Product life cycle and product lifecycle management are terms you will often hear about SaaS. This is because these terms are very crucial to a SaaS business.
What is the product lifecycle? Product life cycle refers to the duration from the first time we introduce it into the market to the time we have to remove it. It is important to know where your product is in its lifecycle, especially in SaaS.
There are 6 stages in Product Lifecycle Management:
1. Development and research
This is the research and prototyping stage. This is the stage before companies introduce the product commercially. It takes months to years to brainstorm a viable idea. Once a company selects an idea, it moves from the ideation stage to the development stage. It starts with a rough design and then creates prototypes. Over time, it refines the product and tests its efficiency.
This is the stage where companies look for funding and investors. In this stage, founders and investors funnel a lot of money to develop the products. All the while, not making a profit since they haven't sold the product yet. Various departments and teams work to design, manufacture, market, and launch the product.
2. Introduction
This stage starts after a company launches its product in the market. In this stage, the marketing team launches a campaign for awareness and engagement while focusing on testing and distribution. The marketing and content team will also create educational content about the product for potential users. Marketing material will include inbound marketing, engagement and brand awareness ads, free trials, giveaways, demo videos, etc. This is the stage of laying the groundwork therefore, revenue generated will be low.
3. Growth
This stage comes after the product has been on the market for a while. The company considers the product well established and commercially viable. In this stage, demand steadily grows as product awareness increases. Therefore, you will see a steady increase in revenue generated. The marketing team heavily focuses on engagement and conversions. Most SaaS businesses work on improving customer support to cater to a growing audience.
4. Maturity
The revenue growth of the product reaches its peak and stabilizes. There is no more steep growth in revenue numbers. Therefore, sales of the product level out. Companies focus more on conversion and retention than brand awareness. The goal is to keep generated revenue stabilized for as long as possible. Therefore, the company will lower product prices, sales strategies become intensive, and will add features. It is crucial to set yourself as a leader in your industry and differentiate your product from others.
5. Saturation
In the saturation stage, the product plateau in revenue and growth. Therefore, there is neither growth nor decline in the numbers. It is the stage before the decline stage. It is crucial to perform and market better than the competitors. If your product is not a brand preference in your industry and a leader, then your product will decline.
6. Decline
Sales will decrease because of intense competition and changes in technology, and you will experience a decline. After a product declines, a company may choose to iterate on the product to come up with new features or a new version or start with a new project altogether. Read More: The Types of SaaS Products and Companies
What is product lifecycle management? And why is it important?
Product lifecycle management (PLM) is the management of the product from its inception to its retirement. Innovation is crucial to the development of a product until it becomes obsolete. Every product will eventually become obsolete. But you can extend its period of relevance with the help of product lifecycle management. You can keep the product longer in the market by adding features and improving efficiency. Knowing which stage of product lifecycle management your product is in helps in decision-making and marketing. Each stage in the product life cycle produces different data and needs to be used accordingly. Plus, you are better equipped to handle the market when you know where you stand. Read More: How to do Competitive Analysis in SaaS?
Implications of product lifecycle management in SaaS:
Adding features
When a SaaS product comes into the market, it has limited features and functions. Over a product's lifecycle, we add futures to keep it updated with the industry and to keep the product relevant. The longer your product stays on the market, the more features you will have to add. This can also include improvising existing features and driving the efficiency of the product over time. You will also have to factor in the expanding user base when doing so.
Planning benchmarks and templates
Most companies tentatively map out the entire lifecycle of the product before they even launch it. Mapping out the growth of your product allows you to set developmental and revenue benchmarks. It becomes easier to identify growth trends when you have a predictive model. You can also apply this predictive model to your pricing and marketing strategies. Moreover, such predictive media helps you see the degree of deviating from the original plan.
Adjusting pricing
Pricing is the hardest part of marketing a SaaS product. There are so many strategies that it becomes hard to decide which one to use. According to cobloom, there are three components of SaaS pricing. All Saas pricing is influenced by pricing models, pricing strategies, and psychological pricing tactics. By using elements that fit these three components, you can easily price your SaaS products optimally.
However, there are a few things that you need to keep in mind. First, some companies start with an introductory price. This is a low price that incentivizes people to buy. It helps build initial traction. Once the product sells well, the company increases prices to drive revenue. While some customers may stop buying or discontinue subscriptions, this is a good strategy. This means that customers who stay want your product and are serious buyers.
Creating marketing material
The marketing strategy for your SaaS product will depend on the stage. During the first and second stages, development and introduction, you want to focus on brand awareness and reach. Since your product is new in the market, you want to create a broad audience. And generate interest in the product with promotional material. It will help in the initial traction of the product.
In the mid stages, growth and maturity focus on engagement, lead generation, and conversion. It will help you build a community and strong relations. You should focus on brand loyalty and establishing your brand as a market leader. In the later stages, saturation and decline, try to work on maintaining the perception of a brand leader. The aim is to delay the stage of saturation and decline as much as possible. Read More: A Founders Guide to SaaS Affiliate Marketing