It’s no secret that digital products are a completely different beast than their analog predecessors. The risks are higher, the development process is more complex, and the margin for error is much smaller. From the ideation stage to marketing the final product, countless opportunities exist for things to go wrong. That’s why adopting a comprehensive and well-thought-out approach to digital product development is essential. At SWARM NYC, we have a decade of experience helping startups, entrepreneurs, and tech companies create successful digital products.
We created this blog post to highlight 11 of the most common digital product development risks and advise you on how to avoid them.
Common Digital Product Development Risks
Before developing a solution, you must first understand the risks associated with digital product development. By being aware of these risks, you can implement processes and protocols to mitigate them. Among others, these risks include:
1. Delays/can’t meet deadlines
Digital products are a relatively new phenomenon, which means there is a learning curve for both developers and clients. Perhaps the most common risk associated with digital product development is delays or an inability to meet deadlines. These can be due to several factors, such as poor project management or unrealistic timelines.
There are many moving parts to a digital product, which can make it difficult to predict how long each stage of development will take. If we’re talking about a mobile app, for example, there are the wireframes, design, user experience (UX), user interface (UI), front-end development, back-end development, testing, and launch.
Each of these steps takes time (some more than others) and can cause delays if not managed correctly. In many cases, mistakes and hiccups are inevitable, adding even more time to the project.
2. Unexpected costs in the development process
At first glance, digital product development may seem less expensive than traditional product development, but many hidden costs can quickly add up. These costs can include:
– The cost of hiring experts in various fields, such as design, development, and marketing
– Costs associated with developing and launching a minimum viable product (MVP)
– Recurring expenses, such as server hosting fees, app store fees, and ongoing maintenance costs
– The opportunity cost of forgoing revenue during the development process
Some of these costs can be extremely difficult to predict because they often depend on the specific product design. For example, the cost of marketing an MVP will be different for a B2C product than for a B2B product. In these early stages of the product lifecycle, it’s difficult to see the full picture, so sometimes startups may not realize the full cost of something until later in the stages of digital product development.
In the end, unexpected costs can quickly eat into your budget and cause delays in the development process. They might also result in a final product that’s less polished than you originally envisioned.
3. Product encloses low market demand
Next, we have the risk that your product simply doesn’t have enough demand in the market. In other words, people might not be willing to pay for your offering. This is also known as product-market fit. A low product-market fit is a common problem for startups and entrepreneurs in software development. They might think their product is groundbreaking and innovative, but the reality is that consumers might not see the value.
In addition, SaaS (software as a service) products often serve a very niche corner of a specific industry. So there might be a market for your product, but it’s simply too small to be profitable. In other cases, the market might exist, but your target audience might not have the disposable income to invest in your product. They might also not understand what your product does or how it can benefit them.
For example, cryptocurrency and metaverse platforms have potential, but they’re still in the early stages of development. The vast majority of people don’t understand how they work or have preconceived notions about them that prevent them from seeing the value.
4. The development team is overworked
Whether you’re working with an internal team or an external agency, it’s essential to make sure your product team is adequately staffed and has the capacity to take on your project. An overworked team is likely to lead to a confused and unorganized workflow, mistakes, missed deadlines, and a lower quality product.
This is often a problem with startups and small businesses that try to do too much with too little. They might not have the budget to hire a full team of experts, so they end up overworking their existing employees. It’s understandable, startups often have no other option but to run a lean business. But oftentimes, working with a skeleton crew will just create more problems down the road. In other cases, they might outsource their development to an agency that’s already stretched thin without knowing it.
As mentioned in the first point, digital product development is a complex process with many moving parts. You can’t expect one person or even a small team to handle everything perfectly. Make sure you have the budget to hire the right people for the job.
5. Competition produces a better product
The unfortunate reality is that there will always be the possibility that someone else might do it better than you, or at least have better product success for one reason or another. This is especially true in the world of digital product development and e-commerce, where competition is only a click away, and consumers won’t hesitate to switch to a product with better functionality. If you’re not careful, your competitor might produce a better product and steal market share from you.
