How to Develop a Digital Product Strategy for a Startup?

In the good old days, every business started with a business plan. Do you remember those? Long pages of reasoning and calculations for years to come with detailed calculations and such. Those business plans were actually time-consuming and expensive to develop, and still are. But as time goes by and the pace of life speeds up, this approach renders itself obsolete. Not in every field, but surely for the field of software product development you need to work on digital product strategy. By the way, we actually discussed it here in more detail. 

Any today’s digital product doesn’t have the luxury of time for long and thorough research. In addition, long-term plans for the majority of online businesses involve extremely high levels of approximation and guesswork. Therefore, it is not even justified. If you are a small to medium business in today’s rapidly changing online environment, then a traditional business plan is not a way to go for you. If you need to get minimum waste and maximum productivity, a digital product strategy under lean methodology is a way to go.

In this article, we will show you how to develop a digital product strategy for your digital startup and illustrate it with a plenty of examples. Happy reading!

Table of Contents

You are launched. Why develop a digital product strategy at all?

Why develop a digital product strategy at all?

So let’s imagine you have your idea, and you feel it is great, it is golden. Why not skip this planning altogether? Many do and many fail. Why?

Common Vision

Example: Imagine the project of our client’s friend. Their team wanted to develop a dating app. They had neither a traditional business plan nor a product strategy. The engineers on the team took a standard dating app blueprint and coded it up. The designer on the team went for a modern look. Do you see inconsistency already? Then, the marketer was the one who talked most frequently to the business owner. The marketer developed a campaign ‘a new way to find your true love’. But, the site was traditional, no novelty features were created. The design didn’t say ‘find true love’, but mostly ‘a cool place to casually hang out’. As a result, the waste was created many times over. There was a lot to be said about the deadlines when each of the teams finished their bit, but we think you got the picture.

Solution: You need some sort of vision for the whole team to follow. And it is what the digital product strategy brings to the table. It will set your team straight and make sure they everyone is on the same page. It specifies not only general goals but also sets expectations of VERY SPECIFIC results within a set time frame. 

Setting up priorities

Example: Our dating app creator first got the original idea for some matchmaking algorithm. And it could have been implemented with a few novelty features. At the same time some of the basics could have been sacrificed. But when they had those meetings about what to do next – engineers had a queue of features. They prioritized tasks on their own. In addition, designers worked on their too. So it was a while till the first working mock-up to be developed. And in the midst of things, things became interconnected. Engineers could not abandon one feature because it had been designed for front-end already, and vice versa. Long discussions were going in circles.

Solution: Clarity is priceless in the world of startups. And if you work with a vendor, handing over your idea to objectivists whose sole purpose is to make sure your idea can generate money as quickly as possible – is invaluable for your success. And it is again the job of the digital product strategy to outline the deliverables linked to the dates.

Reach of the idea

Example: The novelty of the dating site’s above idea was based on the new trend in the area. Business owner’s town became a hub for this wave of astrology solutions to find love with a ton of meet-ups and workshops. So it felt like everyone was into it. However, on the opposite end of the States, it felt like a ridiculous thing to even think of. And it is a commonplace situation. When you get your idea, it naturally comes from your experience, your circle of people, or the business field. It often is restricted to a particular state or city, or to a circle of friends and acquaintances.

Solution: It is somewhat a given that your idea will be based on a small sample size. Especially, when compared to the vast waters of the Internet. You need a strategy that will work not only for your city but the whole country or continent. This is where the digital product strategy shines.


So all in all, spending less on planning is great but skipping it altogether will simply turn out to be a very costly mistake. 99% of the time. So if we got your attention now, let’s keep reading! 

And by the way, if you want to read how to formulate a powerful idea for your business, check out our article “Startup Idea”. 

What is a digital product development strategy for a startup? You are launched

What is a digital product development strategy for a startup?

Start-up digital products get developed starting with a discovery phase. And before your vendor’s team starts developing a product development strategy, they will validate business idea first. Idea validation already involves some market research. It is also likely that idea validation stage finalized with requirement documents such as MRD, PRD, and SRD. Learn more about these documents in this helpful article. And developing a digital product strategy comes next.

A digital product strategy definition is that it is an overarching plan for your digital startup. It consists of several fundamental questions to be answered:

– Who is the target audience for the product?

– What users’ problems (needs) does the product solve? 

