Digital Product Strategy Guide: How to ‘Digivolve’ Your Product Strategy

I’m going to take a bet, if you’re reading this article, you’re a Product Manager who works on a digital product. Many Product Managers do – whether it’s software, an app, or an online service. But have you been explicit in your product strategy about the considerations that come with ‘digital’? There are a few scenarios where having an explicitly digital product strategy is crucial. 

This is never more important than when you’re part of an organization that’s undergoing some form of digital transformation. Here, even though you’re working on a digital product, your organization will not be used to a digital-first mindset. 

If you’ve joined a company going through digital transformation, where stakeholders are used to physical products or service-based solutions, you’ll need to take them on a journey – helping to bridge the gap between the product approach they’ve used in the past and a new digital product strategy. 

Or perhaps you’re managing a portfolio that spans both physical and digital products. You’ll need to pay close attention to the unique considerations for those digital products and make that distinction clear with a digital product strategy. 

In both cases, thinking about digital product strategy isn’t just a checkbox exercise  – it’s a challenge that needs careful navigation.

A digital product strategy isn’t just a product strategy with “digital” tacked on the front. It’s a long-term plan that accounts for the unique dynamics of digital products, including faster iteration cycles, evolving user expectations, data-driven decision-making, and ongoing optimization. 

Reckon you need a digital product strategy? No problem.

Let’s talk through the steps to build a digital product strategy that fits the needs of your product, business, and customers. We’ll introduce a new framework to help transform your product strategy into a digital product strategy. 

That framework is something I like to call Digivolution. If you watched Saturday morning cartoons in the early 00s, you may recognize that phrase 👀. 

Let’s dig in. 

What is a digital product strategy? 

At its core, a digital product strategy is much like the product strategy you know and use, being a guide for how the product will be managed to achieve your business goals. It includes all the common components – like product vision, customer insights, and market analysis – but is crafted through a digital-focused lens. 

The structure and documentation might look the same, but the considerations and approaches need to be fundamentally different. 

When going through a digital transformation, it can be easy to create a product strategy that forgets to consider the main factors of a digital environment, as opposed to the physical focus your business may be used to. This oversight can lead to misalignment between strategy and execution. A digital product strategy ensures that the unique characteristics of digital products are addressed, including:

• Different pricing models: Digital products often use subscriptions, freemium models, or pay-as-you-go structures instead of one-time purchases.
• Product-led growth: Digital products rely more on self-serve adoption, network effects, and viral loops than traditional sales-driven approaches.
• Distinct user interactions: Customers experience digital products through interfaces, workflows, and automation rather than physical touchpoints.
• Unique challenges and friction points: Onboarding, engagement, and retention require different strategies than in physical products.
• Rapid iteration and evolution: Unlike physical products, digital products can be updated continuously, demanding an agile, data-driven Product Management strategy.

A digital product strategy isn’t just about acknowledging these differences between a physical product and a digital one – it’s about building a strategy that actively accounts for them.

It’s very similar to how there are various specialized Product Manager roles. An AI Product Manager or Growth Product Manager still follows core PM principles, but the role title makes explicit the particular focus they need to have. Similarly, a digital product strategy follows traditional strategy principles but adapts them to the digital landscape.

So, as with any product strategy, a digital version defines how your product will achieve its goals while aligning with the overarching business objectives. It’s not a plan, it’s a guiding system that helps you: 

✅ Define your product vision
✅ Understand customer needs
✅ Prioritize key initiatives
✅ Establish success metrics
✅ Navigate the digital landscape effectively

Key differences between a product strategy for physical products and a digital product strategy

Let’s look at the difference between digital and physical products and see how that impacts the strategy. Knowing this is key for Product Managers who manage a portfolio that mixes digital and physical products (like hardware and software), or PMs who are guiding a company through a digital transformation.

Still don’t think you need to specifically worry about creating a unique strategy for your digital product? Here are some of the core characteristics of a digital product in more detail to help you out:

Speed and Iteration

Digital products evolve continuously, unlike physical products with fixed lifecycles.

Product strategies for physical products revolve around a linear lifecycle – development, launch, and eventual obsolescence. In contrast, digital products are in a state of continuous improvement. 

Regular updates, feature rollouts, and rapid iterations mean that your strategy must be flexible, prioritizing agility over long-term fixed plans. This requires adopting frameworks like Agile and Lean methodologies, ensuring that teams can pivot quickly based on user feedback and market demands.

Data-driven decisions

Digital product strategy relies on real-time analytics, not just upfront research.

