“ First, you need to discover whether there are real users out there that want this product… Second, you need to discover a product solution to this problem that is usable, useful, and feasible. ”
Will customers need your top-notch product idea?
Many startup founders and product owners focus on building unique and advanced features that should impress end-users and make them willing to engage. Most likely, the developed functionality is really great, but do customers really need and want those features?
This question often scares entrepreneurs before they start creating their solutions and a product discovery phase is what they actually need.
Today we want to cover this topic and share what is a product development discovery phase, why is it crucial for your startup success, what does it look like, and provide a detailed guide for performing product discovery.
What is Product Discovery
A software product discovery is a process of defining the actual market demand for the solution you are going to build and launch.
Marty Cagan, a Silicon Valley-based product professional helping such top companies like eBay, AOL, and Netscape make their solutions successful, once told:
Put it simple, product discovery is a must-have stage for any entrepreneur before bringing their ideas to life and running a new business.
Let’s imagine you have generated an idea of creating a new digital solution that will help people share their current location real-time. Prior to diving into the business plan and product design discovery phase, you should know exactly the target audience and why it will need your software.
Here comes a product-market fit which means that you are providing the right value to the right people. In case you don’t know your end-users and their challenges to solve, chances are high that your product will have 0 utility even providing brilliant functionality.
So, a discovery phase of a software project is about analyzing specific users’ needs to develop products that perfectly meet them and solve exact challenges. As a result, you clearly realize:
- Who is your target audience
- What problems and needs they have
- What product should you build to perfectly suit their demands
- What technologies you need to build a product
- What scope of works is required to succeed.
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This way, you can formulate a specific business value that should be broadcasted to end-users through the entire product development process.
It will help the product discovery team clearly visualize their areas of responsibilities to know exactly what and why should they do to make the product a success.
As an entrepreneur, you may first aim at risk reduction and profit-making. So, the software product discovery techniques will provide you with a clear business plan and model. Once you define “what to build” and “for whom”, you can create the right monetization strategy and embed it with your product functionality.
Main Stages of a Product Discovery Phase
1. Validate your idea
As always, you should begin any product creation activities with validation to know if somebody needs and wants it. There are multiple ways to succeed with validating your idea, but we want to share the most time- and cost-effective options.
- First, conduct competitive analysis.
Technological development is growing rapidly and the current product market is typically supplied with almost any kind of products. Moreover, the majority of them have dozens or hundreds of alternatives for many audience segments, budget expectations, and needs.
For this reason, you can most likely find a similar product in the market. Why is it crucial?
Analyzing your competitors, you can collect valuable information to build an intelligent development strategy. What data can you get?
#1 Product demand
Most likely, successful startups and solutions have created websites to provide their product description, pricing, testimonials, blog articles, and other content. You can analyze your market rivals’ websites by using such competitor analysis tools as SimilarWeb, SEMrush, Ahrefs, SpyFu, Ubersuggest, etc.
What data should you pay attention to? These software solutions allow you to analyze rivals’ domain score, organic traffic, top keywords, backlinks, and other important SEO information.
Check their top keywords to get to know your audience better and see what they search for and need most currently. This will help you to make an exact emphasis on specific aspects of your product to stand out from the competition.
#2 Promotion activities
Google Ads and Facebook Ads are among the top platforms for promoting any kind of products. You can take advantage of these tools to analyze your competitors’ ad banners to see what they offer to customers.
Also, such websites as Reddit, Quora, and LinkedIn can help you get more information about your market rivals’ content and end-users’ feedback. Pay your attention to what customers like, dislike, want to improve, or remove to build a product that directly meets end-users’ needs.
The analysis of competitors’ promotional activities will help you generate content marketing ideas, unique selling proposition, your brand positioning, and platforms to promote your future product.
- Second, share your idea and collect feedback.
Another way to validate your product idea is to share it across experienced entrepreneurs, partners, and social media platforms.
However, many startup founders struggle with their idea to be stolen. We want to note that this should be the last concern you worry about as there are millions of products, billions of people, and nobody tends to grab your idea until it becomes a success.
In case you have proactive entrepreneurs you can contact, then try to share your idea and ask for their feedback.
Even if they didn’t have any experience within your niche, they have much knowledge base in running businesses and realizing the opportunities of multiple enterprise models. Their comments definitely wouldn’t go amiss for your product idea validation.
Next, share your business idea with partners, colleagues, and cronies.
No matter what professional background they have, you can generate valuable insights and get answers to your questions. Try to imagine that they are your target audience and you want to analyze their needs, challenges, and pains.
Ultimately, take advantage of social media platforms.
According to the Backlinko 2020 report, 3.96 billion people actively use social media around the globe.
So, chances are high that you can collect valuable and diverse feedback from users and even potential customers. Try to be patient with criticism and transform users’ comments into the strengths of your future product.
2. Get to Know Your Target Audience
Once you’ve validated the product idea, it’s high time to know better who your users and customers are. This is one of the most crucial software product discovery process stages that you should pay maximum attention to.