– How does the product improve the user experience (expectations) or make tasks easier? 

– How will the product generate revenue throughout its lifecycle?

It is also often important to include a unique value proposition that will differentiate your offer from the competition. The question to answer:

– What unique features or functionalities does the product have to stand out?

A product development strategy is developed after the idea has been validated. So you already have market research at hand. You know that there is a demand, and you have an idea about the competition. At the stage of developing the digital product strategy, you get more focused and detailed. A great positioning statement should result from your product development strategy. It can be boiled down into these two sentences:

FOR [target audience], WHO HAS [user problem to be solved], [your product] IS A [market segment offering] THAT [product benefits]. UNLIKE [main competitor(s)], THE PRODUCT [unique value proposition].

This is, by the way, taken from Geoffrey Moore’s highly praised work in the field of marketing for high-tech. His book “Crossing the Chasm: Marketing and Selling High-Tech Products to Mainstream Customers” would be an exciting read.

Examples of positioning statements 

Example 1. Let’s imagine you want to create an app to provide accounting services:

FOR small business owners and freelancers WHO NEED a simple, affordable accounting solution, [my accounting solution] IS A cloud-based software THAT offers a user-friendly app for invoicing clients, generating reports, and tax accounting. UNLIKE traditional accounting software, THE PRODUCT is designed specifically for small businesses and freelancers, with a minimalist UI, customizable invoicing options, and affordable pricing plans.

Example 2. Let’s look at how Walmart’s marketplace product strategy might look like:

FOR small and medium-sized sellers WHO WANT to sell their products online, Walmart Marketplace IS AN online marketplace THAT provides a large and growing customer base and competitive pricing. UNLIKE Amazon Marketplace, THE PRODUCT offers lower commission fees, a smoother and simpler onboarding process, and promotes the label ‘made in the USA’.

From both statements, we can see that there are clear definitions of the product and target customers. There are also clear pointers for the development team. In example 1, you already know that it is a low-cost product, so the features must be few and simple. The key feature is customizable invoices. Thus, it clearly defines a must and a waste on the project.   

How to create the digital product strategy for your start-up? urlaunched

How to create the digital product strategy for your start-up?

Creating the digital product strategy may take anywhere from a few days to a few weeks depending on the size and complexity of the project. Remember that some of the market research has been done during the idea validation stage. Usually, the digital product strategy is a responsibility of a product owner, business analyst, or a representative of an engineering team. We will guide through each step of the digital product strategy creation with examples.

Deepen the market knowledge. urlaunched

Step 1. Deepen the market knowledge

At this stage, there is a need to take a closer look at your target audience. The following questions need to be answered:

  • Who are your target customers?
  • What is the size of your target market?
  • What are your users’ pain points and needs in reference to your product?
  • Who is your main competition, their market share and USP? What can be done better than they are doing?
  • What are some of the market trends and opportunities that your product can benefit from?

There is also an efficient approach through defining Jobs-To-Be-Done instead of operating with common terms. For example, you can identify your target audience as ‘young professionals’. OR you can rephrase it in a way about what jobs your target audience needs to solve with your product. For instance, ‘maintain a healthy work-life balance’. Or instead of putting down your target audience as ‘hiking enthusiasts’, you can express it through a job-to-be-done such as ‘stay safe and comfy in varied weather conditions on hiking trips’. This approach refines the motivations of your customers and lets you take a more customer-centric approach. It is also a basis for product design strategy that sets the stage for creating a product that your customers will love.

Create customer personas.

Step 2. Create customer personas

This step helps your team and developers to visualize those people who will be using your digital product. The person responsible for the market research will divide your target market into sub-segments. Then each segment will be represented with a customer persona. So, you usually don’t get one customer persona – it should be 3-5 at least. It can be more depending on the size and complexity of the project. 

Think of each customer persona as a description of the most important and relevant customer from each segment. You need to define your most valuable customer so that you can target your resources. Let’s look into an example. Imagine developing an e-commerce shop for those who want to ‘stay safe and comfy in varied weather conditions on hiking trips’. Here’s a simplified version of customer personas and key information about them.

Customer Personal Sample Table.

Of course, the outcome of creating customer personas included in project’s documentation will be much more elaborate on vital details. When you’re working on a project, you create these personas just like characters. You think about their names, jobs, and photos. You also think about their personalities. Are they outgoing or introverts? For instance, if you manage to get the Adventurous Hiker who is an extrovert, he probably does it with many like-minded people. This is an opportunity to create a referral promotional offer. Ultimately, the more you can learn your customer personas the better.

