If any company has product/market fit, it’s Zoom.
Zoom has had record user growth.
It hit 300 million daily meeting participants in April 2020.
Zoom is so in vogue that social media is flooded with Zoom memes and tips. I literally can’t look at Twitter or Instagram without coming across at least one meme about Zoom.
People just can’t stop talking about Zoom.
It has all the hallmarks of a company with high customer satisfaction and product/market fit. Rapid growth. Buzz. Loads of paying customers.
Except Zoom doesn’t have product/market fit or high customer satisfaction.
How do I know? We conducted an in-depth customer satisfaction survey on Zoom to find out.
Here’s what we learned, and exactly why Zoom doesn’t have product/market fit.
Customer Satisfaction with Zoom
We surveyed a thousand people who use Zoom.
We weren’t just curious because Zoom was seeing a huge increase in customers and frequency of usage thanks to Covid-19. It’s also one of the largest collaboration tools out there.
We had a few key questions we wanted to answer:
- Does Zoom have product/market fit?
- How do customers feel about Zoom? Why?
- What can Zoom do to improve customer experience?
Product/market fit, as described by Marc Andreessen, “means being in a good market with a product that can satisfy that market.” It’s a concept that was first developed by Benchmark co-founder and CEO of Wealthfront, Andy Rachleff.
Sean Ellis developed a way to measure product/market fit by calculating the percentage of people who say they’d be very disappointed if they couldn’t use a product anymore. Once 40% or more people say they’d be very disappointed, that product is said to have product/market fit.
“In my experience, it becomes possible to sustainably grow a product when it reaches around 40% of users who try it that would be “very disappointed” if they could no longer use it.”
I conducted another product/market fit survey back in 2015 on Slack. Back then, Slack had product/market fit: 51% of people said they’d be “very disappointed” if they couldn’t use it anymore.
So where did Zoom net out?
We asked people “How would you feel if you could no longer use Zoom?”
To our surprise, only 30% said they’d be very disappointed. That’s 10% away from the product/market fit threshold. And 21% away from Slack’s score back in 2015.
Half of people (49%) said they’d be somewhat disappointed if they could no longer use Zoom. The rest – 21% – said they would not be disappointed (“it really isn’t that useful”).
That’s really not that high for a product like Zoom.
Those numbers seemed low to us, so we did a quick check on Twitter.
How would you feel if you could no longer use Zoom?
— Hiten Shah (@hnshah) April 20, 2020
Just over 1000 people answered this poll – the same as our original survey. Thirty-two percent of people said they would be very disappointed, in line with the 30% on our survey.
So we have our answer right? Zoom doesn’t have product/market fit.
Not so fast, there are a few things that we still need to dig into before declaring unequivocally that Zoom isn’t meeting the market’s needs.
When looking at product/market fit, it’s important to segment the data to understand which segments are the happiest, which you could get to convert easily, and which would need the most work.
To start, we segmented product/market fit by how people use Zoom: for work, friends and family, and education.
The top reason people use Zoom is for work. That’s exactly where Zoom has the lowest product/market fit. Only 32% of those people said “Very Disappointed.” And they made up the majority too, with 89% of people who took the survey saying they used Zoom for work.
People who use Zoom to teach are the most satisfied. This group, which accounted for 5% of the people we surveyed, had the highest product/market fit percentage.
With 2020’s shelter in place orders, it’s not surprising that Zoom is a must-have for teachers. This group of users need a reliable solution that’s kid friendly and easy to use.
At least the ones whose schools didn’t ban Zoom over security issues. This represents one of Zoom’s largest growth opportunities (more on this below).
There’s another tool that we used to confirm whether or not the market values Zoom, Net Promoter Score (NPS).
Even if Zoom doesn’t have product/market fit, its NPS – one of the most popular indicators of customer satisfaction – has to be high, right? That’s at least what we thought. Especially since Zoom reported that its average NPS was over 70 in 2019, in line with the NPS scores of some of the best companies in the world.
But based on our survey results, Zoom’s Net Promoter score (NPS) is a 21.
That’s not so great.
A score in the range of 1 to 30 typically indicates that customers aren’t that satisfied with a product or service. For comparison with other collaboration tools, Notion has an NPS of 49, G Suite is at 43, and Airtable is right around where Zoom is, at 24.
Why does Zoom, one of the fastest-growing and most ubiquitous companies, not have product/market fit?
Based on our research, there are 3 headwinds holding Zoom back from product/market fit.
- Plenty of alternatives
- Time to satisfied customers
- Security and privacy concerns
Plenty of alternatives
Meetings happen constantly, multiple times a day, both within and between companies. They used to happen primarily in person. Now it feels like we’re on Zoom calls 24/7.