Typically, there are several effective options that can help you define the target audience, segment it, and communicate with each user in a personalized way. Let’s discuss them in detail.
#1 User research
There are two types of data you need to collect: quantitative and qualitative information.
You can generate qualitative data by creating focus groups, conducting surveys, interviews, and analyzing users’ feedback on your competitors’ products.
Qualitative user research is about learning general user behavior patterns which should answer the question ‘Why do customers use the specific product?’, ‘What motivates them to renew a subscription’, and so on.
Quantitative analysis refers to defining countable values like ‘how many, how often, how much’. This method greatly improves the decision-making process as you can operate exact numbers.
For instance, A/B testing allows you to understand which landing page has a higher conversion rate based on such metrics as CPC, CPL, and others.
So, let’s briefly specify the quantitative data you can generate through a user research:
- User gender. How many users are male or female?
- User age. How many users are 18-24, 25-32, 33-42 years old?
- User paying capacity. How many users make $30-50k, $51-70k, $71-100k per year?
- User device activities. How many users work on a tablet, mobile phone, or desktop?
To sum up, the user research discovery phase will help you formulate clear buyer personas for your product. It means that you divide the wide target audience into smaller groups of users.
They should be interconnected by multiple indicators like motivation to purchase your product, group-oriented challenges, and pains, age and gender, paying capacity, and so on.
#2 User Journey Map (UJM) development
Once you have collected basic user data, you can visualize the customer experience for each audience segment. It means you represent the way each user group interacts with your product highlighting their specific behavior patterns, wants, and needs.
UJM is also a great tool to give everyone in your company a single understanding of how you want to communicate with your target segments. There is no efficiency in providing a similar offer to different user groups as they may have diverse challenges, pain points, and demands.
Simply put, you can just lose some audience segments in case you don’t create a personalized communication with them solving their particular problems.
What does a user journey map look like?
Below you can see an example of a Customer (User) Journey Map designed by Starbucks based on their user research.
As UJM development deserves a separate in-depth article, we want to briefly cover 4 steps required to build a User Journey Map for your product:
- Set your product goals
- Analyze and build buyer personas
- Outline the pathway from the first touch to purchase for each segment in stages.
- Bring together and visualize.
3. Define metrics to keep the progress on track
Every process should be tracked to set exact deadlines, reachable goals, and achieve scalability. In case you don’t keep the product development process on track, you most likely won’t meet deadlines and your team members can lose motivation and stop following the result-oriented approach.
In terms of the software product discovery process, metrics will help you set an exact timeline for where you want to be and define the required steps to be there. Also, keeping the process on track will allow you to define the key goals you should reach to make sustainable growth. But how to measure the product progress?
Generally, there are lots of frameworks and tools, but we recommend paying attention to OKR vs KPI. Let’s take a look at them in detail.
What is OKR in business?
Objectives & Key Results (OKRs) is a collaborative goal-setting framework used by Google that can help you define objectives and their potential results.
Objectives are the short and inspirational qualitative goals you want to achieve. In turn, Key Results refer to a range of metrics that evaluate your progress towards the set Objective. You need to define 2-5 Key Results for each goal as this range is ideal to visualize the steps you need to take and sufficient to reach the set Objective.
Marissa Mayer, a former Google’s Vice President, once said:
“ If it does not have a number, it is not a Key Result. ”
It means that your Key Results should be countable and measurable.
What is KPI in business?
Key Performance Indicators (KPIs) are a set of measurable figures that demonstrate how effectively you achieve the defined product goals. In terms of the software product discovery process, you can set and track the following KPIs:
- Monthly Recurring Revenue (MRR)
- Customer lifetime value (CLTV/LTV)
- Customer Acquisition Cost (CAC)
- Session duration
- Bounce rate
- Retention rate and others.
4. Set Exact Time Constraints
Jack Kornfield, a bestselling American author, once said:
“ The trouble is, you think you have time. ”
These words shouldn’t force you to hurry up the product discovery process, but they perfectly describe the rapid pace of a product market.
While you might be planning to finish and release a product in a year or so, others set exact time constraints and then come to task decomposition. This way, they most likely will release a product to market faster and avoid such issues as constant work scope changes and endless product development.
So, the software product discovery process is about planning and setting deadlines as you should clearly understand when you are going to get from point A to point B.
How can you benefit from setting exact time constraints?
First, deadlines drive creativity.
When people are limited with any resources, they most likely start generating creatively different ideas to succeed. Twitter is a great example as users only have 140 characters to catch attention, engage, and convert. For this reason, we can see thousands of marketing-brilliant headlines that meet our eyes and make us willing to learn more.
Similar happens to the defined product development tasks as your team members don’t have a great deal of time to conduct super-wide research, test each hypothesis, optimize, and so on. They simply need to pick an option and run with it.
