Top 5 Reasons Digital Products Fail

Photo by Balázs Kétyi on Unsplash

I’ll start off by clarifying this post. It’s not going to be much help to UI/UX designers and tech startups, because they’ve likely done their homework and know what they’re facing. This is more for non-digital businesses, like real-world product manufacturers and knowledge businesses that have an idea for a digital product or service with hopes of building something that makes money while they sleep. Or for the entrepreneur with a successful real-world business that has a great idea, wants to create a digital product and plunges in head-first. I’ve seen more than a few, resuced some and walked away from others.

There are some key reasons that digital products fail. In fact, more fail than succeed, including many tech startups. Usually, the biggest reason is egos. But that’s something else entirely. So here we go.

1. No or a Poor UX Strategy: It all starts here. This is about the business model (how you will make money), the opportunity (where you will play to win), the market itself and understanding the needs of the market. From the UX strategy are born real personas, use-case scenarios, stories and the other critical elements that go into a successful digital product. Including the user research.
2. Stakeholder over Customer: This is where egos come into play. In existing companies, this may be the CEO or the founding entrepreneur. Or a mix of the executive and perhaps some board directors. Just a few years ago, I was tasked to build a digital product because several of the board directors felt it was an excellent opportunity. A budget of USD$3 Million was set aside. The product was launched. It failed. It was driven by stakeholders and despite the market research and user interviews saying otherwise, it went ahead. Stakeholders do have good input, but they should not be the sole source for developing a digital product. Nor should the CEO. Internal stakeholders aren’t buying the product, customers are. Do you want to make money or are you looking to satisfy egos?
3. Insufficient Marketing Resources: A digital product brings together a whole set of talents, from UX strategist to UI designers, DevOps, engineering, product owner/manager and so on. Then it needs to be launched, through beta to MVP and a suitable roadmap for ongoing iterations built on ongoing competitive market research and user feedback and so on. Most often, it’s a lack of marketing budget to build awareness and fill the funnel.
4. Lack of Resources Understanding: This is really for traditional businesses or some long-time eCommerce businesses that want to build a new digital product that may include a mobile app. Often, it is assumed that a web-based digital product is much the same as a mobile app. It is not. Many analog businesses think “digital” is cheaper and much easier and faster. This leads to a lot of frustration for the company hired to build the digital product and educating the client. The resulting tension can lead to frustration on both ends and often, a failed initiative.
5. Poorly Designed Business Model: I actually see this the most. I shouldn’t be surprised how often this happens. This should be sorted in the UX strategy, but often isn’t. SaaS products have a by now well-established system of business models and approaches, but where startups often get this figured out at the start, traditional businesses that are building a digital product attempt to align the business model for a digital product on their existing model. This rarely works. Buying behaviours are different with digital consumers from real-world consumers.

Other factors can play into digital products failing, but these are the ones we see the most. The secret sauce and the deep work is the skills and experience of product teams. They know how to build nuance into a digital product that makes the difference between almost and awesome. When you’re using a great app, such as email on your phone, a weather app or making a booking on AirBnB, many hundreds of hours and arguments, design iterations and ongoing tweaks and improvements are behind those products. Much the same as the real-world widget you’re company has spent years building. Digital products are not cheap, unless you want to fail.