How to Tell If Product-Market Fit Is Real
PMF is not a vibe—it is a set of signals that customers will pay, stay, and expand. This guide shows the metrics and evidence that prove the fit is real.
Table of contents
- Core PMF signals
- Metrics that validate fit
- Examples: real vs false PMF
- Common mistakes
- Action checklist
- Use the Churn Calculator for this
- FAQs
- Sources & further reading
- Related reading
Core PMF signals
flowchart LR
A[High activation] --> B[Retention cohorts stabilize]
B --> C[Expansion revenue]
C --> D[Organic referrals]
- Customers reach activation quickly.
- Retention cohorts flatten instead of collapsing.
- Expansion revenue grows without heavy discounting.
For newer founders
For newer founders
Focus on one segment first. PMF is easier to prove when you can show retention in a specific customer profile.
For experienced founders
For experienced founders
Look for expansion in mature cohorts. If older cohorts expand while new cohorts lag, your go-to-market or positioning may need refinement.
Metrics that validate fit
- Retention: 6–12 month cohorts flatten.
- NRR: 100%+ signals expansion.
- Payback: CAC payback < 12–18 months.
Examples: real vs false PMF
Example 1: Real PMF
- Activation: 70% within 7 days
- NRR: 112%
- Pipeline driven by referrals
Example 2: False PMF
- High signups but 3% monthly churn
- Discounts required to close deals
- Low usage after month two
Common mistakes
- Confusing signups with PMF.
- Ignoring retention in older cohorts.
- Chasing multiple segments too early.
Action checklist
- [ ] Define your ideal customer profile (ICP).
- [ ] Track cohort retention monthly.
- [ ] Measure activation time-to-value.
- [ ] Interview churned customers.
- [ ] Validate expansion in mature cohorts.
Use the Churn Calculator for this
Quantify retention impact as a PMF signal.
Run the Churn Calculator: Measure retention
Compare with unit economics via the LTV/CAC Calculator.
FAQs
How do I know if I have product-market fit? PMF is real when retention stabilizes, customers expand, and referrals grow without heavy incentives.
What metrics show PMF? Cohort retention, NRR above 100%, and fast activation are the most reliable indicators.
What are false PMF signals? High signups with poor retention, heavy discounting, and inconsistent usage often indicate false PMF.
Sources & further reading
- OpenView – PLG research: https://openviewpartners.com/product-led-growth/
- Reforge – PMF essays: https://www.reforge.com/blog
- SaaS Capital – Benchmark data: https://www.saas-capital.com/saas-benchmarks/
- Bessemer – State of the Cloud: https://www.bvp.com/cloud
- First Round – PMF insights: https://review.firstround.com/