Product Life Cycle: A Detailed Guide on Dos and Don’ts in the Growth Stage
0
mins to read
During the introduction stage of the SaaS product life cycle, your goal is to get the first customers. In the growth phase, you need many customers. However, you might get stuck in this second stage of the product lifespan and do not know how to enlarge your client base.
It is true that each phase has its particularities and requires different solutions and success strategies. Project in both the introduction and growth stages of the SaaS lifetime undergoes challenging transformations to lay the basis for its future.
As a design agency, Eleken has worked on diverse products, including those in the growth stage. From our clients' experience, we know what it feels like to live through this complex period.
How do you sustain your product development? How do you increase your client base? How do you stand out among your competitors? How do you make your SaaS unique? We will dwell upon these and many other questions in this article.
Short overview of the product life cycle stages
Each project goes through specific phases in a logical consequence. This consequence is called the product life cycle (for detailed information on this topic, check our blog post).
One can single out such main phases in the product lifetime:
- Growth
- Maturity
- Decline
The first stage often looks like the easiest one with more efforts to be put in the following phases. However, each stage has its pitfalls and challenges. Similarly, for each phase, you should use different success methods dictated by the current needs of customers.
Main characteristics of the growth phase
Products in the market growth stage are developing and changing constantly. The users are already familiar with your SaaS and are actively purchasing it. At the same time, your product is getting better while the market expands. To make sure that this phase will be as profitable as possible, let’s go through its leading characteristics:
Growing revenue
The first positive thing once your project levels up to the growth stage, is the revenue going up. In the introduction phase, users did not purchase your SaaS actively because they did not hear much about it. Now, when you've proven that your product is worth spending money on, more people are getting to know about it, so your sales are growing.
Reduced spendings
At the same time, spendings on the product are lowering because your SaaS has already taken its position on the market, which leads to high-volume sales. Despite quite expensive project advertising in the growth phase, smaller costs coupled with massive sales result in income rise.
Undoubtedly, the product launch was costly but these spendings are justified now in the growth stage. However, this scenario is not the only one for each product ever created. It can be, for instance, that in the growth phase, you also need to invest significant sums to keep your business running.
Increasing competition
It is quite rare that your project will be unique even though, at first, there can be no equivalents for quite some time. Thus, potential users are willing to explore and try it out. Shortly after, the market will boom because similar products are coming up. Consequently, there is a threat that your product can receive less attention.
Even though competition can be quite motivating in terms of improving your project, it also has its downsides. For instance, competitors can be stealing or duplicating your product, its design, features, etc. Your SaaS is risking to be lost and forgotten among similar or even the same ones.
Lowered prices
A decrease in pricing is a common technique to boost the growth of the product. Numerous rivals and analogous products make the choice even more puzzling for the users. Customers will likely go for something at a lower price without paying extra money. If the value for your SaaS is too high compared to other products, there will be no demand for it.
At this point, price wars may start because each company is trying to enlarge their market share. What is more, as technologies are becoming easily available, their costs may get lower as well. Eventually, these factors can cause a reduction in a product’s price. If you are determined to win this war without losing profit on discounts, read our article on SaaS pricing strategies.
Once you've reached a growth stage, you’ve already achieved enormous success. However, as they say, only the sky's the limit. Now, it is a great occasion to make use of each window of the opportunity in the current phase to maximize market share, sales, and profit.
In the following part of this article, we will discuss what strategies you can implement in the growth phase to sustain the steady development of your SaaS and ensure its success during the next stages of product lifespan.
How to make the most of the growth phase
The growth stage means that the SaaS product has already taken its place in the market and enjoys its popularity among the public. Revenue is bigger than spendings, which makes your business profitable. Still, there are no guarantees about the stability or duration of such a rise. We will look at the most powerful success scenarios for this phase below.
New marketing strategies
In the first stage, most of the budget goes into advertising and product launch. Due to massive sales in the growth phase, now you own more funds. Nevertheless, grand marketing campaigns may not be very effective as the users are well-familiar with what you are offering. Indeed, with advertising, you can focus on something that is still unknown.
Hootsuite is a digital dashboard for analyzing your social media platforms. This SaaS provides social media management services to help companies track different social media indicators and they took up a golden opportunity to make an outstanding marketing move.
As mentioned before, in the growth stage your product is not new anymore. Therefore, you should apply different success strategies compared to the introduction phase. Hootsuite chose a new curious approach to advertising and released their themed video A Game of Social Thrones that was inspired by one of the most trending TV shows.
