Basics of digital product development – Apps & more.
How can you develop digital products, e.g. apps, properly and what do you have to consider?
The success of digital applications, or apps for short, is unstoppable. It’s clear that everyone wants a piece of the “app” pie. But what makes digital applications successful? Which procedures help to keep the vision in sight and to achieve it? Which methods are useful or even indispensable? Get an overview of the success factors that reliably support you in developing a truly successful digital product.
According to a recent study (German), the app industry will experience a renewed boom in 2020. In the two largest app stores, download figures will exceed the previous year’s record by more than 20 percent in each case: At Google Play Store, the figure is 28 percent more than in the previous year, with 2.75 billion downloads; Apple’s App Store, with 1.99 billion euros in sales, will record an increase of 24 percent compared to 2019.
The Google Play Store accounts for 72 percent of downloads with 3.4 million apps and the Apple App Store for 28 percent with 1.8 million apps – covering all topics and areas of life.
The development of digital products, such as apps, is therefore more worthwhile than ever. Not only startups, but also many established companies have recognized this and have set up entire innovation departments and digital teams. This means that the competitive pressure is enormous.
To keep up with the competition, you should know exactly how to successfully build a digital product. Because a unique product idea is unfortunately not enough to be successful in the digital market. In addition to the right mindset, you also need a lot of “tools of the trade” or the right methods to implement the vision in a target-oriented and satisfactory way – especially for the customer.
What has become clear again and again in the more than 200 digitization projects in our company’s history are the following 3 things that you should continuously pay attention to before during and also after development in order to have long-term success with your app and to hold your own alongside all the others in the App Store.
- There must be a need.
- It must be consistently digitally focused.
- It must be profitable.
This results in three action maxims that you should observe:
1. Check the demand – continuously!
That sounds more sober than it is. What you ultimately develop, the end product, your app, must excite the user so much that he or she chooses exactly yours from the pool of apps. Of course, this works best if your app offers a solution to an existing problem that doesn’t exist yet, or at least outperforms existing apps.
For the first scenario, you need to find out which problems are unsolved so far, or if you already have the idea for a solution, check if it is really in demand. The goal of product development should always be innovation, something new and groundbreaking.
Has someone else already tried to solve the problem? Are there already competing products? That’s not a bad thing, in fact it’s usually an advantage, because it allows you to learn from previous applications and let’s face it, criticizing and doing better is easier than designing something from scratch. As long as you are developing a new or improved solution, it is an innovative product.
There are numerous methods to analyze the need and existing solutions and match them with your idea. At this point, we would like to point out Product Discovery, because compared to many other methods, it not only examines the need and and your product idea before starting development, but also continuously compares the need and current development status during development. In this way, you do not lose sight of your goal, which can also change more quickly than you would like due to rapidly changing customer requirements and market conditions.
However, the most important aspect of the product discovery method is the analysis BEFORE the start of development. By checking whether there is a need and what it looks like, i.e. WHAT exactly the user wants, you will find out whether it is worth pursuing your idea at all. Product Discovery enables a fast, low-risk and resource-conscious development of digital products. It also allows you to exploit the full potential of a digital product and develop a truly value-added product. In other words, Product Discovery prevents you from developing a product that no one might want in the end.
2. Think your product digitally – consistently!
Sie konnten ermitteln ob und welcher Bedarf konkret besteht?
Then it’s time for the precise conception and creation of your product vision.
Even if it actually seems quite logical, we would like to point out at this point: If the product or service is digital, all measures that contribute to its success should also speak the digital language. This already starts with the development of the strategy or the design of your digital business model: In order to check whether your digital business idea really pays off, numerous tools help – digital tools. After all, anything that is supposed to work digitally must be considered digitally with all its characteristics. Both the market positioning, the cost structure and the revenue sources should be examined on a digital level.
The nice thing: Tools for these analyses are numerous, and they provide far more tangible data than a business model for the analog – less data and number-based – world.
One helpful tool here, for example, is the Google Keyword Planner, which can display the search queries for a search term per month. The results are a good indication of whether demand is correspondingly high. A lot of information can also be gained about competitors and substitute products using digital tools. With tools such as Similar Web, you can examine the competitor’s website and find out, among other things, how well its website is visited and which channels its visitors use.
