Maturity Stage of Product Life Cycle: Three Strategies to Stay on Top

Dana Yatsenko

Sooner or later, all businesses, even the most successful, run out of room to grow. Sales will eventually peak and then slow down, partly due to internal limits and partly because you start to bump up against the limits of the market you serve.

You hit the ceiling that is not necessarily the limit of your business, but a significant obstacle in reaching the new peak of growth. So, how can you keep your SaaS company growing? Below, we'll break the answer in more detail.

But first, look at the salmon.

It’s leaping hard in order not to be washed downstream. You should basically do the same.

Characteristics of Maturity Stage in Product Life Cycle

The product life cycle curve explains the common evolution of any successful product. Starting from the introduction stage of the product life cycle, early adopters provide the momentum behind uptake during the growth stage of the product life cycle. The followers swiftly catch up leading to the upward trend and finally, the curve flattens, as the increasing adoption leads to saturation. In broad terms, this is the definition of the maturity stage in the product life cycle.

You climb the curve as high as possible, and when you’re at point “A”, you take a leap to the new growth or getting ready to slide down to a decline stage of the product life cycle.

Maturity Stage in Product Life Cycle
Image credit: trainingjournal.com

A quick check to see if you’re heading your point “A”. How many points from the list below describe your company’s situation?

  • Customer acquisition is slowing since most people who need the product already have it.
  • The lifetime value of new customers decline.
  • Your focus moves from educating and building brand awareness toward winning customers from competitors.
  • New entrants disrupt the market while weak companies can’t sustain competition.

If all that characteristics of the maturity stage of the product life cycle sound familiar to you, we’ve got some good and some bad news.

Good news: Neil Patel says that 90% of startups fail, and you definitely belong to the remaining 10%. You’ve reached a peak of market penetration, which means a peak in profits, which also means you have some resources to recover from your startup fight for survival.

Bad news: Growth will slow down, as you run up against either natural market-size or market-share limits of your core product.  As Matthew S. Olson and Derek van Bever write in their book Stall Points, once a company runs up against a major stall in its growth, it has less than a 10% chance of ever fully recovering. The remaining 90% move from maturity to decline, so you step into the mature enterprises’ fight for survival.

The Strategies for Maturity Stage of Product Life Cycle

While every company’s circumstances are unique, there are three strategies that help to regain growth during the Maturity stage:

  • Product Development: Activities such as creating new products and improving the existing products with improvements and developments.
  • Market Development: Includes localization for different locations and selling to the new audience segments.
  • Diversification: Can be made by entering a new market via acquisitions or development of brand new products for the new audience.

We’ll consider those strategies in practice. Slack and Zoom are the first two SaaS companies that come into mind as examples — they are reaching the maturity stage of the life cycle before our eyes because so many people already have their account (or their competitors’ account)

Both companies have shown stellar growth based driven by the freemium pricing model. Since they make software for remote work, they have been helped rather than harmed by the pandemic. Both compete with giants — Google and Microsoft build video and communication capabilities.

However, one company is riding the year high with $21.7 million of net revenue, while the other, staggering under $91 million of losses, has ended up selling itself to a strategic acquirer.

The Strategies for Maturity Stage of Product Life Cycle
One chart tells the whole story. Image credit: axios.com

Let’s watch what maturity-stage challenges both companies faced and what moves they did to cope with them within product development, market development and diversification strategies.

Product Development Strategy for Mature SaaS

The key idea here is to update the product to keep up with its expanding user base, deal with emerging issues, and new requests. It allows you to hold the current market share and prolong the maturity stage.

Security issues became one of the main concerns for Zoom in 2020. A series of high-profile security mishaps — including Zoombombing, a vulnerability that led to cameras hijacking, and routing calls through China — resulted in a great loss of credibility.

Zoom maneuvered quickly to address privacy concerns:

  • On April 1, Zoom CEO Eric Yuan announced a 90-day plan to channel all engineering resources into fixing safety and privacy issues.
  • Acquisition of Keybase, a startup that specializes in end-to-end security.
  • Recruitment of  Alex Stamos, former Facebook security executive, and adding the end-to-end encryption.
  • Two-factor authentication as an additional security level.

In the year 2020, Slack was forced to figure out ways to rapidly scale its infrastructure instead of refining its product and building out the features that users wanted. However, there was at least one long-awaited update.

