Oct 2023|Adrenalin
Avoid Costly Pitfalls & Seize Opportunities: Why You Can’t Ignore Digital Product Strategy Any Longer
Customer expectations from brands they choose to engage with have never been higher. Consumer wants and needs are continually changing and evolving over time which has made customer loyalty even harder to realise.
Gaining cut-through in this ultra-competitive landscape across multiple channels, devices and touchpoints has never been more challenging for brands.
That’s why it’s critical that you have a digital product strategy in place, to help you and your team make smarter, tactical decisions. A product strategy will help you identify the right opportunity, decide where to compete and allow you to solve a problem for your customers in a viable, unique and sustainable way.
One of the reasons that so many organisations fail at delivering valuable products and services is the lack of a well-defined strategy or the complete absence of a product strategy framework. With the failure rate for digital transformation projects at over 80% (Forbes), it’s critical that senior leaders prioritise their digital product strategy to minimise failure rates, remain competitive, and ultimately, increase ROI. In this article, we dive into exactly how a digital product strategy does this.
What is a digital product strategy?
In our guide to creating a successful digital product strategy, we define a ‘digital product strategy’ as the strategic vision of your digital product or platform, a detailed plan that identifies the opportunity in the market and pinpoints the value you create for customers.
In essence, a digital product strategy helps your team focus on the right things, by answering “what,” “why,” and “how” you can make your digital product unique and profitable. The key to this is honing in on the specific components of that strategy…
What are the components of a digital product strategy?
A unique and highly effective approach that many digital teams take in relation to their digital product strategy is to view it as a roadmap, a plan that provides direction and guides decision-making and resource allocation.
As such, it includes:
Vision and goals – a long-term vision and ‘business-aligned’ goals that cover revenue targets, user adoption rates, market share objectives or other key performance indicators.
Target market and audience identification – an understanding of the needs, pain points and preferences of the target market, alongside a wider market analysis to assess the competitive and economic landscape.
Value proposition – how the digital product is going to address the target market identified above, what problem it will solve, and how it will be different to other solutions on the market.
Monetisation and growth strategy – aligning with business goals, this is how the product will generate revenue, be that via subscriptions, advertising or affiliate fees. Leading on from this, it’s about how the product will grow, how it will tap into wider markets and reach more customers.
Marketing and sales strategy – to achieve the revenue strategy, how will the digital product be marketed and sold? What pricing point will it be pitched at and what ‘go-to-market’ plans will be put in place to promote the offering?
User Experience (UX) strategy and design – crucial to digital products are the UX strategy and design, and the key here is developing a product that’s intuitive, user-friendly and visually appealing.
Data strategy – very few companies nowadays build a digital product without taking into account the data strategy. Not only does this cover the legalities of data collection and management, but it can also tie back to the monetisation strategy of how the data is used.
Tech stack – supporting everything from the data to the UX, and even the marketing strategy, the appropriate tech stack and architecture are crucial.
Development approach – which development methodology will be selected, e.g. Agile, and how will feature prioritisation, user feedback and iteration all be accounted for in this approach?
Analytics and metrics – how will success be measured and what KPI will be used to tie the product back to the business goals?
Risk assessment and mitigation – the product development process will likely through up a number of risks, so it’s important to have a plan in place to deal with these before they happen.
Resource allocation – all of this work is of course going to need resources and budget, so what does that look like and how will it be set up effectively?
Why is a digital product strategy so important?
It’s difficult to ignore the mind-boggling growth rates of digital devices across the globe. In Asia Pacific, the average customer has 3.1 devices. This rises to 13.4 in North America, and 9.4 in Western Europe (Statista). At a macro level, McKinsey estimates that by 2025, some 20 billion digital devices will be in use. For savvy digital businesses, this represents an opportunity to deliver a multi-channel, optimised digital experience across these many different devices and interfaces, an opportunity that if not snapped up, will ultimately result in:
Missed revenue opportunities
Loss of competitive edge
Innovation stagnation
Higher customer dissatisfaction and churn rates
Missed data opportunities
Increased technical debt and mounting overheads
Inefficient resource allocation and ‘shadow’ departments
Inability to scale
What are the key benefits of a digital product strategy?
With such an opportunity open to forward-thinking digital teams, it’s important to highlight what the benefits of a robust digital product strategy are. When you take into account that over 80% of digital transformation projects fail (Forbes) and that one of the key reasons for this is the lack of a digital product strategy, then it’s easy to see why that strategy is so key in the first place.