Digital product strategies are dynamic, leveraging real-time analytics to inform decisions. This changes how you build your digital product strategy.

Continuous monitoring of user behavior, A/B testing, and predictive analytics allow Product Teams to refine their approach instantly. This means that product strategies must integrate data collection mechanisms from day one, so you can actively use insights to optimize user experiences, pricing models, and feature development.

Ecosystem thinking

Digital products integrate into platforms, APIs, and marketplaces rather than existing in isolation.

Unlike physical products that function independently, digital products thrive in interconnected ecosystems. Whether integrating with third-party APIs, being part of a SaaS marketplace, or leveraging cloud-based services, digital product strategies must factor in partnerships, interoperability, and network effects. 

This shifts strategic priorities and goals toward compatibility, seamless integrations, and creating value within an ecosystem rather than just focusing on standalone features.

Customer retention and growth loops

Unlike one-time purchases, digital products depend on engagement, subscriptions, and viral growth.

For traditional products, success is often measured by unit sales. Digital products, however, rely on ongoing user engagement and retention. Your digital product strategy should include mechanisms that help build this like personalized onboarding, habit-forming designs that follow the Hook Model, and incentives that encourage user advocacy. 

Scalability and tech considerations

Digital strategies must account for scalability, security, and AI-driven features.

Unlike physical products with fixed production limits, digital products can scale exponentially, but only if built with the right infrastructure. Scalability isn’t just about handling more users; it includes cloud computing decisions, database management, and automation. 

Security is also a critical consideration, as digital products handle sensitive user data and must comply with regulations like GDPR. Plus, AI and machine learning are increasingly shaping digital strategies, enabling personalized recommendations, automation, and predictive analytics to enhance user experiences.

What goes into a digital product strategy?

As we’ve said, a digital product strategy is similar to a physical one, just with an explicit focus on making sure you consider the nuances of managing a digital product. It includes the same core elements as any product strategy – just with a modern, adaptable approach. 

At its foundation, a product strategy defines what you’re building, who it’s for, why it matters, and how you’ll bring it to market. It typically covers:

• Product vision: The long-term goal and purpose of the product.
• Customer insights: An understanding of the target audience, their needs, and pain points.
• Market analysis: Research findings into the competitive landscape, trends, and broader market dynamics.
• Goals & KPIs: Your definition of success through measurable outcomes.
• Roadmap & execution plan: An outline of how the product will evolve over time.

However, building a digital product strategy requires an evolved framework. To make your strategy fit for the digital world, you need a framework that adapts to the nature of digital ecosystems, user behaviors, and rapid technological advancements. 

If you’re transforming an existing product strategy used for physical products to suit a new digital product, or if you’re making a strategy for your digital products alongside physical ones, you need to scrutinize your existing strategy and refine it through a digital-first lens. 

Every assumption, goal, and approach that worked so well for a physical product should be re-evaluated to ensure it aligns with how digital products are built, sold, and scaled.

This can be a daunting task. Trying to retrofit a physical product strategy without a structured framework can lead to gaps, inefficiencies, and missed opportunities.

That’s where Digivolution comes in.

Introducing Digivolution – evolving your product strategy for digital

Digivolution is a useful process to follow to ensure your product strategy fully embraces the realities of digital products. It helps take a previous strategy and evolve it for online products and services, addressing the unique challenges that come with them.

If you watched Saturday Cartoons in the early 00s, you might recognize the term from Digimon, where creatures “digivolve” into more powerful versions of themselves. Think of Agumon, the small yellow dino. When he digivolves, he transforms into an armored T-Rex – stronger, faster, and way more capable. 

That’s exactly what you’re doing with your product strategy: upgrading it to handle the digital landscape more effectively.

Instead of force-fitting old-school product frameworks onto digital products, Digivolution helps you systematically refine each stage of your product strategy. From pricing models to engagement loops, every element is optimized for digital success, so your strategy isn’t just functional, it’s built to thrive.

How to create your digital product strategy

Let’s walk through what you need to do with your product strategy to make it properly suited for your digital product. 

The process follows general product strategy steps but with a digital-first mindset at every stage.

Step 1: Define your product vision

Traditional Approach: Define your long-term vision, identify market fit, and clarify the problem your product solves and how you want it to grow. You can do that by creating a product vision statement or by following our free product vision template.

🔥 How to Digivolve It: Digital products don’t exist in isolation: they live in ecosystems. Your vision must account for platform scalability, integrations, and network effects to ensure long-term viability. Think beyond just what the product does today and consider how it will evolve in a constantly changing digital landscape.

