Creating great digital products is a journey. At each development stage, there are assumptions that have been made and can make or break your digital product project. Identifying and testing your assumptions early on can dramatically reduce the risk and costs - including the opportunity cost of time lost if you wait too long to learn that your assumptions were wrong. However, before you can test your assumptions, you need to be able to identify them.
A common approach to de-risking digital products is to build a Minimum Viable Product (MVP). MVPs come in all shapes and sizes but share a common goal, test the most desired features and assumptions with a core group of key users to get feedback.
There’s nothing like user feedback to test your assumptions. At the end of the day, it’s the users’ problem we’re trying to solve. MVPs allows users to get their hands on the wheel and take the digital product for a spin.
However, jumping right in and building an MVP has its own set of risk. Before you get building, we recommend you answer the following questions.
1. What’s your problem?
Great digital products solve problems for users. First, you need to get clear about the problem you’re attempting to solve. Make sure there’s enough “pain” created by the problem that your target user would be willing to stop what they’re currently doing to solve that problem (if anything) and try out your solution instead.
2. Who is your target customer/user?
Get specific about whose problem(s) you are trying to solve, so that when you go to test your other assumptions you’re getting feedback from the right audience. If you miss on this, all of your other testing could be for not.
3. What’s in it for them?
You could build an amazing digital product, but if your customer doesn’t clearly understand how it will benefit them, it may never see the light of day.
If you don’t consider yourself a “marketing person” and feel like you could use some help articulating the benefits of your product, then ask around for a little help. Odds are any skilled marketing person you know would enjoy this kind of challenge and be willing to help out if simply asked. A word to the wise, try to be as overt as possible about the benefit(s) you’re offering. Try to really boil it down so your benefit statements have “can’t miss it” impact.
4. How will your digital product solve the problem(s)?
Make sure you get clear about exactly how your digital product will solve each of the problems you identified earlier. What key activities, experiences or backend systems provided will solve the problem? How will they solve them?
Write these down clearly and concisely. Doing so will help you cast vision for how your digital product will work, and may serve as important reasons to believe for internal approval or during the sales process.
5. What are your top marketing channels?
How will you find your customers, or how will they find you? You could create an incredibly valuable digital product, but if your customers don’t know it exists then it is essentially worthless. Because of this, you need to be thinking about marketing channels right from the beginning. Sometimes a strong marketing or distribution channel can be even more valuable than the digital product itself. Make sure you test your assumptions about how customers will find you early on.
6. What are all of the possible revenue streams?
How will your digital product make or save money? Don’t forget to factor in recurring revenue if relevant, and start by being conservative with your assumptions about retention and re-engagement. Most digital products are not as “sticky” as you’d like them to be at first, but gradually improve over time through customer feedback and optimization.
Related to the last point, you’ll eventually need to make sure the revenue you drive from your digital product will exceed the marketing costs required to get people using it.
7. What are your costs?
Make a list of all of your costs, both fixed and variable. From development costs to marketing costs, third party services, hosting, maintenance, and support - the costs of making a great digital product can really add up.
From the outset, try to be realistic about these expenses; from our experience, most companies underestimate what it takes to build, iterate, support, and market their digital products.
8. What is the one metric that matters most?
In the world of startups, much has been written about the importance of identifying the “one metric that matters” (OMTM). Identifying this OMTM is equally important for corporate innovators. Since there are so many variables in play when you’re building a new digital product, it can be incredibly easy to lose focus. Instead, identify the one metric that matters more than all.
Doing this will not only keep you and your team members focused, but also help you know how well your effort is translating into results, allowing you to better communicate your progress to your team, stakeholders, and the media. Here’s a hint, the OMTM needs to ladder up to the vision and mission of your organization.
9. How is your digital product different?
What is your unfair advantage? How is your product unique? Early in my career, I worked for an innovation consulting company that helped companies like Ford, Nike, Disney, American Express and other blue chips look into the future and define the new product or service offerings that could fill their innovation pipeline. As part of this work, we commissioned a massive research project that analyzed over 5,000 new product and service concepts that were quantitatively tested with consumers to determine purchase probability, the strength of benefits, perceived uniqueness and more.
One of the clearest insights from the research was that products which were highly unique and had a clear point of difference were much more likely to score very high on purchase probability. But to be fair, they were also much more likely to score very low on this same metric.
What highly differentiated products were not likely to do was show up in the middle, or what we deemed “the commodity zone”.
The takeaway here is that if you want to hit a homerun, your digital product needs to have a meaningful point of difference or some sort of unfair advantage that no other competitors have.
What you don’t want to do is build another “me too” digital product, because doing will likely limit your ability to have a major success, right from the outset.
10. What are the death threats?
Now that you have amassed a healthy list of assumptions, think about which ones are the riskiest? Which ones are most likely to kill your project if you don’t get them right? In which do you have the lowest confidence that your assumptions are right? These are your death threats. Stack them from most risky to least, and identify ways to start testing them - starting by testing the riskiest ones first.
Taking the time to give thoughtful, realistic answers to these questions can save you a significant amount of time and resources down the road.
Think big, but start small. Groundbreaking digital products have a minefield of risks to avert on the path to success. Testing your assumptions can take many forms. Sometimes the first version of a digital product can be built very simply in something like Google Sheets or Excel. Or perhaps you could start by building a basic landing page with a clear call-to-action, and then find a way to get in front of your target customer to see if they’ll engage.
At Differential, our process starts with a Discovery Meeting where we drive clarity around the key activities and experiences that the product should offer.
This is often followed with a Design Sprint where we create a high-fidelity, clickable prototype of the digital product we have in mind. This process allows us to get a “looks like, feels like” product in front of targeted customers quickly and cheaply. Also, it helps us answer “business questions” like, “Is this a product customers want, understand and would be willing to use and pay for?”
Further, the Design Sprint helps us see if the assumptions we’ve made around the user experience and user interface hold up when a user is actually trying to navigate the application. All of this work takes place before we ever write a single line of code.
If you’re a corporate Intrapreneur and are struggling to figure out how to start small and learn fast with your digital product, feel free to contact us. We’d be happy to carve out time to help you work through these questions and perhaps identify a few creative ways to test your assumptions.