The Market/Product/Channel/Model Fit Framework

When I launched my first company, all I could think about was making my goals a reality.
And that’s why I bombed out of school nine times in a row.

After that, I found out about the Product/Market Fit model.
However, this is just one of four essential models into which you must fit for optimal performance.

They’re all listed below:

Market acceptance is priority number one.
Your product is in high demand because it offers a valuable solution to problems faced by your ideal customers.

Product/Channel Alignment is Number Two.
The advantages of a channel are optimally utilised by your product.
TripAdvisor, Yelp, and Pinterest are just a few examples of user-generated content + SEO.
Listen to music on Spotify and meet new people on Zoosk.
The proliferation of WhatsApp, Dropbox, and Slack.
Use Tinder and Supercell games on your mobile device.
Promoted products include Squarespace and Blue Apron.

Channel and model fit, which is the third step.
Your Customer Acquisition Cost (CAC) from a channel must be lower than your Average Annual Revenue Per User (ARPU).
Facebook, WhatsApp, Yelp, and Pinterest all have a low ARPU (ads) and a low CAC (virality, SEO).
Dollar Shave Club and Draft Kings both have a medium CAC (inbound + paid) and a medium ARPU (annual recurring revenue, or subscription fee, of $10-$200).
HubSpot and Zendesk have higher CAC (b2b content, sales) and higher ARPU ($500-$2K/yr in subscriptions).
Palantir and Veeva have extraordinarily high CAC (enterprise sales) and ARPU (contracts worth between $100,000 and $1,000,000).

In the fourth place, we have a good Model/Market Fit.
A quick equation: If your expected market share is 10% and your ARPU is $100, then you have a $100 million market.
Elephants: One thousand clients paying $100,000 or more annually. A Few Examples: (ServiceNow, Palantir, Veeva)
Moose: Ten thousand clients who each pay you $1,000+ per year. (Hotjar, Zendesk)
100,000 rabbits – $1,000 annual revenue from 1,000 customers. Online questionnaire builders (SurveyMonkey, MailChimp, Gusto)
Mice – one million clients at $100 a year each. As in (Dropbox, Ipsy, Dollar Shave Club)
Ten million users, $10 million in annual revenue, and flies. (Instagram, Twitter, and BuzzFeed)



Scroll to Top