Unless your startup is backed by a major corporation, it’s likely that you don’t have the same resources as your competitors. That means you must be extra careful about allocating resources to ensure your product is truly differentiated.
If your sales metrics are being impacted by a competitor having more market power, there are some options to put your product on the map. Differentiation can come in many forms, such as a unique selling proposition (USP), a first mover advantage, or a better customer experience. Find a way to stand out from the crowd, or you risk being lost in the shuffle.
6. The product doesn’t solve a specific problem
Going back to our crypto/metaverse example, some products simply don’t have a specific purpose or solve a specific problem – usually because they’re too new, unproven, or simply lack a strategic market strategy. As a result, people might not see the value in investing their time and money into something that doesn’t have a clear use case.
While it’s always good to be innovative, you also need to make sure your product solves a specific problem that people are actually facing. Otherwise, it’s improbable that your product will be successful. Even in a niche market, there needs to be a specific issue that your product solves.
7. Lack of resources
There’s no denying that digital product development is a complex and costly process. It requires a significant investment of time, money, and labor.
Racing to market is often a recipe for disaster. You might be able to get your product out the door faster, but it will likely be full of bugs and missing key features. This will only lead to more problems down the road and could ultimately damage your reputation.
If you don’t have the time, money, and labor to do it right, that’s a sign that you may need to extend your development timeline. This might mean raised eyebrows from your investors, but it’s better to have a delayed launch than a buggy one.
Of course, you also need to make sure you have the financial resources to sustain yourself during the development process. Running out of money is one of the surest ways to kill your product before it even has a chance to launch.
8. Stakeholder issues
Speaking of money and investors, a significant risk in digital product development is stakeholder issues. This can come in many forms, such as disagreements about the product’s direction, unrealistic expectations, or a lack of understanding of the development process.
Investors are often more interested in short-term gains rather than long-term success. This means they might pressure you to launch your product before it’s ready. It’s important to stand your ground and make sure the product is up to your standards before releasing it.
Keep in mind they may not understand your industry or the product development process. They might even have idealistic expectations about what’s possible or how long it will take to develop certain features. It’s up to you to manage their expectations and ensure they understand the risks involved.
The other part of this issue is that losing stakeholders can sometimes have a snowball effect. If one person leaves, it can often lead to others going as well. Without buy-in from all parties, it’s challenging to move forward.
9. Unrealistic expectations
While stakeholders are often guilty of having unrealistic expectations, it’s also worth mentioning that this issue can come from anyone involved in the development process, not just investors. Even CEOs and product managers can have an inaccurate understanding of what’s possible because they’re not doing the development work.
Part of this is due to the fact that they’re not intimately familiar with the technical aspect of the process. They might have an idea for a feature that sounds great on paper but is very difficult, out of budget, (or even impossible) to implement. Digital product development is hard to gauge, and even the most experienced professionals sometimes underestimate what’s involved.
10. Scope creep
‘Scope creep’ is one of the most common risks in digital product development. It’s also one of the most difficult to avoid.
It occurs when the scope of the project gradually expands over time. This can happen for a variety of reasons, such as changing customer requirements, new stakeholders, or simply a lack of focus. While it’s not necessarily a bad thing, it can quickly spiral out of control and lead to significant delays.
For example, you might start out with a very clear idea for a simple video conferencing app. But as you begin to develop it, you realize that there’s a lot more that you can do with it. Suddenly, you’re adding new product iterations left and right, such as screen sharing, dynamic presentations, and cloud-based recording.
Before you know it, the scope of your project has tripled, and you’re nowhere near finished. This can get overwhelming and eat up a lot of resources.
11. Inadequate testing
Last but not least, inadequate testing is a major risk in the digital product development process. Testing is essential to digital product development, yet it’s often overlooked or done inadequately. It can manifest itself in many ways, such as not enough user testing, insufficient performance testing, or skipping beta testing altogether.