So let’s say you have a favorite conference call service. Zoom, Hangouts, whatever that may be. Even if you’re only using that service to set up meetings, it’s almost impossible to not be exposed to other video conferencing providers. Just this past week, my co-founder and I had meetings on WebEx, Zoom, GoToMeeting, Google Hangouts, and Slack. We can’t control it. Even different people in our own team like using their own video product of choice to schedule meetings with us. Not to mention customers, sales prospects, vendors, and anyone else we talk to.
Alternatives to Zoom are just an invite away.
It’s also incredibly easy to try out or switch to another video conferencing service. There’s nothing in the product that locks you in.
Video products are a utility. They help you get a job done: to host a call with one or more people. Sure there are lots of features different companies add, but in the end there isn’t that much difference between the products from a functional standpoint.
So it’s not surprising that when we ask people to explain why they selected the answer they did to the question “How would you feel if you could no longer use Zoom?”, they mentioned alternatives. Over, and over again.
For people who said they’d be “Somewhat Disappointed” or “Not Disappointed”, the number one reason was because of alternatives.
Alternatives include direct competitors like WebEx or Google Hangouts. But they also include indirect competitors like apps that aren’t focused on video or voice but have a video feature, like Slack or Miro. And alternative solutions like phone calls, FaceTime, even WhatsApp.
For people who said they would be “Somewhat Disappointed”, 60% cited the reason as alternatives to Zoom. The number is even higher for those who said “Not Disappointed (it really isn’t that useful)”. Seventy-four (74) percent of those people cited alternatives as the reason for their choice. No wonder Zoom didn’t have product/market fit with these people. They just aren’t that loyal and know they can switch to one of the many competitors in the space.
“There are a dozen alternatives to Zoom.
This was the sentiment of so many people who wouldn’t be very disappointed if Zoom no longer existed.
“Video conferencing is a commodity. There are so many available options. Sure, Zoom is reliable, but many other products—other conferencing, phone—solve my job to be done, which is to communicate and connect with my team.”
“Quality is great with Zoom. But there are other alternatives that come close.”
Many people pointed out that although Zoom is a reliable product with a high quality video connection, there are plenty of other products that are as good as, or nearly as good as Zoom. The quality wasn’t enough to keep them hooked.
To learn what alternatives come to mind for people, we asked “What would you likely use as an alternative if Zoom were no longer available?”
Half of the people said they’d use Google Meet/Hangouts.
The next-largest alternative mentioned was Skype (16%), followed by Microsoft Teams (15%), which was only launched a few years ago in 2017 and has quickly picked up a ton of steam.
Zoom’s competition includes both stalwart, recognizable brand names and the new kids on the block too.
Companies have taken note of Zoom’s incredible growth, and new players keep entering the video market as a result.
Products that don’t have a core video focus are now adding video functionality too. Not to mention that there are a growing number of indirect competitors to Zoom, such as Yac, that focus on voice first. Even an online white boarding product that uses video or audio can be considered an indirect competitor to Zoom.
The competitors are multiplying, and it shows in the product/market fit results.
There are plenty of alternatives with similar features, and they are all building fast and continuing to close the gap.
All of a sudden, the market has become bigger than it ever was, and there are now countless companies looking to capitalize on the opportunity. Zoom is at risk of losing customers that it doesn’t have product/market fit with to these competitors.
Time to satisfied customers
The switching cost of moving to a new video conferencing tool is incredibly low. Trying a new competitor doesn’t require much effort at all.
In a few clicks you can be using an alternative tool. No heavy lifting or extra work required.
Of all the apps, however, Zoom has the highest friction to get into a meeting for the first time, and even each time after.
Many of the alternatives don’t even require a download by default. While Zoom’s default is for people to download the app and run it from their computers.
First, you’ll need the Zoom app. Then to start a Zoom meeting means you’ll need to click a link, get redirected to a page, click a prompt to start a meeting, the Zoom desktop app needs to load and you get to select to join with audio, and then turn on your camera. That’s a lot of steps!
For cloud collaboration tools, there are two critical customer satisfaction drivers:
- Friction to using the tool
- How long a person has been using it for
Zoom scores low on the friction criteria.
On the second criteria, it scores high. The longer someone uses Zoom, the more likely Zoom is to have product/market fit with them.
Zoom has product/market fit with people who have used Zoom for 3 or more years.
“It’s the 💣”
“Been using Zoom for close to 5 years. Can’t imagine life without it!”
Reading through these responses was fun – these people literally love Zoom and were shouting from the rooftops (aka our survey) about it.
The document app category is very similar. Switching costs are low because links to documents are shared constantly by just about everybody. The longer someone uses an app, the more invested they become, causing their satisfaction level to go up.
With video conferencing, the more times people have a consistent experience during calls, the higher their satisfaction level gets. And the less likely they are to want to tolerate a bad experience.
One of the hallmarks of Zoom is its reliability. The more people experience it and get used to that reliability, the more they get hooked.
And the more likely they are to default to Zoom as their first and preferred option over any alternative.