Once the market positioning has been established, the next step is the economic considerations, especially the question of cost structure and revenue sources. To be successful with the digital application, it is advisable to stay in the digital world. After all, what is consumed digitally is also paid for digitally. How your digital product pays off ultimately depends on the product and the user profile. If the product is very exclusive and the number of users is low, you should earn a certain amount per user, or if the application is high-quality and -priced, it will probably not be used by many users, like a social media platform for everyone. However, the exclusive user base is probably willing to pay a bit more for your digital product for that very reason.
So, depending on the case, you need to figure out how many users are willing to pay and how much. In other words, what do you have to do to make your digital offering really pay off? There are numerous ways to make a profit digitally.
3. Make sure it pays off – consistently!
As innovative and inspiring as your app idea is. Of course, you don’t develop it out of pure idealism. It has to pay off. In the best case, just as digital and thus scalable as the app itself.
Accordingly, the profit you want to generate with your digital business model should also be generated on a digital level. This can range from e-commerce solutions to services and products that could not even exist without digitization. Examples of this are Dropbox or Facebook. Here, the product itself is also digital.
As you can see, the way profits are made depends, of course, on the type of application and how payment models can be incorporated into it. Here, the product itself is digital. Below are a few examples that show how versatile the possibilities are.
Ads are probably the most conservative way to generate profits within a digital business model. Your digital product is mostly free as an advertising medium in this case. If it offers your users high added value, the number of users and thus the visibility of the adverts is high. Advertising partners are accordingly willing to pay for the high visibility of their ads. These can be a few premium advertising partners, or numerous advertising slots that are allocated automatically. Probably the best example of refinancing a digital product through ads are user-strong social media platforms like Facebook or Instagram. They have continued to expand this way of generating profits in recent years.
Even with apps that are free per se, you can earn money. Thanks to in-app purchases that unlock additional content for the once-enthusiastic user. To earn money with an app that is actually free of charge, numerous app providers offer in-app purchases that unlock additional content or functions after payment. In this way, app operators can initially reach many users with a free standard version and then demand money when they are satisfied. However, the respective app stores retain 30% of the revenue as a fee for the in-app service.
Hierbei wir das Basisprodukt gratis angeboten, das Vollprodukt oder Erweiterungen sind hingegen kostenpflichtig. Ein Beispiel für ein Freemium-Geschäftsmodell ist Dropbox. Um die Gebühren an die App-Stores zu sparen, lassen sich unter Umständen Bezahlmethoden außerhalb der App-Stores nutzen.
In affiliate marketing, affiliates advertise the products and services of other companies (advertisers) on their websites. In return, they receive a predetermined commission, which is paid out by the advertisers to the affiliates as soon as a certain action takes place on their website, for example clicking on an advertising link or ordering a certain product. A tracking code makes these actions traceable.
In this business model, the provider of the platform retains a portion of the profit generated by a user on it. This form is often used in online marketplaces, such as eBay or Uber.
If the product costs nothing, you are the product: Even products and services that at first glance cost nothing must generate a profit. And if users don’t pay money, they pay with their data. They are the gold of the post-industrial society, because information about the user, his interests and buying habits is valuable information for marketers and retailers. They can use it to tailor their offerings and advertising campaigns. This business model is really being used by Facebook, Amazon and Google, for example. A certain number of users therefore seems to be a prerequisite for the successful implementation of this business model.
As you can see, the possibilities of digital business models are versatile. They can even be combined with each other. But not every digital business model fits every digital business idea; it depends heavily on the user group and their needs. And on what they are willing to pay.
No success without a valid strategy – The potential analysis
You can find out which type of revenue is best suited to which target group and which digital product through targeted analyses. For example, with the help of a potential analysis with which you take a close look at the users, competitors and pricing models of your app and thus determine the chances of success for certain framework conditions of your digital solution, such as for the corresponding payment method. You analyze the market situation and what users are willing to pay, in other words, what has real value for them that they are willing to exchange for a certain digital currency.
As you can see, it takes some extensive thinking before you get down to the actual development of your digital application. However, the precise and well-considered definition of the digital business model is an important cornerstone for the success of your digital product.