Hootsuite came up with the idea of the video that resembled Game of Thrones intro with social media icons instead of houses. It was an unexpected move that turned out to be a total success. Due to the huge popularity of the tv show, Hootsuite enlarged the client base tremendously because fans of Games of Thrones developed an interest in the service.
The company did not introduce any new features or present changes to an already existing product. The key aspect of this ad was an innovative creative approach to marketing. As a result, they managed to reach out to thousands of new customers, unaware of Hootsuite previously.
New markets
In the growth stage, you are aiming to make the market share bigger as your product is actively developing. If users prefer your product to the alternatives, it means that your solution is working much better for customers than the ones offered by other companies. However, to prolong this success, it is worth looking into new markets and new possibilities.
The term “new markets” signifies the customers that didn’t belong to your targeted audience initially. With time, it appears that these potential users can also benefit from your product. Still, this strategy can be quite risky if it was a hasty and random decision.
The first rule of exploring new markets is knowing your current end users and their needs. If you have no idea what kind of people are exploiting your SaaS daily, the product development process can be very complicated and full of unexpected obstacles.
You should identify the targeted market and users before entering it. Such preparation includes steps as market and customer analysis, which will show trends and peculiarities of the new market. Thus, you can predict challenges, opportunities, and even possible profit.
Xero, a leading accounting service in the world, was providing software for SMBs. However, they realized that they should advertize their product to bookkeepers and accounting companies. Unfortunately, the small number of bookkeepers who needed a cloud-based accounting software did not look very promising.
That is why Xero implemented a vast partner program which helped them to enter new markets as more people found out about their product. With the help of partners and special perks for them, such as awards, Xero managed to double its client base a few times within several years and became an irreplaceable tool for small businesses.
This approach also shows that focus on clients’ needs defines your success. When entering a new market, you do not necessarily have to sign up as many users as possible right from the start. Indeed, you can make a few people test the product first and leave their reviews to see if your service works for them.
Don’t forget about product localization because depending on the market, users’ needs may vary. For example, you can adjust your SaaS by adding or removing some features. At the same time, you will demonstrate that your company cares about its customers and seeks the best solution for them. Keeping the product design dynamic is a key to success: that is why we always prefer working with clients on on-going basis.
Additionally, you should consider financial risks. Even such a thing as taxes is crucial for the whole strategy of entering a new market. Be ready that there can be some financial losses and decide on the sum that you can spend on this.
Distribution channels
Distribution channels are the tools through which products reach their final destination — end-users. To make this process quick and effortless, the most effective distribution channels are to be used. For different SaaS products, they vary. But how do you find the right ones?
Just like with entering new markets, the key to proper distribution is your customers’ interests. Look for channels that will be popular and widespread among your users and will likely draw the attention of potential customers. Nowadays, User Action also known as the Referral programs is a perfect distribution channel for many SaaS products.
Referral programs work in such a way, that users share links or discounts to products among their relatives, friends, etc., and receive rewards themselves once these new users make an account/first payment/booking, and so on. Usually, new customers can also get some small rewards for starting using the service.
Airbnb, probably the most used booking service in the world now, introduced its Referral program back in 2011 but it did not work well because of a lack of promotion. Later versions brought in thousands of new active users, which appeared to make even more bookings compared to the ones who were not referred.
For Airbnb, its referral program helped not only in product growth but also raised awareness of their service. What is more, even nowadays, many years after its launch, the referral program still benefits the company by increasing not only the number of new users but income as well.
Learn from your experience
With dozens of SaaS products emerging every day, promoting and marketing can be quite a tough task. The growth stage is perfect timing to map out and test the best strategies so that your project will flourish. A little tip: not each solution that worked for other SaaS, will be efficient for your product.
Indeed, the combination of various success strategies proves to be the solution that benefits each SaaS. By trying out different approaches, you can work out what solution will be practical and cost-effective for your product, learn from mistakes, and gain valuable experience for the coming stages of the product life cycle.
Wonder how to retain customers and keep growing? Check out these strategies to improve the retention rate.
Top Stories
Fastest Growing SaaS Companies That Drive Remote Work Revolution
Six years ago HP made a fantasy commercial about their 4G internet that was good enough to run a board meeting from a beach.
Who would have thought this fantasy would become a reality where you can work from Bermuda or Barbados without hiding from your boss, without even wearing an office background imitation on your back — there’s a feature for that in Zoom and Google Meet.
Remote work fantasy is rapidly becoming a reality
It’s been over a year since the pandemic hit and the corporate world shifted to remote working. With the vaccination drive, everything seems to go back to normal. Everything except the labor market.
