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.