 It is great to know what they’re like, such as their personality and what they like or dislike. For example, you might say that The Casual Hiker has a lot of Lululemon clothes or owns at least three Patagonia jackets. So you can get sense of style they like and price points for items. By having those customer personas developed, you in a way bring your customers to life so that everyone on your team can see them as real people. And it is of the essence in business over the Internet. This helps your engineers, marketers, and managers ‘know’ and ‘feel’ your customers. 

The final product for each of the user personas that goes into the digital product strategy document might look something like that:

User Personas sample. Customer persona sample. Digital Product Strategy

Altogether, it creates a valuable source of information on: 

– how to engage these customers,

–  how to promote to them, 

– what design will be most suited, 

– and what information should be prioritized and so on.

Prioritize customer problems

Step 3. Prioritize customer problems

Now that you have a clear view of your customers and their problems, you need to rank them by their commercial potential. For example, The Adventurous Hiker has problems solving which will bring the highest commercial success. Solution to their problem is high-performance gear that is able to withstand extreme weather conditions. It must also be durable. This kind of gear goes with the highest price tag. And these customers will be willing to pay for it. 

In contrast, the Casual Hiker would be the least interesting for the business because those are often price-sensitive customers. They like having a big selection when shopping. Also, they would seek out deals and affordable options. 

Under the lean methodology, prioritizing customers’ pain points or problems to solve is important for these reasons:

1) Targeted use of project’s resources. For startup products, resources are often limited. So, it is important to allocate budget and time effectively. By focusing on problems with the highest revenue-generating potential, your vendor’s team can ensure you get the most result from your investment. 

2) Reduced risk. Developing a feature or creating a UI/UX is dependt on the preferences of the customers. But it is a creative process and has an inherent risk that the feature will be a miss. But if you focus on the most valuable customers, then you eliminate the risk. The result is higher adoption rates and revenue growth.

3) Fast learning. The lean methodology is all about starting with an MVP. Then you get to the desired product through iterations based on customers’ feedback. If you choose a focused and prioritized approach, you get the feedback more quickly. This allows making data-driven decisions on each iteration leading to improved products rapidly. The speed of learning equals a competitive advantage in the market.

Set product goal. Develop a Digital Product Strategy

Step 4. Set product goals

At this stage, you develop quantifiable and specific objectives for your product that your team aims to achieve. These goals are developed in sync with business goals and overall business strategy. Importantly, the product goals are heavily rooted in the needs and desires of the target audience. 

For example, let’s continue with our hiking “startup”. The product goal can be something like that:

“By the end of Q1, develop and launch a minimum viable product (MVP) that:

– generates at least 100 purchases of hiking gear that is lightweight, durable, reliable, and suitable for use in various weather conditions

– reach a satisfaction rate of at least 90% among customers who provide feedback on the MVP’s user experience and product quality.”

This example is formulated by what is called SMART technique. 

S stands for specific. Our goals weren’t about creating a web app or creating a streamlined shopping experience. These terms are way too vague and broad. We specified that it is going to be an MVP with particular kinds of merchandise offered.

M stands for measurable. We didn’t just say to generate sales, like any number of sales. We established an exact number. We quantified it. The same we did with customer satisfaction rate. We didn’t just say to create a website that users will love. Love needs an exact number for your team to track. 

A stands for Attainable. These numbers may seem low or not perfect, but they are attainable. Your first launch is just a rough draft of your product which will target mainly ‘early adopters’ of a specific category of your future customer base. The goal of MVP is to get those early adopters to try your product, and give their feedback so that you can iterate from there. A step at a time. 

R stands for relevant. It is often useful to remember that visitors are not buyers. The same goes for an average time spent on your webpage or the number of pages visited. These are good metrics, but they are not your goals. These metrics are part of analytics to make better decisions. The metrics must be relevant to your business. If you are not a blog site which runs Google ads and gets revenue from the visitors – it is not relevant. 

T stands for time-based. “By the end of Q1…” – you need to link the goals to the date on the calendar. We all are going to achieve some results sooner or later. But when it comes to business, time is money, and money is time. You don’t need at least 100 purchases in 2 years after the MVP launch, you need that in the first quarter. Otherwise, it has no value to your business. 