Here are top 10 benefits of a digital product strategy:
Alignment with business goals to drive revenue growth
Having a robust strategy set up from Day 1 ensures that the digital product itself aligns with broader business objectives. Not only does this align your internal teams but it provides clarity later on for how the product is contributing to the bottom line.
Customer-centric approach that increases acquisition and loyalty
A strategy that is grounded in understanding the customer and their needs and preferences will undoubtedly lead to increased customer acquisition and loyalty. Digital products that are too ‘inward-facing’ very rarely get market traction in the first place.
Faster time-to-market through clear vision and internal alignment
A digital product strategy shouldn’t be seen as an onerous task. Instead, it should be viewed as the opportunity to get clearly aligned on the vision and goals of the project. Doing this work upfront ultimately leads to faster time-to-market as misunderstandings and conflicts are less likely to come up in the development process.
Competitive advantage and innovative edge
Putting the time into researching the market in order to inform your digital product strategy inevitably means that your product will be more differentiated in the marketplace – giving your product and business that innovative edge.
Data-driven decision-making and UX strategy
As we outline here, companies that leverage data-driven design outperform industry-benchmark growth by as much as two to one! What better reason to support your bottom line than with data?
More efficient resource allocation
Going into a digital product project without a clear understanding of resources and budget is a sure-fire recipe for disaster. You can avoid this and wasted time with a clear strategy and plan in place.
Decreased risk
Having done your risk assessment and mitigation planning, you’ll have a decreased likelihood of risk creeping into your project, especially when it comes to your tech development and features prioritisation.
Measurable success
Surely the key to any successful strategy or plan! For more help on defining the key metrics to use in digital product design and UX, head here.
Long-term business sustainability
If you’ve covered all your bases when it comes to growth strategy and alignment with business goals, then you’re ultimately ensuring the long-term sustainability of the business.
Enhanced stakeholder and investor confidence
And with long-term sustainability and a clear growth plan, you’ll also guarantee stakeholder and investor confidence!
Successful digital product strategy – a case study in excellence
The gold standard when it comes to developing sustainable digital products has got to be Amazon. When it comes to the digital product strategies sitting behind these products, it will come as no surprise that Amazon’s internal motto is ‘Treat your strategy as a product’ (ProductPlan).
Let’s take a look at the evidence…
The Annual net sales revenue of Amazon has been nothing short of astounding. In the last quarter of 2022, they reported net sales of over $149.2 Billion!
This has been fuelled over a number of years by some key strategic initiatives:
They’re centred on a clear vision and business model.
They’re 100% focused on digital – from selling books to AWS, the model has clearly capitalised on digital from Day 1.
They’re customer-obsessed, continually looking to deliver digital products and services that make their customers’ lives more efficient.
They continually test digital and market opportunities, Amazon Fresh being the latest that seamlessly blends the digital with the physical.
They’re all about the UX. They may not follow the cookie-cutter approaches, but their UX delivers what the customer needs and is consistent across their portfolio.
Even the biggest brands sometimes fail at digital product strategy!
Google may be another gold standard in digital product development but Google Wave shows that even the large Enterprise brands sometimes get it wrong!
Google Wave launched in 2019 as an abstract emailing platform – a place where users could join ‘waves’ to share polls, statuses, images, videos and more.
It lasted just three years because it lacked a strong digital product strategy:
It was a finished product at the time of release – it didn’t take into account user feedback and iteration before launching.
It wasn’t focused on a specific customer problem – and the team didn’t update features in line with customer feedback.
It had an overly complex user interface (Hackernoon).
Its positioning didn’t convey its true value or capitalise on growing digital trends in the right way.
The Google Wave example shows that putting the time and effort in upfront to establish a well-crafted digital product strategy is well worth it. In fact, a well-defined strategy does more than just detail your digital product plan and features – it’s the blueprint that pinpoints how your business will grow by harnessing the power of digital that sits at the centre of so many people’s lives.
As we outlined earlier, a digital product strategy is the vision for your organisation that clarifies how you and your team will:
achieve faster times-to-market
stay ahead of the competition
ensure alignment and boost stakeholder confidence
reduce risk and increase efficiency
All to drive revenue growth through new market and customer opportunities.
To grab these opportunities, senior execs and digital teams need to put their collective brainpower into creating robust digital product strategies that are both growth-oriented and sustainable. If this is something you want to take further in your business, then here’s our step-by-step guide, on how to do this.
If you’d also like to learn more about how to develop and implement successful digital product strategies, then get in touch with the team.
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