Nothing lasts forever, even the strongest products have their life cycle. We used to represent it visually as a curve you see below and split it into four phases: Introduction, Growth, Maturity stage, and Decline. The Decline is the stage you want to postpone as long as possible.
It all starts with an Introductory stage when a product gets off the ground. The Introduction is a painful moment of major expenses, struggles to break even, and unknowable risks. 92% of SaaS startups fail during the Introduction. So if you survived during this stage, you belong to the luckiest 8%.
The next stage is calling Growth and is characterized by the sharpest rise in sales. The growth rate is high, and the burn rate is also high, everything to ensure your product climbs its life cycle curve.
At the point when the product has reached its peak in terms of sales and profits, growth starts to slow down, and we can state that we’ve reached the stage of Maturity.
One interesting thing about Maturity is that some brands reach it fast and die fast, like shooting stars. Remember Pokemon Go? It’s a bright example of such a shooting star. The game that became an all-conquering phenomenon in its first few months of existence, crashed down quickly from its peak. Check out its download curve below.
Image credit: businessofapps.com
And now look at Facebook’s curve that embodies sustainability. We can easily find not-so-monopolistic long-livers in any niche. Take Salesforce — it’s rocking the CRM market for a decade already.
What is the difference between long-living brands and mayfly-brands? Looks like the former know how to prolong their mature product’s life.
Characteristics of maturity stage in the product life cycle
A product life cycle is like an apple tree life cycle — you plant and take care of it, spending time and money until it gets stronger and starts to pay you back with apples. At this stage, you may leave your tree and get back to it once a year to pick apples. It will work, and quite a long time.
However, it may work even better (which means longer life for the tree and more apples for you), given that you continue some gardening.
Prolonging the mature product’s life also requires some gardening. Mature products have reached some internal limits or market limitations that shape their new mature reality:
- Most people who need the product already have it, so customer acquisition slowing down;
- Customer lifetime value declines;
- Educating the audience and building brand awareness is not a priority anymore, people know you;
- Winning customers from competitors, instead, moves front and center. As well as preventing competitors from stealing your own customers.
- Young underdog competitors disrupt the market making weak companies leave.
An ability to notice the appearing limitations and resist can give your product longer life.
Some ways to prolong your mature product's life
We can boil down effective life-pursuing activities into three strategies. One is focused on product expansion, another on market expansion, and the third one is about jump-starting a new product and a new life cycle.
Your plan A is strengthening the product
Developing new features or improving existing ones can inspire more usage among present customers and attract newcomers. Look how cleverly Notion pulls this off with their Timeline view feature.
A bit of context for people who are not obsessed with productivity and productivity apps. Notion is an all-in-one workspace tool that was considered an almost perfect productivity app on Youtube and Twitter, and that almost was due to the lack of Gantt charts feature.
After a while, Notion added Gantt charts as a Timeline view and did an interesting move in terms of pricing. The opportunity to use a Timeline view for free was limited to three Gantt charts only, which was enough to try and see how awesome the charts were, but way too little for actual usage within big teams. Notion tried to upsell more expensive plans with only one new feature, and it worked, since the feature was long-long-awaited and warmly greeted.
Your plan B is extending the boundaries of your current market
The idea is to deliver your existing product into new customer segments or geographies when you feel market saturation is hovering over your shoulder.
Look at Zoom. As it was booming with the start of lockdown among individuals and small businesses, it was also neglected by large enterprises due to infamous security issues.
Ericsson, Bank of America, Tesla, and some other outstanding companies decided to avoid Zoom over security concerns. Zoom’s competitors, Microsoft Teams and Cisco’s Webex, took advantage of the situation and joined the battle for the enterprise segment of video conferencing.
Zoom did its best to quickly address privacy concerns and get its slice of large enterprises. That’s perfectly understandable, given that corporate users not only tend to pay more but also less often cancel subscriptions to SaaS services.
Your plan C is product diversification
Diversification means using your mature product to give birth to a new product and a new life cycle.
The market of video conferencing was overblown by the pandemic that caused a sharp transition from working in offices to working at home. Overnight, Zoom became ever-present. It's not forever though, the popularity of the app will inevitably deflate to a greater or lesser extent as soon as the pandemic gets left behind. The company’s stock got down by 20% in November as we got the first positive vaccine news.
So Zoom builds new products around its core tool as soon as possible to move from a video conferencing app to a remote communication ecosystem. The potential revenue streams lie in cloud-calling solutions and new capabilities for webinars and business events.
Wrapping up maturity life cycle strategies
There are no universal answers on how to beat the growth cycle and stay on top forever, otherwise, we’d have 100% of ever-green businesses. But the example of long-living companies, such as Salesforce or Basecamp, shows that everything is possible. Just pay attention to what’s going on with your company and bear in mind three strategies for mature companies: product expansion, market expansion, and diversification.
No comments:
Post a Comment