In addition, it is important to link the objective to the acceptance criteria. For this, check out this article on acceptance criteria examples and templates.

Overall, it is important to have SMART objectives so that your team focuses on very specific results. This is the essence of the lean methodology. You streamline the work to get the best results in the most reasonable time frame. 

Define Unique Selling Point – USP. Develop a Digital Product Strategy

Step 5. Define Unique Selling Point – USP

At this stage, you already have enough market research to know a lot about your competition. It allows you to easily come up with a feature that will set your product apart from them. And in general, a software startup needs to define its Unique Selling Point (USP) when developing a digital product strategy. Your marketers usually will focus on promoting USP in their campaigns. So it is the main attraction point for your customers.

For example, in our hiking startup product, we can formulate the USP in the following way:

“At our startup, we offer high-quality hiking gear that is lightweight, durable, reliable, and suitable for use in various weather conditions. Our unique value proposition is that we combine our expertise in outdoor gear with the power of technology to create a streamlined online shopping experience for hiking enthusiasts.”

To give an example from the existing companies, let’s talk about Slack. Its USP is that it focuses on team communication and collaboration. In addition, it integrates with a variety of work-related tools. It sets it apart from other communication tools like Skype or WhatsApp which are more focused on personal communication.

In both examples, the USP is what drives the marketing and sales efforts of the start-up. It allows them to focus on a specific niche. Defining a USP for a software startup is another piece of the puzzle of how to be successful on the market.

Have a product vision. Develop a Digital Product Strategy

Step 6. Have a product vision

Even if it is just an MVP, and maybe even especially if it is just an MVP – make sure there is a product vision. It is this big long-term goal that will be guiding your team efforts through the years. When you create your MVP, you often create a stripped-down version. Then you iterate over it and break down problems. Basically, you create your product in steps. The product vision is what will help stay on track over the long term. It provides a high-level uniting view of the overall goals and direction for the product.  

For our example from before, we can formulate a product vision as follows:

Vision Version #1 

“Our product empowers hikers to enjoy the great outdoors with confidence by providing them with high-quality hiking gear that is reliable, durable, and suitable for a range of weather conditions.”

Or we can focus on a social aspect if that is a part of the digital product strategy and formulate our product as follows:

Vision Version #2 

“We believe that technology can enhance the outdoor experience by making it easier for hikers to find the right gear, connect with like-minded individuals, and discover new trails and destinations.”

Both of these product visions set the stage for the development of an MVP. And you can see how different they are: one focuses on the items that will be sold. The other one includes a triad of points including merchandise, social factor, and technological feature. For both of these visions, the to develop will differ. Overall, the product vision is a powerful tool. It aligns the long-term business goals, day-to-day development, and marketing.

Generate a feature list.

Step 7. Generate a feature list

Now you have established the target market, objectives, USP, and product vision. The next step is to compile a list of essential features for the first release of your product. This document is used to define product development. It is known as a Feature Breakdown List (FBL).

To create an FBL, you can start by identifying a larger piece of feature-package called epics. With our hiking e-commerce startup, it can be gear selection, trail exploration, and community building. That is if we base it on our product vision version #2. Then you would create smaller individual features for each epic. It will look something like this:

Feature Breakdown List Sample.

Of course, it can be refined even further to leave out some of the features that can be included in the follow-up releases. Still, now you can see how all the research and time put into the Discovery Phase for Product Strategy pays off: 

  • you and your team get a clear picture of where you are going, 
  • what you need for that, 
  • and what results you are aiming at. 

Summarize everything into Product Strategy Canvas. URLAUNCHED LTD

Step 8. Summarize everything into a digital Product Strategy Canvas

Creating a Digital Product Strategy Canvas is an effective way to develop a dashboard view for your digital product strategy. It is a visual tool that helps to organize the key elements of your digital product strategy in a concise way. 

The canvas is typically divided into three key areas: Target Market, Business Model and Product Strategy. Each of them has a few boxes for key data. Target Market includes Customers, Problems to Solve, Competition and Solution. The Business Model includes elements such as Revenue Sources of the Product, Customer Benefits, and USP. Product Goals with the established objectives using SMART methodology and Product Vision conclude the document.

What is next? Create your product roadmap

The Discovery Phase doesn’t end with a digital product strategy. You will need to take it further. You will break down the digital product strategy into actionable milestones. For each milestone, you will set key deliverables, metrics and dates. Grab the Guide to creating a Project Roadmap here.