Most people who have tasted the freedom of working from home want to keep a flexible schedule forever. Saying this on behalf of 90% of Eleken’s team.
One recent study found that even bosses don’t necessarily want to pull their staff back — nearly 80% of companies plan to keep some degree of remote work post-pandemic. For business, a flexible schedule brings its own pros: greater employee satisfaction, increased productivity, lower operational costs, and a larger pool of global job applicants.
Dozens of tech companies already offer flexible work models. Just to illustrate the point:
- Jack Dorsey, the dual CEO of both Twitter and Square, said his employees can continue working remotely forever.
- Mark Zuckerberg announced that Facebook people may also work from home.
- Ford has recently approved a work-office “hybrid” model for its 30,000 employees.
Sounds like a remote work revolution, and cloud technologies are in the vanguard.
How enterprise SaaS companies saved remote workers
In March 2020, almost overnight, everyone who had a kind of job that could be done remotely started working remotely.
Locked at homes, people had to somehow communicate with the outside world and defend themselves from scammers looking to cash in on this most miserable of moments in our lives. Needless to say, that on-premise business software, locked away together with offices, couldn’t help.
Before I tell you how SaaS apps came to the rescue, you should meet Okta.
Okta is a company that provides 10,000+ enterprises with an SSO gateway — a tool that enables users to securely access multiple apps with just one set of credentials. Simply put, Okta’s line of work allows the company to see what SaaS apps enterprise users prefer.
That’s perfect optics to see the underlying trends across the entire cloud, and thankfully, this optics is available to everyone through Okta’s yearly reports.
Okta’s reports show that telecommuting was on-trend long before the lockdown. Zoom, for instance, has belonged to the top growing SaaS companies since 2016. But then in March 2020, the normal usage curve of SaaS apps reared up.
In no time, Zoom rocketed from #10 to #1 fastest growing SaaS company with a mindblowing 110% growth in unique users in March over February 2020. For comparison, Zoom grew only 6% during that same month-over-month period in 2019.
And it wasn’t just Zoom — three of the top seven fastest growing software companies were video conferencing apps. RingCentral ranked at #6 with 39% growth and Cisco Webex took #7 with 37% growth.
Network security was another concern for organizations moving workforces to the cloud, that’s why VPN tools were on fire. GlobalProtect by Palo Alto Networks ranked as #2 fastest growing with the audience broadening by 94% in March over February. Cisco AnyConnect finished close behind with 86% growth. Citrix ADC, a tool that improves application performance and secures apps from attacks, had 56% growth and the #4 spot.
The #5 app also belonged to a wide array of work-from-home security services — it was Security Awareness Training by Proofpoint.
Fastest growing B2B SaaS companies after a year of remoting
Once you eliminate your number one problem, number two gets a promotion. We’ve got the most basic remote necessities of security and communication covered just to figure out there are a ton of other issues with working from home:
- overthinking makes you stir crazy
- multitasking kills your productivity
- dining chair kills your back
As new problems arrive, changes happen with the list of top SaaS companies. The first thing you notice in the new Okta’s report summarizing the usage in the year 2020 is that Zoom has dropped down to #15.
The pandemic has accelerated the life cycle of telecommuting services so that they reached maturity and slowed down their traction. Most people who need an app for video calls already have one. The market is split between a few major players like Zoom, Google Meet and Microsoft Teams who are now copying each other's features and poaching each other's customers.
The list of SaaS companies with the fastest growth after a year working remotely differs completely from what we’ve seen at the very early part of the pandemic. If the first wave of Covid-related technology adoption was to support the very possibility of working from home, the second wave came to make remoting easier and more productive.
The list of high-growth SaaS companies is now dominated by Amazon Business. According to Stanford economist Nicholas Bloom, last year the average worker in the US invested “15 hours of time and $561 in home equipment” to facilitate their workplaces. Looks like dining chairs killing their backs pissed Americans off just enough to spend an astonishing 1% of the annual GDP on better equipment.
Three hottest SaaS collaboration tools share the spotlight with Amazon Business — Miro, Figma and Monday take the #2, #3 and #4 spots respectively.
A people management platform Lattice got ranked as the #6 fastest growing app in 2020, and that’s the first time since 2016 when an HR brand got to the list — looks like companies are more than ever interested in developing teams and keeping employees engaged as they are working remotely.
