Product managers will encounter many forks on the road to growth and product success. Those forks always require answering difficult questions. For an early-stage company or new product, the question might be, How will we prioritize features before we have customers? Growing companies will ask, Is it time to scale up our product team?
At some point later in your product’s evolution, you might face another tricky question. Should we try to extend the mature product’s lifecycle? Or should we instead allow for the product’s natural decline and shift our focus and resources into a new product?
We can’t answer the question for you. Every situation is unique. But we can offer some questions to help guide your strategic thinking.
Is your judgment clouded by the effort you’ve already put into this product?
Investment experts have a standard lesson for new investors. The amount you paid for an asset should have no influence on whether you should sell it now or keep it.
Of course, human psychology makes us feel otherwise. If we bought a share of stock for $10, and now it’s worth $5, we view selling today (at a 50% loss) as painful. So we might try to rationalize holding onto the stock instead. But the real question is, why are we considering selling today? If it’s because the market or the entire economy is tumbling, or because we really need the cash for something important, then maybe it is a smart strategy to sell.
When you have a mature product, your decision about what to do with it should be based only on your forward-looking strategic options. The amount of time and resources your team put into building and marketing it should not factor in; those are sunk costs.
You need to be thinking only about whether or not your existing mature product still has life in it — and maybe even growth potential — going forward.
What would it require to extend your product’s life, and would that be profitable?
If you want to try extending your product’s life and revenue-generating potential, you have a few options.
- You can add new functionality to the product, to capture more of your existing target market.
- You can increase your promotional efforts, to boost awareness and interest among your existing market.
- You can take your product into new markets.
Note: This approach could require one or both of the tactics described above. You might need to build new features and capabilities into the product to make it attractive to a new market. You will also need to devote promotional resources to introducing the product to the new market.
Before you make a decision about whether or not to try extending your product’s life, your team should first think through which of the options above would make the most strategic sense.
You’ll then want to estimate what that approach would cost (in time, resources, and the opportunity costs of not deploying these resources to something else), estimate the potential upside (in added reach, brand awareness, new markets, more revenue, etc.), and then determine if the strategy seems both viable and worth the cost.
What would happen if you simply left your product alone in the mature stage?
As product management thought-leader Roman Pilcher points out, product maturity simply means a product has stopped growing. But that does not mean it is now a liability. A product can exist in the mature stage — delivering strong, steady revenue — for years.
You might be trying to decide whether to take actions, like the ones described above, to pull your product out of maturity and get it back into the growth stage. That’s a smart strategic exercise to go through with your team.
But it’s also worth thinking through what would happen if you simply left your product to live out its days in maturity as long as possible. Things to consider here would be:
- How much would it cost just to keep this product at maintenance, doing regular fixes and offering support but not working on new functionality or creating new promotional campaigns for it?
- What do the historical data suggest that we can expect to earn in revenue, both from our existing customers and from the small slice of the market that continues to buy from us, at this maintenance level?
- For how long could we expect this amount of revenue, and when should we expect to see it start falling off — suggesting the product is entering the decline stage of its lifecycle?
- How much could we save by shifting to this new strategy (in time, development resources, marketing, and support resources, etc.)? What could freeing up these resources allow us to do in terms of developing new products?
Does it have to be an either-or decision?
Think about Coca-Cola. Their flagship product, the iconic red soft-drink can, is clearly a mature product. What strategy did the Coca-Cola company decide on to deal with a product in the maturity stage of its life? They’ve taken every strategy.
- They’ve pushed the product back into the growth stage:
Coca-Cola has continually added new “features” to its standard cola drink, releasing them as Cherry Coke, Vanilla Coke, Orange Vanilla Coke, etc.
- They’ve introduced the product into new markets:
Coca-Cola adjusted its soft drink’s contents for more health-conscious buyers: Diet Coke, Coke Zero, etc.
- They’ve developed (and bought) new products:
Coca-Cola launched bottled water, mineral water, flavored water, green tea, etc.
In Coca-Cola’s case, they did not settle on a single answer to the question of whether to continue working on a mature product or focusing instead on new products. They did it all.
Of course, your organization probably doesn’t have the team size or the budget available to the product managers at the Coca-Cola Company. If continuing to prioritize the development and promotion of your mature product would consume all of your team’s resources, then you will need to make a choice. We hope the questions and thought exercises above can help you.
But if your organization has the resources to allow for it, and if your calculations suggest it makes strategic sense, you might want to try the two-pronged approach.
Put time and resources into identifying new markets, new customer trends and demands — just like Coca-Cola did when it developed its bottled water and green tea, for example. But at the same time, keep the lines of communication open with your market, and with adjacent markets, to learn how you can keep adding value to your mature product that can keep it growing.