Final Words

In conclusion, developing a digital product strategy is a critical step for any startup looking to create a successful product. This vital step helps you understand your target audience. You also get to define your value proposition and outline your business model. Additionally, this step involves setting specific goals and identifying the appropriate metrics to measure them.  Finally, you can develop a clear product vision and an itemized breakdown of the features. Based on the documentation for your digital product strategy, you then go on to create a roadmap. 

p.s. Here you can check the 6 main steps of Custom Mobile App Development


What is a digital product strategy?

A digital product strategy is a plan that outlines the approach a startup takes to develop and launch a digital product. It involves defining the target audience, identifying customer problems to solve, setting product goals, and establishing a unique selling point (USP).

Why is a digital product strategy important for startups?

A digital product strategy provides a clear direction for a startup’s product development efforts. It helps align the team, prioritize customer problems, and create a product that resonates with the target audience. Without a strategy, startups risk inconsistency, waste, and missed opportunities.

How does a digital product strategy differ from a traditional business plan?

Traditional business plans are comprehensive documents that outline long-term business goals, financial projections, and detailed calculations. A digital product strategy is more focused on the specific steps needed to develop and launch a digital product. It emphasizes market research, customer needs, and product features.

What are the key components of a digital product strategy?

A digital product strategy typically includes:
Common Vision: Establishing a clear and consistent vision for the entire team to follow.
Setting up priorities: Prioritizing customer problems to address and solutions to offer.
Reach of the idea: Ensuring that the product idea resonates with a wider audience beyond the initial target.
Product Goals: Defining specific and measurable objectives for the product’s development and launch.
Unique Selling Point (USP): Identifying what sets the product apart from competitors.
Product Vision: Outlining the long-term goals and direction for the product’s development.

How is market knowledge deepened during the digital product strategy process?

Deepening market knowledge involves answering questions about the target audience, market size, customer pain points, competition, market trends, and opportunities. This step helps the team better understand the landscape in which the product will operate.

What is the purpose of creating customer personas in a digital product strategy?

Customer personas are detailed representations of different segments of the target audience. They help the team visualize the people who will be using the product, enabling better design, marketing, and decision-making based on customer preferences and needs.

How are customer problems prioritized in the digital product strategy?

Customer problems are ranked by their commercial potential. By focusing on solving high-potential problems, startups can allocate resources effectively, reduce risk, and learn quickly from user feedback.

What is a Unique Selling Point (USP) and why is it important?

A USP is a feature or aspect of a product that sets it apart from competitors and provides value to customers. It helps the product stand out in the market and guides marketing efforts by emphasizing what makes it unique.

How does the digital product strategy contribute to creating a product roadmap?

The digital product strategy provides the foundation for creating a product roadmap. The strategy outlines the goals, features, and direction for the product, which are then translated into actionable milestones and deliverables in the roadmap.

Is a product vision necessary for a digital product strategy?

Yes, a product vision is essential for a digital product strategy. It provides a long-term goal and direction for the product’s development efforts, guiding the team’s decisions and efforts over time.

How can startups benefit from using a digital product strategy?

Startups can benefit from a digital product strategy by having a clear roadmap for product development, prioritizing customer needs, minimizing waste, and creating a product that resonates with the target audience. It ensures efficient use of resources and increases the chances of success in the competitive market.

Can a digital product strategy be adapted for different types of startups?

Yes, a digital product strategy can be tailored to suit the needs of different startups, regardless of their industry or size. It provides a framework for focused and efficient product development that can be adapted to various contexts.

How long does it take to develop a digital product strategy?

The time required to develop a digital product strategy varies depending on the size and complexity of the project. It can take anywhere from a few days to a few weeks to complete the strategy, considering factors such as market research, customer persona creation, and goal setting.

Is a digital product strategy a one-time process?

While the initial development of a digital product strategy is a crucial step, it’s not a one-time process. Strategies may need to be updated as market conditions change, customer preferences evolve, and the product matures. Regularly revisiting and refining the strategy is important for long-term success.

Can a digital product strategy help startups avoid common pitfalls?

Yes, a well-defined digital product strategy can help startups avoid common pitfalls such as lack of focus, inconsistent messaging, and misaligned priorities. It provides a structured approach to product development, reducing the likelihood of wasting time and resources on ineffective efforts.

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