• Ask: How will this product integrate with existing digital platforms and services?
• Think about your product architecture and plan for growth. Can features be expanded or adapted easily?
• Consider AI, automation, and emerging tech that could shape future iterations.

Step 2: Understand your customers

Traditional Approach: Develop detailed user personas based on demographics, behaviors, and pain points. Conduct surveys and focus groups to gather qualitative insights.

🔥 How to Digivolve It: Digital products generate real-time customer data, so don’t just rely on static personas – use live product analytics to understand behavior and hone in on your ideal customer.

• Implement heatmaps, session recordings, and A/B testing to track how users actually interact with your product.
• Use cohort analysis to see how different demographics of users are engaging with your product.
• Leverage AI-driven personalization to tailor experiences dynamically, and build user profiles to get a sense of your users based on real facts, not assumptions.

⚠️ Traditional persona: “Sarah, 32, a busy Marketing Manager who needs better team collaboration.”
💡 Digivolved insight: “Users who invite 3+ team members within their first week have a 70% retention rate. This shows that your strategy should optimize onboarding for team invites.”

Step 3: Set your outcomes & goals

Traditional Approach: Establish SMART goals (Specific, Measurable, Achievable, Relevant, Time-bound) to track product success. These goals often focus on revenue, market share, or product adoption within a set timeframe.

🔥 How to Digivolve It: Traditional sales-driven goals don’t always capture the continuous, user-driven nature of digital products. Instead, focus on engagement, retention, and monetization metrics that reflect real user value.

• Prioritize engagement metrics like Daily Active Users (DAUs), session length, and feature adoption rates.
• Optimize for retention – set goals around customer churn reduction and cohort retention rates.
• Think in growth loops: What actions drive the different types of growth loops?
• Revenue isn’t just about sales anymore: track Monthly Recurring Revenue (MRR) and Customer Lifetime Value (LTV) as well.

⚠️ Traditional goal: “Sell 10,000 units of the product in the first year.”
💡 Digivolved goal: “Increase MRR by 15% in Q3 by optimizing onboarding to boost trial-to-paid conversions.”

Step 4: Establish KPIs & success metrics

Traditional Approach: Choose key performance indicators (KPIs) such as revenue growth, customer acquisition cost (CAC), and Net Promoter Score (NPS).

🔥 How to Digivolve It: Some business KPIs don’t always apply to subscription models, freemium structures, or SaaS offerings. Your KPIs must reflect the realities of digital engagement. Look at:

• Activation rate: How many users take the key first step that leads to long-term use?
• Churn rate: How quickly do users abandon your product, and why?
• Feature adoption: Are users actually using the features that drive business value?
• Virality metrics: Referral rates, social sharing, and organic growth indicators.

Step 5: Define your action plan

Traditional Approach: Develop a product roadmap with key milestones, dependencies, and execution timelines. Planning often follows a fixed schedule.

🔥 How to Digivolve It: Digital products thrive on agility and iteration – your action plan should focus on continuous improvement rather than rigid milestones.

• Adopt an agile roadmap like Now-Next-Later with broad time horizons rather than  rigid feature deadlines..
• Plan for continuous deployment rather than a fixed “launch and leave” mentality that leads to feature creep.
• Use customer feedback loops at every stage – your strategy should evolve based on real-world usage, not just internal assumptions.

⚠️ Traditional roadmap: “Feature X launches on Feb 2, Feature Y on Apr 14.”
💡 Digivolved roadmap: We want to solve this problem now, and we’ll prioritize this other problem next.“

Your product roadmap is one of the core ways you can communicate your digital product strategy. Because of that, you’re going to want a powerful and effective product roadmap tool. ProdPad offers just that, working as a centralized product ecosystem where you can tie your product strategy and objectives to your roadmap Initiatives and Ideas. 

Check out our interactive template to have a go yourself.

The power of digivolving your product strategy

Switching from physical to digital products doesn’t just change what you build, it changes how you think about strategy. The key difference is adaptability: instead of static planning, digital product strategies are living, breathing frameworks that evolve based on real-time user behavior, rapid iterations, and ecosystem shifts.

By applying the Digivolution framework, you ensure that your product strategy isn’t just a copy-paste of traditional methods that worked for physical products, it’s built for the realities of the digital world.

As you go through a digital transformation, you’re already going to have a product strategy, but the question is: have they truly made it digital-focused?

With ProdPad, you can easily create a digital product strategy through your product roadmap. Try ProdPad today for free to get started and improve the way you manage your digital product.