8 steps to create a successful product development strategy

When you’re developing a new product, there are several inputs to consider: business requirements, stakeholder demands, customer feedback, limited resources…the list goes on. With so much to juggle, it can be tempting to just dive in and figure it out as you go. But without a solid product development strategy to guide you, you risk building something that doesn’t actually meet your users’ needs.

Whether you’re creating something brand new or improving an existing product, a product development strategy ensures you stay aligned with key business objectives, prioritize customer needs, and make informed decisions about where to invest your resources for the greatest ROI.

In this article, you’ll learn why a product development strategy is crucial to the product development process, and discover how to use real user insights to create an effective strategy of your own.

Key insights

• A successful product development strategy helps you stay on track throughout the new product development (NPD) process and make informed decisions that meet key strategic objectives and goals

• Data is the foundation of any good product development strategy and should be incorporated wherever possible to create a user-centric product that meets customer, business, and market needs

• Using an experience analytics tool gives you quantitative and qualitative insights to draw on throughout your product development strategy, from market research to validation to post-launch optimization

How to create a data-driven product development strategy in 8 steps

A product development strategy is a high-level, long-term plan that outlines how you’ll create and optimize products that meet your users’ needs. It’s used to map out key objectives and priorities that guide your decision-making as you move through the product development process and lifecycle.

A data-driven, research-backed product development strategy is essential to staying competitive and user-centric because 

• It ensures you stay aligned with business priorities and objectives

• It keeps you focused on your North Star (that is, your unique value proposition and your customer’s needs)

• It helps you adapt to changing marketing needs and evolving user requirements without losing sight of your big-picture goals

The best product development strategies leverage user insights and digital analytics to show you exactly what your users want—and need—from your products. Follow these 8 steps to create a product development strategy that’s packed with valuable data, so you can develop, build, and launch your product with confidence.

1. Define clear objectives

Any successful product development strategy starts with clear objectives, but these don’t exist in a vacuum: they need to align with your overall business goals. 

For example, your strategic priorities will shift depending on whether your business goal is to attract new customers, grow and retain your existing user base, or enter a new market. Likewise, your product development strategy will vary depending on whether you’re creating a product from scratch, expanding your offering’s current functionality, or improving on existing structures.

At this stage, set clear, concrete, and measurable objectives for your strategy and clearly map them to business needs. (Don’t worry about specific metrics and KPIs right now—we’ll get to those later.)

Here are some examples of how you can map business goals directly to your product development objectives:

2. Deeply understand your audience with research

Understanding your users is the most crucial part of any product development strategy. That’s why experience insights and data should form the bedrock of your product development, enabling you to identify pain points, uncover opportunities, and empathize with your users.

Here are 3 powerful ways to get direct user insights:

• Heatmaps: discover which parts of your site or product capture users’ attention and which ones get overlooked—or worse, cause frustration—with visual aggregations of where users click, scroll, and move to

• Session replays: watch how real users navigate your site or product from beginning to end to  uncover their motivations and find areas of friction in the customer journey

• Journey analysis: quickly compare how customers from different user segments and traffic sources navigate through your site to understand their intents and behaviors

Use this data when creating your strategy to answer questions like

• What do users like and dislike about the current user experience (UX)?

• What problems are users trying to solve?

• How can our product help different types of users achieve their goals?

💡 Pro tip: use an all-in-one experience intelligence platform like Contentsquare (👋) to connect the dots and simplify your search for data. Our connected tools mean you can jump straight from a problem area in Heatmaps to an associated recording in Session Replay to see exactly what happened. Contentsquare immediately pinpoints key moments so you spend less time scouring timestamps and more time solving problems.

Jump from Heatmaps to Session Replay with one click in Contentsquare

3. Analyze market trends and competitors

User and experience insights are the most important research input for your product development strategy, but you also need to look at the bigger picture—or in this case, the wider landscape.

This is where market research comes in. What are your competitors doing? What are the big trends and opportunities in your space? For example, how can you use recent advancements in AI to enhance workflows and save time for your users?

Use Contentsquare’s Benchmarks capability to see how you’re measuring up to your peers. Compare your performance to similar companies in your industry across key metrics like conversion rate, bounce rate, and average cart value to uncover areas to improve as well as competitive differentiators you can use to your advantage as you develop your product.

Contentsquare Benchmarks reveals how your performance compares to that of your industry peers

4. Define your unique value proposition (UVP)

With all of this research in mind, you can now craft your unique value proposition (UVP). Your UVP should clearly articulate what makes your product different from others and why your ideal customers should choose it.

It synthesizes everything you’ve done so far into a neat statement. You can refer back to it throughout the product development process to ensure you’re always moving in the right direction.

To create your UVP, you can use this template:

"For [target audience], [product/service] helps [solve problem/need] by [how it works/solution], resulting in [key benefits/outcomes]." 

Still not sure what your UVP is, or what people really think about your business or product? Ask your customers. User feedback helps you home in on what makes you stand out from the crowd. Use surveys to ask users open-ended questions like, “What made you choose our product?”, or run interviews to dig deeper into what they love about your existing product or want to see from your development team in future. Then, use these insights to craft a UVP that resonates with your target audience.

