performs better.

• Listen to your customers. Be responsive to customer feedback and make changes to your product as needed. Just remember to use enough of a sample so you don’t find yourself chasing individual needs.

By following these tips, you can ensure that your product is always meeting the needs of your target market. This will help you achieve PMF and grow your business.

Finally, it's important to remember that the product team and the marketing team should work together as a cohesive unit. The product team should be constantly iterating on the product based on feedback from the marketing team. The marketing team should be constantly testing and iterating on marketing campaigns based on feedback from the product team. By working together, the two teams can ensure that the product is meeting the needs of the market and that the marketing efforts are effective in reaching and converting new customers.