Nowadays, everyone seems to be involved in “digital” somehow. If you browse through profiles on LinkedIn, you’ll see that we’re surrounded by people who are directly or indirectly involved in creating digital products. There are Software Designers, UX Designers, Entrepreneurs, Investors, Product Managers, CEOs, Founders and many more… This is not unexpected in today’s technology-focused world. However, it’s clear that while many people are involved in the digital space, some thrive while others fail. In an age where everything seems to be digitalising, it may be challenging to recognise what classifies as a “digital product” but, to avoid failure, it’s important to understand why this happens. And to understand why; you need to know the process behind digital product development.
What is A Digital Product?
A digital product is anything that can be sold online that doesn’t have a physical form. In this regard, e-books, music, web elements, data and research, software, applications, guides, recipes, templates, and even artistic creations may be classified as digital products. However, with such a broad definition, it’s hard to distinguish between a digital product and a digital service. It’s important to recognise this distinction because it can have an effect on an entire business model.
The Differences Between Digital Products and Services
A product is something that is either sold in exchange for currency or bartered for something else. Once the exchange is complete, the relation between both parties end. A product’s existence is independent of the buyer or seller. On the other hand, services involve processes and may resemble relationships. A simple example would be selling a web page template or teaching someone how to design a web page.
Today, products and services are usually offered in combination, in hopes of sustaining the commercial relationship with the customer. Why? There is a very simple answer to this. The contemporary world is built on data and marketing data says that acquiring a new customer costs 5 times more than retaining existing ones. Increasing customer retention by 5% increases the profitability between 25% to 95%. The possibility of selling something to a new customer is around 5-20%, which climbs up to 60-70% when it comes to existing customers. In other words, investing in a relationship with a customer is far more profitable than selling something as a one-off exchange.
This is why it often seems hard to distinguish products and services. Is the iPhone a product or service? At first glance, it looks like a product. However, by providing extensive after-sales services, apps, support, updates and more through iTunes, Apple makes its customers sustain their relationship with the company.
If we go back to our first example, even a simple website template can become a product-service hybrid when updates, support, design tweaks, components and additional elements are included.
Before advancing to the development phase, it’s important to determine what kind of relationship you want to build with your customers. Being clear at this phase also makes it easier to structure the business model.
Analysis, Research and Preparation
There are different theories explaining the success of a product. Say’s law states that “supply creates its own demand”, while in Keynesian perspective it’s easier to fulfil demand than creating it. It’s the economist’s job to argue which is true but in terms of contemporary marketing, it’s obvious that a product or service must offer added value to customers to be successful.
There is no added value if someone is planning to create just another Amazon or eBay. A new business must either offer something unique (even if it’s a very small detail) or must fill an unaddressed demand.
As a result, the preparation phase is very important. In this phase, it must be determined if there’s a demand for your product or service and if the supply and demand ratio is in your favour.
A basic internet search is all you need. You don’t even have to be intuitive to determine demand. There are vast amounts of data available for free or for a small fee that can be simply accessed on the internet.
After determining the problem or demand, as well as the solution or supply that you’re ready to offer, it’s important to determine the business model. How will you make money with your digital product or service? There are many successful business models today that benefit all parties involved with certain products or services. For example, popular apps are often offered for free in exchange for data collection or in-app ads. Many free video games make money through in-game micro-transactions. There are also apps with a freemium or free-trial model, with some even combining two or more of these models to make their product or service more profitable.
So it would be wise to determine which way you’ll make money with your digital product or service before advancing to the development phase.
You should also think about how you’ll reach potential customers beforehand. Although it depends on your product or service, there are many platforms that entrepreneurs can use to reach their customers. If it’s a mobile app, there is iTunes and Google Play. If it’s a game, there are platforms that work with a similar mentality and business models such as Steam or the Microsoft Store.
A website is also a requirement for your digital product or service. A digital product without an official website could be a funny joke if it didn’t raise questions of transparency, brand image and reliability.