Sure, they’ll inevitably use other products when they get invited to meetings, but it just won’t be the same experience. And that will only reinforce their desire to continue to use Zoom.
Reliability is the top benefit people receive from Zoom. It’s why people who have been using Zoom for years love it.
When we asked “What is the primary benefit that you have received from Zoom?”, 27% said video connection quality, and 25% said ease of use.
“I have poor bandwidth (DSL) and it’s the only service that works reliably.”
“Out of any video conference tool, it’s the one that fails the least. And I’ve used Google Hangouts, Skype, Teams, Webex, GoToMeeting.”
“Zoom has high quality video and audio, even when bandwidth issues occur. It’s also easy to use.”
For many of the people who have been using Zoom for years, it’s simply irreplaceable:
“It’s simply the best video conferencing solution. There isn’t a good alternative I’m aware of.”
“I tried using Google Hangouts for a birthday party yesterday, and it was awful.”
We also segmented NPS by years of use, and saw a similar trend as the product/market fit data.
Zoom has an NPS of 37 with people who have been using Zoom for 3 to 5 years, and a 29 with people who have been using it for more than 5 years. That’s compared with a 21 for those who have been using it for 1 to 2 years.
If Zoom can just hold on to its customers for long enough, eventually it will hit product/market fit with a good portion of them.
Zoom’s rapid growth within a couple months created an elephant in the room.
After broad backlash about their security practices, founder and CEO, Eric Yuan announced that the company was taking a break from shipping features to fix it’s security flaws for the next 90-days. He even went as far as to host weekly webinars to provide security and privacy updates.
This was absolutely the right move.
By focusing its efforts on security, Zoom is more likely to increase the percentage of people who are highly satisfied with the service.
Security was mentioned by only 2% of people who would be “Very Disappointed” if Zoom no longer existed. These people didn’t mention security, they’re too hooked on the high quality experience of using Zoom and the simple UI.
The problem sits with the customers who aren’t really satisfied with Zoom.
Of those who would be “Not disappointed” if they could no longer use Zoom, a whopping 16% mentioned security as a reason why they wouldn’t be disappointed. It was the second reason listed, after alternatives. Six (6%) percent of people who would be “Somewhat Disappointed” mentioned security.
Security concerns had a few people angry and disappointed. Others said they had no idea what issues were and weren’t being resolved by Zoom. Some believed Zoom didn’t care about security at all. It even seemed like some people went from “Very Disappointed” to one of the other two categories because they lost trust in Zoom.
“A few weeks ago, I would have said very disappointed. But after all the security concerns, part of me wonders… would it be a GOOD thing if I were forced to choose an alternative?”
The efforts Eric and the Zoom team are going could go far in resurrecting these customers, if they’re willing to give Zoom another shot.
Often, people believed that alternatives to Zoom had better levels of security.
“GoToMeeting is more solid and intuitive…and secure.”
“Zoom has had many security issues lately. Also, there are other alternatives to Zoom that are more secure.”
“There are many other video options and Zoom seems to be behind on the security front.”
We also asked people how Zoom could be improved in order to determine what the company can do to help meet customer needs and get to product/market fit.
The number one answer was security. That’s super telling and is why fixing security issues and communicating the new state of things is going to be so very important for Zoom.
Thirty-one percent of people said Zoom should work on fixing security and privacy issues. That’s huge – nearly a third of people mentioned security.
In the “Very Disappointed” group, 22% mentioned security. It’s a real issue, even for people who love Zoom.
In the “Not Disappointed” group – the people who like Zoom the least – that number was much higher, at 39%.
If Zoom can fix this one thing, they’ll likely see a lot more retained customers who are satisfied with the product.
Why Zoom Doesn’t Have Product/Market Fit
Zoom doesn’t have product/market fit or high NPS because of the abundance of alternatives, the time it takes for new customers to reach product/market fit, and the state of their security.
Competitors are closing gaps, and fast. They’re doing everything they can to grab customers from Zoom and get a bigger piece of the market. And new ones are trying to innovate in this suddenly very high-demand market.
But they have a big hill to climb to get to parity with Zoom. In 2019 Zoom shipped 300 features – that’s nearly one feature a day.
Plus, Zoom wins on connectivity and reliability. A critical criteria for this product category that competitors haven’t been able to beat, let alone even match.
Though that’s not enough alone to keep Zoom in the lead.
If Zoom wants to continue to grow at breakneck speed, it will need to fix its security flaws and communicate those fixes widely.
Zoom is addressing the #1 thing (security) that matters to customers with an impressive cadence of improvements.
It’s in this company’s DNA to listen deeply to customers and take decisive action based on what they learn. What’s most impressive is that Zoom continues to live these values as it has scaled and gone public.
Read about the history of Zoom to learn how Eric Yuan’s leadership from day one got them to become the customer-centric company that we know today.