💡 Pro tip: streamline user feedback with Contentsquare’s Voice of Customer product. Launch surveys in seconds by tapping into Contentsquare’s template library, or let the AI survey generator build one for you based on your goal. Speed up analysis with an AI summary report of results to quickly find trends and spot patterns you might otherwise miss.

Improve time to insight with Contentsquare’s AI analysis for Surveys

5. Prioritize opportunities

By now you should have a deep understanding of your user’s needs, the customer experience (CX) your existing site or product provides, and your unique position in the market. The next step is to effectively prioritize based on customer needs and impact.

You can use a simple prioritization matrix to help you decide which features to focus on first. There are tons of frameworks to choose from, so look for one that meets your needs and considers the factors most important to you.

For example, the RICE framework (originally developed by Intercom) is popular in product management. It assesses new product or feature ideas based on 4 criteria: 

1. Reach: how many users will be affected by this? [R = number of users]

2. Impact: how much of a difference will this make to your target audience? [I = 3 for massive impact, 2 for high, 1 for medium, and 0.5 for low]

3. Confidence: how certain are you that this will have the desired impact? This is where all your previous research comes into play, letting you make decisions based on quantitative and qualitative evidence instead of gut feelings. [C = 100%, 80%, or 50%]

4. Effort: what resources (time, money, and labor) do you need to complete this? [E = effort ranked on a numerical scale that makes sense to you]

After scoring each criterion, use this formula to get a numerical score that allows you to compare and contrast the priority of each feature or initiative:

[Reach x Impact x Confidence] / Effort = RICE score

💡 Pro tip: understand how specific events affect customers, conversions, and revenue with Impact Quantification in Contentsquare. Instantly see how digital experiences impact your bottom line, zone in on different user segments, and compare behaviors to get a crystal clear picture of what you need to prioritize in any new feature or product.

Impact Quantification lets you prioritize the highest-impact improvements when developing your new product or upgrading an existing one

6. Create a product roadmap

Once you’ve prioritized your product ideas and decided which ones to start with, it’s time to create a product roadmap. Your roadmap outlines the overall product vision and guides your product team through the development cycle. 

Using the prioritization exercise you completed above, map features and initiatives into short-term, medium-term, and long-term goals that’ll inform your product design and development. Which features do you need to launch a minimum viable product (MVP) and which ones can you add at a later stage?

Your MVP is the simplest possible version of your product, allowing you to start testing and validating it with customers quickly. This lets you collect real feedback fast, and ensures you don’t invest valuable resources in things that customers don’t want or need.

Contentsquare’s Voice of Customer roadmap outlines the product vision for the next 12 months and beyond, mapping each improvement to key objectives

7. Test and iterate

Once you have your MVP, start getting feedback from real users. Use segmentation to invite users from your target market who fit your ideal customer profile (ICP) to test your product.

Run unmoderated user tests in Contentsquare to see how potential customers navigate your product and complete their goals without any guidance or intervention from your team. Watch recorded playbacks of users performing key tasks—like setting up their profile or adding a team member—to uncover confusing UX or moments of friction. 

Use these findings to make user-centric improvements, like adding helpful tooltips or simplifying UX design, before product launch to ensure you’re setting new users up for success (and long-term retention).

Conduct user tests in Contentsquare to reveal how people interact with your new product without the need for time- and resource-intensive focus groups

8. Set and monitor KPIs for continuous improvement

The product development process doesn’t end at market launch. To create a truly great product, you need to continuously monitor its performance so you can make ongoing improvements that meet—and even anticipate—your customers’ needs.

Remember the initial objectives you outlined back in step 1? Now’s when you need to turn those goals into concrete KPIs and metrics. Don’t forget to consider the entire product lifecycle when setting your metrics: while conversion KPIs like user signups are important at launch, you also need to make sure those users continue to use and get value from your product to maintain a sustainable growth strategy.

Some metrics and KPIs to monitor include

• Conversion rate: how many new users sign up for your product in a given period

• Activation: how many users regularly use your product, such as daily active users (DAU) or monthly active users (MAU)

• Churn rate: how many of those new or existing users stop using your product

• Frustration score: an indicator of poor UX that compiles factors like rage clicks, slow load times, and API errors

Use your product development software to effortlessly track these KPIs, surface issues, and quantify their impact, so you can quickly prioritize fixes and updates that keep your customers happy. 

Leverage Contentsquare tools like

• Dashboards, to get an overview of the metrics that matter to you in one place so you can quickly drill down into specific data points for more detail

• AI-powered insights and alerts, to get notified about trends and patterns before they become issues, so you can proactively improve the user experience

• Experience monitoring, to quickly find and fix errors or performance issues that may impact your business

Build user-centric products with a data-driven product development strategy  

Great product development strategies lead to great products. But to create a meaningful strategy that empowers you to meet your goals, while still remaining flexible and adaptable, you need data.

Gather quantitative and qualitative insights from tools like session replays, heatmaps, interviews, surveys, user tests, and AI-powered analysis to understand exactly what users want from your next product—then incorporate this data into a product development strategy your team will refer back to again and again.

FAQs about product development strategy