During the pandemic, consumers have moved dramatically toward online channels, and companies had to respond by increasing the share of digital products in their portfolios. No wonder that the #9 fastest growing app became Sentry, the service for developers to diagnose, fix, and optimize the performance of their code.
The last thematic cluster is security apps that provide a full range of protection. At #5 appeared Fortinet FortiGate with its firewalls against outside cyber attackers. Spot #8 belongs to the endpoint security service VMware Carbon Black. And rounding out our top ten password manager 1Password.
What is the future of SaaS in the work-from-home economy
In just a few months, the pandemic has brought years of change in the way companies do business. The possibility to work from anywhere has taken a quantum leap, thanks to the largest SaaS companies in particular.
The big expansion of fully remote or hybrid work models seems inevitable in the post-Covid era. But mixing remote and on-site work in the long term might be more challenging than it looks, despite its success during lockdowns.
Consider previous experiments in this field. Marissa Mayer, CEO of Yahoo!, finished the company’s virtual-working attempt in 2013 because the team needed to “become one Yahoo! again”. HP Inc. failed with their remote experiment the same that year, to create a more connected workforce and drive greater collaboration and innovation.
Specific reasons may vary, but it’s clear that remoting brings both positive and negative effects. Some things simply become more difficult when you are not working altogether. It’s getting hard for newcomers to blend in, to teach and to learn, to build inclusivity and corporate culture.
All those difficulties are coming and we don’t know how to address them yet. So the SaaS startups that will launch to offer worthy solutions will probably ride the following wave of the most successful SaaS startups.
Except for the stellar problem-solving idea, a successful SaaS startup needs stellar product design. And if the idea is the task for an entrepreneur, in everything related to design you can count on Eleken.
Product Life Cycle: Everything You Need to Know about Stages and Success Strategies
If you are here, you’re probably seeking to build a digital project. Just like human beings, all products undergo phases of development and growth. A profound understanding and knowledge of the product life cycle and its stages, help you to act in the right direction to prolong the lifetime of your SaaS.
Eleken is a product design company, with the end users being the most significant element of our process. Setting up a SaaS business is not only about designing the project. The truth about growth and longevity is that your product needs to meet its customers’ requirements. Throughout all these phases, it’s the user who defines whether your SaaS lives or dies.
In this article, we will look closely at the stages of the product lifespan to support you with figuring out how to develop your SaaS.
4 main stages of the product life cycle
All in all, there are 4 main phases of the SaaS lifetime:
Let’s look at the curve of the product life cycle with all phases included:
The research & development stage precedes all the other phases and is all about research and testing product prototypes. This is usually an indefinite phase dedicated to learning more about the requirements of your target customers. By studying the issues your potential users deal with, you can think of the ways to satisfy their requests and create SaaS.
If your project is brand new, the research & development stage can continue even for some years. During this time, you can look for investors, plan the launch of the product, and finalize the arrangements to take your startup off the ground. Such preparations may include building a website, creating a business plan, and exploring your customer base.
One of the biggest obstacles at this time is the absence of revenue. In most cases, all of your finances are used for market analysis and project development as you need to lay the foundations for your SaaS introduction.
Introduction stage
The keypoints:
During the first stage, the product debuts in the market, so you have to introduce it properly. The task here is to spread the word about your service. Because nobody knows much about your SaaS yet, you should provide as much information as possible. You should plan your go-to-market strategy way in advance.
A common way to do this is to start talking about your project a few months before it is actually released. On the one hand, you are slowly introducing your product to people. On the other hand, as they are learning your SaaS step by step, they can decide if they need it once it shows up on the market.
Reform, a powerful data preparation solution built by SlamData is one example of a SaaS product in the introduction stage that we assisted with design (check our case study here). There were no analogs to this service on the market, so our client came up with a plain message to their users: a tool that turns your data into analytics-ready tables in minutes.
Reviews and feedback are crucial at this point. With users’ comments and opinions regarding improvements and changes, you will know what modifications are required and what customers want to see in the product shortly.
You can even ask your friends or experienced people from the same sphere to review your project. They may advise what to improve, add, or even exclude from it. Honest reviews are the most valuable ones, even though they are not always positive.
An additional boost in the introduction stage is an investment in marketing and advertising to draw attention to your SaaS. Thus, you will stimulate demand, which, in its turn, should hike both your product’s popularity and sales. Nevertheless, be prepared that there can be no revenue, as the users are still getting familiar with your service. Good customer acquisition strategy is a key to business growth up till the next stage.
Growth stage
The keypoints:
In the growth stage of the SaaS lifetime, customers already know about your product and invest money in it actively. As a result, sales are constantly increasing, which creates stable revenue.