Digital Product Design
After determining the demand and the product itself, it’s time to venture into the digital product design phase.
In this phase, the user experience must be carefully planned. User experience and design are usually intertwined so these processes may be conducted together or in parallel. It doesn’t matter if your product is the mobile app itself or provided through the mobile app, the mobile app and the website must be user-friendly.
Wireframes, user flows and function flow blocks should be carefully and completely planned at the end of this stage.
“Intuitive design” is a term often used these days. It means that users can easily find out what is where, even if they haven’t ever seen that specific app or software before. This design mentality is based on a simple fact about human psychology: humans rely on their past experiences when facing something new. When we see three lines on top of each other, we know that’s the menu (or a hamburger menu as it is called in the business). When we see a gear, we usually think that’s the “options” or “settings” feature of the app. Determining such design elements is important in achieving an intuitive, user-friendly design.
Prototyping of A Digital Product
After the design phase is complete, a functional prototype should be made. A functional prototype is a good way to conduct user tests and discover errors, bugs, functional mistakes, and design improvements. Errors and subsequent improvements are inescapable parts of the digital product, app or software development. It’s important to eliminate as many errors as possible before presenting the app or software.
A functional prototype can even be used for marketing purposes (to an extent). You can test your app’s value proposition, user experience, user interface and user-friendliness.
Development and Testing of the Digital Product
After the prototyping phase, it’s safe to advance into full-scale development. If proper procedures and tests are conducted carefully, then this phase should be painless.
Some complex systems may be technically harder to develop. Some products or services require many different components with various functions. Some applications or software needs to be integrated with other software or elements. Although this may complicate the process slightly, there are even ready-made API and interfaces developed for these purposes.
Advancing to the launch phase may sometimes become an ordeal. Digital product history is abundant with stories of delays, recessing back to the design or testing phase, and even entire project cancellations. There are sequels to PC games that have more than 10 years between the latest release.
It’s easy to get lost in details and become paralysed in such situations. However, the balance must be maintained. Errors and mistakes must be accepted as a natural part of the process. Too many of them will cripple the success of the final digital product. However, trying to launch a “perfect” and flawless product may cause launch delays over and over again.
Even multinational tech giants like Google, Facebook and Microsoft make mistakes. During the pre-launch broadcast live on CNN, Windows 98, which was marketed as the operating system that would end the “blue screen” (a renowned phenomenon back then) the operating system still crashed into a blue screen. It was a humiliating episode but it didn’t make Microsoft go bankrupt or withdraw the product. In fact, Microsoft sold 530,000 copies in the very first day of release and made more than $3.2 billion.
The point is: an error is not the end of everything. They are a part of digital business and there is no final product in digital businesses. Because everything is constantly changing — user behaviour, design trends, technology, and more. Since improvements and revisions are an indispensable part of the business, they are acceptable to an extent.
Maintenance and Support
This is the part where you can sustain your relationship with your customers and make a little extra profit in the process. Support is very important in digital businesses, whether it’s a video game, business software, e-commerce platform or something else. Some customers even make choices according to the support service quality of the brand or company.
As we mentioned previously, errors and improvements are a natural part of a digital product, which putsmaintenance in the same category too.
Establishing strong and sustainable relationships with customers is so important and beneficial that you can even modify your business model during this phase if it’s not working.
To be honest, every consumer expects after-sales support to an extent. And this is true for every industry. Would you buy a washing machine if you find out that the company doesn’t give you a 2 or 3-year guarantee? Would you use an e-commerce platform if you cannot reach anyone in case something goes wrong with your transaction?
In conclusion, developing and launching a digital product is hard but like every business, there are guidelines and tips for progressing. Careful research, preparation and implementation are crucial like in every other industry. Digital products may be different from tangible products, such as an automobile or a washing machine, but the target audience is always the same: humans. In the end, consumer demand, habits and behaviour are the determining facts and entrepreneurs who are able to read them usually become successful.