Not testing your product thoroughly enough can have disastrous consequences. You might think the product is ready to launch when it’s actually full of bugs and errors. Or you might not catch serious performance issues until after the product has been released. In the worst-case scenario, security issues could have you facing legal issues before you even get off the ground.
Risk Mitigation Solutions for Digital Product Development
You might feel a little overwhelmed after reading about these risks, but our intention is not to discourage you from developing a digital product. It is absolutely possible to successfully bring a new digital product to market if you understand the risks and know how to combat them. Businesses have developed methodologies to work around common product development risks for years, which means you have the advantage of learning from mistakes others have made in the past. Here are some of our tips:
Identify risks early on, and plan accordingly
Many of the above risks can be avoided if you take the time to plan appropriately at the beginning of the project. It’s essential to identify risks early on and plan accordingly. Ideally, you should bring on a digital product development agency that has experience in your industry and can help you avoid these pitfalls.
From there, you can develop a clear roadmap and timeline for the project. This will help ensure everyone is on the same page and those expectations are managed.
Work with partners who have the resources you need to get the product off the ground
Don’t try to go it alone. Work with partners who have the resources you need to get the product off the ground. This could be anything from financial backing to access to talent. If you’re working with SWARM NYC, you’ll be pleased to know we have a wide network of resources we can tap into.
It’s also best to have a clear understanding of what your role is in the project. If you’re not a developer, don’t try to take on that responsibility. Focus on what you’re good at and delegate the rest.
Consult industry experts to ensure that there’s a market demand for your product
Before you invest any time or money into developing a product, it’s crucial to consult industry experts to confirm market demand for your product. This research will help you validate your idea and avoid creating something nobody wants.
It’s also important to remember that the market is constantly changing. What was popular six months ago might not be popular now. This is why you should be up-to-date on industry trends. If you don’t have the time to attend conferences or read industry publications, you can always leverage knowledge from somebody who has it.
Test focus groups with prototypes of your product
Test, test, and test again! It’s vital to test prototypes of your product with focus groups to get valuable user feedback. Testing will help you catch any issues early on, get more insight into customer needs, and make necessary changes before releasing the product.
Then, you might want to consider doing a beta test with a select group of users. It will allow you to gather even more feedback and make final tweaks before making the product available to the general public. Gradually increase the number of users during the beta testing phase to ensure the product can handle the load.
Finally, don’t forget about performance testing. This is different from user testing and focuses on how the product performs under various conditions. Will it still work if there’s a power outage? What is the likelihood of getting hacked? You need to make sure the product can withstand anything. The other advantage of testing is that it gives you and your stakeholders the validation and quality assurance that your product is likely to perform well.
Continuously deliver value
As for your stakeholders, they will want to see results at every stage of the project. Try to deliver value continuously. Show them that you’re making progress and that their investment is paying off.
Even if you cannot show them a working product yet, you can still deliver value in other ways. For example, you can show them a product roadmap, mockups, wireframes, or prototypes. You’ll build trust with your stakeholders and keep them happy by taking the time to do this.
Have a contingency plan for when things go wrong
Despite your best efforts, there’s always a chance that something will go wrong, even if you think you have an airtight product strategy. That’s why you should always have a contingency plan in place.
For example, let’s say you’re working on a new feature that takes longer than expected to develop. If you don’t have a contingency plan, you might be tempted to rush the development and release an inferior product. However, if you’re prepared, you can simply pivot to another feature that’s easier to develop. Then, you can come back to the original feature at a later time.
Learn more about digital product development with SWARM NYC
Following these tips isn’t always easy, which is why it’s important to work with an experienced digital product development agency that has a well-defined, agile development strategy. If you’re looking for help with your next digital product, we encourage you to contact SWARM NYC.
We’ve worked with startups and Fortune 500 companies alike. We know all the risks associated with digital product development and how to avoid them. Contact us today to learn more about our services and get started on your next project.