Another great benefit of creativity is task prioritization. In case professionals realize that they cannot include everything they need within the allocated time, they most likely start prioritizing their tasks and decisions. This helps to visualize a step-by-step guide on how to build a product feature from A to Z and how much time is needed.
Second, deadlines delight customers.
With a rapid pace of product market development, customers are becoming more and more demanding as well. This tendency forces entrepreneurs and startup founders to compete as hard as never before to gain user engagement. Does it make sense for your product’s success?
According to the Gallup Customer Engagement Report, fully engaged customers make 23% more purchases which boost profitability, revenue, and relationship growth.
One of the product discovery tips to increase customer engagement is to provide regular product delivery and updates based on users’ feedback. Here come deadlines that allow you to plan each version release in detail and make users happy according to the schedule.
5. Identify and Evaluate Possible Risks
Nobody is immune to crisis which may unexpectedly come to your business and the best way to mitigate risks is to be as prepared as possible.
Try to divide the risks into manageable and unmanageable. First require building a detailed plan of actions so that you know beforehand what preventative measures will be assumed. This often requires brainstorming sessions with the discovery team to simulate any kind of situations that may happen.
Don’t be afraid of generating as many pessimistic cases as possible because the detailed plans of solving them may greatly help you in the future.
Unmanageable risks are those you cannot have influence on like a similar product launch by your competitors or even disasters within your target audience locations. Ideally, you should also prepare a detailed list of actions you will take to reduce the potential costs.
6. Organize and Visualize
Once you’ve finished the mentioned above steps, it’s high time to get your thoughts and ideas organized and visualized. There are lots of ways to go through this stage, but we want to share the Lean Startup Method.
It was designed and released by Eric Ries in 2011 to help startups develop and launch their products cost-efficiently. It follows an experimental and iterative approach to reduce the software development life cycle (SDLC) and gain valuable feedback from end-users.
One of the core methodologies of Learn Startup is Build-Measure-Learn (BML). Let’s take a closer look at each component of this approach.
Ries offers to start with a Minimum Viable Product development with a key goal to validate your idea. The created MVP shouldn’t be perfect and include all must-have features but should be feasible and value-oriented.
There are 4 options to build an MVP for your product:
- Find a CTO/Technical Co-Founder
- Partner with freelancers
- Hire a software product development company
- Build it on your own.
Once you have built a minimal product, you need to measure your assumptions. Analyze whether your customers really need the features you’ve built by asking them via polls, surveys, comments, and so on. The core goal of this stage is to gather as much user data as possible for future improvements.
You’ve collected users’ feedback from the previous step to analyze it and generated data-driven product ideas before launching a new product release.
Try to be patient with criticism and transform it into the strengths of your future product. Also, pay attention to even minor notes of the users as their comments are just puzzles of an entire picture that will help your product become successful in the market.
So, the BML loop provides the following opportunities to your startup:
- Create a minimum viable product quickly and cheaply to analyze the users’ demand
- Gather valuable feedback from potential customers to know their problems
- Improve your product idea and make sure it solves specific users’ problems
- Continue sustainable product development to drive user engagement.
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Benefits of a Product Discovery Phase
We have discussed the key stages of software product discovery that will help you launch a startup in a time- and cost-efficient way. Now let’s summarize the talk by defining the key benefits it provides.
#1 Launch a product that solves users’ problems
Software discovery allows you to develop a product that users need. It becomes possible through conducting target audience research, performing user surveys, testing your product idea with an MVP, and continuously improving it with data-driven insights.
#2 Reduce development costs and time-to-market period
Product discovery isn’t about blindly building a brilliant functionality that won’t meet customers’ needs. User research, MVP development, and continuous feedback from users allow you to build only those features that your customers require. This helps you greatly save development costs and consequently reduce the time-to-market period.
#3 Mitigate potential risks
Agile product discovery empowers you to predict potential manageable and unmanageable risks before your start developing and launching your startup product. You can organize brainstorming sessions with your team members to generate detailed plans of action for each specific situation that might happen.
#4 Prepare a material visualization of your future product to show to investors.
After a product discovery phase, you’ll have a detailed document outlining key features of the future product, its unique selling proposition, competitor, and user insights. In many cases, it is enough to go to investors. So, with minimum investment, you’ll be able to get their feedback and see if it worth continuing with this product.
A software development discovery phase is a process of validating a company’s product idea and defining real users’ problems. This way, you can build a customer-oriented solution in a time- and cost-efficient way by building an MVP and collecting valuable feedback.
We hope our software product discovery guide will be helpful for your company to build a product that your end-users will love.
If you are looking for a product development company, we will be glad to help transform your idea into a top-tier digital solution that solves the real problems of customers. Check our case studies or drop us a line to discuss your project.
Daniil specializes in content marketing and has a deep knowledge of promoting the company's products and services through high-quality content. On the Ascendix blog, Daniil shares his tricks and tips on custom software development, provides technology trends and insights, and helps you get valuable content to make your business even more successful and profitable.
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