Launching and Monetizing Your Digital Product

In our work helping business leaders build and launch new digital products, we've seen the same tactical question arise time and again: when to start investing in user experience, analytics, marketing, sales, and other areas? The outlined roadmap is the step-by-step approach that captures how leaders have succeeded in generating revenue.

1. Ideation

This first phase is all about making sure everyone on the team understands the business model. It is when high-level business needs and goals are defined and agreed upon. Special focus is given to end-user benefits and prioritizing them. Prioritization is not a one-time effort—it happens continuously throughout the process. Changing requirements and adjusting priorities is a necessary part of all product development efforts. 

Highlights of Ideation:

  • End-users: There is no product to look at, hence no end-users.
  • Business Workflow: Define and prioritize business requirements.
  • Software Output: Alpha version of the product.

The software team works on delivering the alpha version of the product. The Alpha version contains limited functionality with little consideration for the user interface. It is in no shape to be shared beyond the product team members. It is very difficult to do good analysis, design, and user interface in the absence of any software. Developing an Alpha gives the product team a version to begin gaining a better understanding of the business domain and the challenges of building the product. 


2. Analysis

The analysis phase is when the product team revisits and tests assumptions. Analysis and design exercises are more productive during this phase as there is a point of reference—the alpha version. Undoubtedly, opportunities and challenges one thought about will crop up, and priorities will change. All of this is normal and part of building the Beta. 

Highlights of Analysis:

  • End-users: A few internal business end-users.
  • Business Workflow: Utilize analysis to iteratively develop the product (+ workflow from the prior phase).
  • Software Output: Beta version of the product.

The Beta version can be shared with a few beta users. The product still does not have all the base functionality needed and the user interface is rudimentary.


3. Experience

Feedback from a few beta end-users is a key part of this phase. The team members are too familiar with the product and business purpose to be able to effectively evaluate it. It is essential to rely on end-users when prioritizing benefits and functionality. It is the time to make sure end-users can use the product. At this stage, they do not have to like the product. They should be able to understand what the product is doing and not get lost when using it. Enduser experience should be a top priority, so focus on it during this phase and never lose sight of the benefits and experience for the end-user.

Highlights of Experience:

  • End-users: A few external end-users.
  • Business Workflow: Improve end-user experience (+ workflows from prior phases).
  • Software Output: Minimum-Viable Product (MVP).

Once you have the MVP version, it can be shared with many more end-users. MVP has the bare minimum of the features/benefits needed so that some end-users will find the product useful. It does not have the user-experience or benefits yet to meet the needs of the larger target audience. 


4. Analytics

End-user feedback is important in finding out if the product is heading in the right direction. However, it is risky to rely on end-user feedback alone. In this phase, analytics are set up to learn about end-user behavior and to find out if end-users are returning. No matter what they say, if end-users are not coming back, the product is not ready. The product is ready for launch only when both the end-user feedback and analytics show that the product is providing value to the end-users. Setting up analytics is neither quick nor straightforward. Like anything else, it is an involved, detail-oriented, and iterative process.

Highlights of Analytics:

  • End-users: Several end-users.
  • Business Workflow: Set up analytics (+ workflows from prior phases).
  • Software Output: Version 1.0 - Congratulations! But there is still work to be done.

With Version 1.0 you have a product that is ready to be launched and you are ready to increase your user base. However, Version 1.0 does not mean you are ready for rapid growth—that comes later.

5. Product Launch

This is the time to start working on marketing channels and revenue sources. During this phase, the main goal is figuring out how to acquire and retain end-users. The idea is to iteratively lower your cost of acquisition (CoA) and increase the lifetime value (through retention). The goal of this phase is to make sure your CoA for each end-user is reasonably lower than the lifetime value (LTV) of the end-user.

Cost of acquisition < Lifetime value

Highlights of Product Launch:

  • End-users: Many end-users.
  • Business Workflow (additional): Determine CoA and estimate LTV (+ workflows from prior phases).
  • Software Output: Version 2.0. Time to celebrate—you’ve done it!

6. Business Launch

Now you are ready to launch your business and pour in marketing money to gain as many users as possible.

Highlights of Business Launch:

  • End-users: High growth.
  • Business Workflow (additional): Marketing and Sales (+ workflows from prior phases).
  • Software Output: Maintenance, improvements, and enhancements—the evolution of your product never ends.

Conclusion

It can be daunting to think of monetization when you’re starting out with an idea. How can your idea generate revenue? It is important to focus on the next milestone and not just the destination.

Ideation to Monetization: A Phased Approach


By having achievable intermediate goals, a business leader can gain control of the process:

  • Monetization happens when the product can be effectively sold (CoA < LTV). Phase 5
  • The product can be effectively sold when the analytics and feedback show that end-users like the product. Phase 4
  • End-users can be made to like a product if they can use it easily and understand the benefits. Phase 3
  • End-users can understand and use the product if beta end-users are engaged and listened to when iteratively developing the product. Phase 2
  • Beta end-users can be engaged when there is a base product for them to work with. Phase 1


We’d love to hear about your journey through product development and how it aligns or differs from the process outlined above. We hope you enjoyed the article and it helps you embark on your innovation journey!

Written by Ali Usman, CEO of PixelEdge.