Let's look at the project in its growth stage to understand how the target audience shapes your actions and development methods. We have chosen Dropbox that wasn’t a unique product initially. Indeed, there were plenty of cloud storage services on the market. Dropbox intended to be a first storage service that would be simple to use.
By introducing its services for Linux users years ago, Dropbox managed to enter a whole new market segment. Additionally, this software is famous for its referral programs. With more new customers you invite to Dropbox, your free storage is getting bigger. This strategy has been effective for a few years already and constantly adds to the number of users.
Another essential quality of the growth stage is a market expansion which is caused by project development. When new SaaS enter the market and enjoy their popularity, there appear more competitors. But what to do if the competition is too harsh and your product remains unnoticed?
Don’t forget about the marketing aspect, so that advertising works in your favor. With SaaS, you can consider such ways of promotion as social media platforms or cooperation with bigger companies or even influencers. At the same time, you may check various distribution channels to enlarge the number of potential customers.
Maturity stage
The keypoints:
Once you get to the maturity phase of the product lifespan, be prepared for market saturation. Sales are dropping or slowing down while advertising is not so easy and fruitful. This happens because many users have already purchased your SaaS.
Marketing should focus on differentiation. In comparison to similar projects, your SaaS should have serious benefits to stand out. In this stage, the stabilization of market share and keeping customers are your major goals. Then, you can restart the life cycle of the product to avoid falling into the decline stage.
You should analyze your SaaS and the requests of the target audience once again, as they could have changed since the launch. This phase is a high time to launch new features and reach out to all market segments. Remember that with time, the technological sphere is only advancing and your product has to keep up with all the changes.
Before working with Eleken, TextMagic was a messaging service helping small businesses with marketing. However, being in the maturity stage, they decided to add more functionality to their product. In such a way, TextMagic skyrocketed the number of users and remained active on the market (more information in our case study).
As mentioned before, effective marketing and advertising always come in handy. However, there are times when you should do more. One more trick here would be implementing success strategies to keep your SaaS profitable and we will get back to these a little bit later.
Decline stage
The keypoints:
Although the maturity stage can last for decades, each project will eventually reach its final stage, also known as the decline. During this time, both sales and market share are gradually dropping, which is caused by a slowly decreasing demand.
Because of the over-saturated market, there are almost no potential new users. Consequently, your advertising is targeted mostly at proven loyal customers with prices being reduced for them. In such a stage, it is advisable to redesign and redevelop SaaS to create demand again.
A fine example of a project in its decline stage is Kodak. This company is worldwide known for its photography products. It was rather successful in the early 21st century. However, Kodak failed to shift to digital photography and went bankrupt. Probably, if they could foresee and adapt to the change in their users’ requirements, they would remain in the market.
Success strategies to prolong your product’s longevity
Apart from conventional tips to profit from each stage of the SaaS lifespan, you can also implement success strategies. However, make sure to double-check if they will work best for a certain stage of the product lifetime. Let’s look at these methods down here:
Adding value
This strategy often works magic, especially with SaaS. There is always something that can be added or improved in software so that it becomes even better. Sometimes, it is just a modern UI/UX design but sometimes, it can be an essential feature that users have been begging for forever.
Exploration of new markets
This strategy can be beneficial in each phase of the product life cycle. Without careful consideration of users’ needs and planning of your next steps, it is impossible to build a profitable SaaS or any other project. That is why the opportunities that come with new markets can always make a deal and attract an even bigger pool of potential customers.
New packaging
This approach is effortless to imagine when you are selling actual goods and products. Nothing surprising here, but works wonders in most spheres. But what about software? Introducing a SaaS version is very likely to make it even more attractive to targeted users.
In terms of SaaS, this strategy is about design and the very service. You can optimize and update the website, features, and anything else that comes to your mind. Probably, there was something that users wanted to see in your product, even if it’s such a small thing as an additional button or a completely new layout of the site.
Price reduction
Possibly the least harmful approach, it will help to keep your project afloat at any point in the product lifespan. By implementing a price reduction strategy, you can both resist your competitors and demonstrate that your project is valuable but not overpriced.
To sum up
Whether you are only developing your digital product or already at some stage of the SaaS lifetime, you should constantly monitor the needs of your end users. Their requirements are your top priority to figure out how the market works and build a successful project.
If you want to learn more about specifics of marketing at the different stages, read our article about product life cycle strategies.
Your email has been submitted successfully. Check your email for first article we’ve sent you.