Mashable welcomed an updated app with the headline “Slack's redesigned mobile apps are less likely to make you bang your head against a wall”, and I couldn't agree more with that wording. Don’t get me wrong, Slack is a great app, but it should have gone more mobile-friendly long ago.

Don't be like Slack. We at Eleken can help you create a mobile app that attracts potential users and doesn't scare them away.
Learn more on how we work – read our case study on designing a mobile app that helps people track their habits and improve their quality of life for HabitSpace.

Market Development Strategy for Mature SaaS

With a market development strategy, you expand your existing product into new customer segments or geographies. The lockdown helped both our objects to accelerate the global adoption that was finally slowed down due to the tough competition in the maturity stage.

Thanks to its freemium model, Zoom has acquired a large audience among individual users and small/medium-sized businesses. Though, being popular with the masses doesn’t necessarily lead to more income — the largest revenue segment comes from large enterprises.

Corporate users not only tend to pay more — they’re less likely to cancel the service when thanks to vaccine in-person meetings become possible again. And looks like Zoom has lost that solvent customer segment.

A number of prominent companies, including Ericsson, Bank of America, and Tesla, decided to avoid the service over security concerns. Microsoft Teams and Cisco’s Webex took advantage of the situation and started the fight for the enterprise segment with one another.

Slack started out as a favored tool among quite a narrow segment of developers and corporate IT departments. Its market expansion strategy was in building a brand head and shoulders above the competitors’ so that employees evangelized Slack within their organizations demanding management to buy the app.

Over the last years, Slack was working to gain traction with a wider, more general business customer base beyond IT in verticals such as education, customer support, and human relations. Here, with more hierarchical companies, the viral bottom-up adoption turned out to be unable to compete with the massive distribution system of Microsoft Teams, for instance.

Diversification Strategy for Mature SaaS

To jump-start a new cycle of growth after reaching maturity, companies enter a new market with a new product. Within this strategy, our two objects took the opposite courses.

For Zoom, the greatest danger that pushes the company into diversification is the overblown market of video conferencing. It out and will inevitably deflate to a greater or lesser extent as soon as the pandemic gets left behind. The company’s stock dropped nearly 20 percent in November after the positive vaccine news.

So Zoom builds new products around its core tool to jump from the maturity into the new growth curve as a remote communication ecosystem. The potential revenue streams lie in new webinar capabilities, Zoom Rooms for business and cloud-calling Zoom Phone solution. The beta release is running for OnZoom, a marketplace for video events that enables selling tickets.

Slack's life as a Silicon Valley underdog ended in 2016, when Microsoft Teams entered the game by copy-pasting Slack’s basic design. While Slack was fighting for each newcomer, Microsoft played dirty including Teams to its huge 365 bundle without increasing the price — it took Teams from zero to 115 million users in no time. The integration is seamless since most enterprises are already paying for that bundle, like, forever.

Slack’s biggest downside in its maturity stage is that it’s a standalone collaboration tool is competing with an enterprise collaboration platform. Consequently, companies using Slack need to pay extra for other tools if they want to make prezzies or send emails or work with spreadsheets.

Diversification Strategy for Mature SaaS
Image credit: uctoday.com

Unlike Zoom that builds supporting tools around the core one, Slack attempted to join an external suite of business solutions, and offer their own bundle similar to Microsoft Office.

In 2018 the company partnered with Atlassian, which owns a project management software ecosystem that includes Jira, Trello, Bitbucket, Confluence and a number of other tech solutions. Nowadays, being acquired by Salesforce, Slack has a new chance to fight back against something as significant as Microsoft Teams. So, place your bets.

Wrapping Up the Maturity Stage in Business Life Cycle

What is the maturity stage of the product life cycle? It’s a part of the life cycle when sales growth starts to slow down as the product reaches widespread acceptance in the market.

There are no universal answers on how to beat the growth cycle, get on top, and stay there, otherwise we’d have 100% of ever-successful businesses. As we can see in the examples of Zoom and Slack, even superstars can’t rest on their laurels.

What is certain is that winning once is not enough. You have to rack up repeated improvements and innovations in the market, one after the other to jump into new growth cycles that can be found along the lines of product development, market development and diversification.

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