Product Growth Slowing? Tips for Managing Mature Products (Product Lifecycle Part 4)

This is part 4 of our five part series exploring the product lifecycle where we delve into the maturity stage. If you haven’t yet, check out part 3 of the series for tips for managing a product in growth.

The maturity stage of the product lifecycle marks a slowing of growth in your product value metric, moving from exponential to linear growth. Unlike the introduction stage, linear growth is coming off a much larger base in maturity and therefore overall revenue growth is much more impressive in this stage. Most of the biggest products you can think of are in maturity, growing in single or double digit percentages over the year. Products may stay in maturity for a very long time if investments continue to be made sustainably. Below we discuss some considerations for managing a product in maturity for the long term – particularly relevant to teams focused on Product Management in Australia.

Retaining Your Returns

Often when a product first hits maturity it can be a bit of a hard time. You will have seen large growth predictions in the high double or triple digit percentages during the growth stage. When you enter maturity however, these targets are often not revised for some time. This means products hitting maturity often start missing targets for what may be the first time.

Overall product revenue is usually still very impressive. If you have done all the right things in the growth stage to set up for maturity the customer base will be large and operations will be well scaled – meaning the potential for high profitability.

Increasingly however, customers will be harder to win. Usually they will require more spend to convince (leading to higher customer acquisition costs) and you will be accessing an already highly penetrated market. Early majority customers are more likely to have already tried your product and either continued (retained) or churned. A new challenge of retention and winback emerges. Without effectively considering how customers can be won-back and retained, a product will exit maturity quickly. This makes investing in optimising churn and retention management.

The remaining customers who have not yet tried your product will be late majority and laggard customers that are harder to access and retain. They tend to be more risk averse and less likely to try and stick with a change to their behaviours. This may mean more assistance is needed to get these customers onboarded and more attention needs to be given to product education, especially when releasing new or changing old features. This may come from your account management, customer success or support teams (especially for B2B) but also should be done in product. As these customers are usually expensive to acquire, you want to make sure you retain them with an experience tailored to managing change.

Responsibly managing new product investments becomes especially important for a mature product. It can be tempting to invest in a mature product like you did when it was growing. Taking many bold bets and including many large scaling-type initiatives (e.g., the ‘UI refresh’) in a product that may very shortly be in decline may mean these costs can never be recouped.

Larger investments in this stage will often need a clear business case, but even smaller investments or experiments can yield outsized returns in a mature product. Two types of investments should be clearly prioritised in this stage are:

1. Profitability improvements: This may be on the cost or revenue side e.g., devops improvements for costs or pricing experiments for revenue.
2. Growth experimentation: These may be growth optimisation experiments or larger value proposition experiments (see below).

The good news is the brand of your product is likely to be strong (or at least pervasive) in the market at this stage. If managed well, a tactic that is a clear profitability win in this stage is a price increase. People are more likely to accept a price increase for a proven product that is established in their workflow and shows continued valuable investment than they are for a newly introduced product. For example, Netflix’s focus on reducing account sharing and price increases has achieved significant revenue growth with only a manageable churn increase.

Care must be given however that competitor pricing and value propositions are carefully monitored to ensure that your product continues to remain value for money or price increases may lead to unmanageable increases in churn. It is also important to remember that while price increase can do wonders for profitability and revenue, you can’t price increase a product back into the growth stage. This requires net new customer acquisition.

Finding New Growth Areas

Even though it is most often drawn this way, the product lifecycle is not necessarily linear. It is possible for a product to move back from maturity into growth, and this should be the goal of product lifecycle management at this stage.

In order to do this, a compelling new customer value proposition must be generated that either wins new customers that have not used your product (e.g., from a previously non-targeted customer segment) or winback customers that have churned because your value proposition wasn’t a fit for them. Note here that ‘value for money’ strategies like discounting do not count as new growth areas, even though they can be effective at winning-back customers.

To create true growth, a new value proposition (or a significant expansion of your current one) must be delivered. This could be delivered in a few ways by:

1. Expanding your target audience: This may be delivering a value proposition and positioning that speaks to a new geographical or industry vertical with your current offering or it could also be one that targets new problems and delivers new benefits to a new customer base.
2. Expanding your product offerings: It is also possible to expand the customer base in a product portfolio by offering more adjacent products that bring customer utilisation back to your product. This is a common tactic for B2B ‘suite’ products (e.g., Microsoft, Google, Atlassian) that continue to build or buy products that complement their core products in a ‘suite’ and thus contribute to individual product growth.
3. Expanding your business models: Growing products through new and varied business models is also possible. The most obvious example of this is products offered on licence and subscription (e.g., Playstation Plus vs game purchase), or buy vs lease for physical products (e.g., new car purchase vs novated leasing). This technique will work only if there is a significant customer market that is partial to alternate business models, otherwise it may just move around your current customer base.

By utilising different tactics to continue to evolve and refresh your value proposition to access and retain new customers it is possible for a product to continue to cycle through growth and maturity for many decades. Inevitably however a product will start to move towards decline.

Focus Areas For The Maturity Stage

While the maturity stage often gets a bad rap in comparison to the growth stage, it is important to note that this stage by far generates the most benefits for the business. In order to achieve this, it is essential that the focus of the growth stage continues to be:

1. Responsibly managing product investments to maximise profitability: This means either prioritising larger initiatives that have clearer impacts to profitability or experimenting with smaller growth initiatives that have a lower upfront cost to collect more information on potential growth and profitability impacts. Bigger, unproven bets with less clear impacts to profitability should be prioritised only if there is a clear path to new growth areas (i.e., a new customer segment).
2. Customer retention: Optimising the customer experience to retain and win back customers is key. Again, an experimental approach can be useful here as simple tactics like churn follow ups, integrated product marketing and churn offers (discounts etc) can be highly impactful on churn for relatively low effort.
3. Planning ahead for decline: Every product will eventually enter decline, so planning ahead for your product and building the customer experience to prepare the customer base to transition to a new product with plenty of lead time is essential.

By focusing on maximising profitability and investing returns into delivering new value propositions that can win new customers, it is possible to maximize the length of the maturity stage of your product and thus the overall business returns. Without this thoughtful planning the maturity stage may be over in a flash and before you even notice, you are in decline. These considerations are essential for any Product Management Australia team navigating long-term product success.

In the next article of our five part series, we go in depth into the decline stage. We will discuss strategies for exiting a product in decline that maximise the value generated from this final stage of the product lifecycle.