In this guide, we’ll define the five stages of the product lifecycle (development, introduction, growth, maturity, decline), and explore the role of the product manager at each stage.
Table of contents
- What is the product lifecycle?
- What are the 5 stages of the product lifecycle?
- What is the product manager’s role at each stage of the product lifecycle?
What is the product lifecycle?
The product lifecycle refers to the stages a product goes through from the moment it is introduced to users to when it is removed from the market.
Before a product is introduced to the market, it goes through a development cycle, which consists of four stages:
- Ideation
- Development
- Testing
- Release
Following the product development cycle, the product is introduced to the market, then (ideally) undergoes a period of growth before reaching maturity and, eventually, declining from prominence in the market.
What are the 5 stages of the product lifecycle?
The five stages of the product lifecycle are:
Some consider only the latter four stages (introduction through decline) to be part of the product lifecycle. But in my opinion, development is an equally important stage in the product lifecycle because it lays the foundation for the subsequent stages.
These five stages complete the lifecycle of the product.
What is the product manager’s role at each stage of the product lifecycle?
The product manager plays a major role throughout the entire product lifecycle. Each stage requires a different skill set and mindset to lead the team to success and steer the product in the right direction.
At each stage, the product manager has to evaluate KPIs and metrics to support a range of important decisions.
1. Development
The process of developing a new product consists of many steps, from idea generation, to prototyping, building, and testing, to product launch.
Throughout these stages, the product manager acts as the voice of the customer, conducts market research and surveys, understands the user’s pain points, and determines solutions to address them.
Product managers define the product vision and strategy to help the product team understand why and how they are to build what they are building.
At this stage, the goal is to build the right product to attract early adopters. At each stage of the product development process, product managers ensure the team’s decisions revolve around the customer’s pain points.
4 stages of product development
Let’s break down the product development stage even further and explore the role of a product manager at each step:
- Idea generation and screening — Product managers brainstorm with the team to evaluate various solutions the product can offer to resolve user pain points. It’s the PM’s job to survey all the available ideas and then finalize what features to be built
- Design and discovery — The product manager defines the user personas, conducts market research, and analyzes competitor products. They work with designers to define the user journey and how to build a top-notch user experience
- Development and testing — Once the team has determined which features to build, the product manager works with the development team to help them understand the features in detail and clarify any doubts. The PM also works with the QA team to ensure that the feature implemented is delivering value to the user
- Product launch — With the help of the product marketing manager, the PM endeavors to create a buzz in the market ahead of the product launch
Metrics to monitor pre-launch
It’s hard to measure performance during this stage because the product is still under development. However, the product manager might conduct focus groups or surveys to get more information about user pain points and validate their assumptions.
Before launch, the product manager might consider looking at the following:
Market size
It’s good to know about the potential target market size and set a bar on how much the product can tap the market upon launch.
Potential sign-ups
If there is a website or a minimum viable product (MVP) launched, you can measure the number of potential signups. More signups indicate high interest and higher likelihood of success.
Social media engagement
During the pre-launch stage, the marketing team often tried to generate buzz on social media to attract early adopters. Engagement rate can help you track users’ ongoing interest in your product.
Product development
Keeping track of the progress of features and whether they are being tailored to user needs is a key responsibility of the product manager.
2. Introduction
The introduction stage refers to the period when a product is launched to the market, whether it is the first of its kind or you’re introducing a product into a new market. During this phase, the sales volume is low and demand is built gradually.
The product manager works with the marketing team and helps educate early adopters about the benefits of using the product. Product managers are subject matter experts on the product, so they should be able to explain its core values to internal teams such as marketing, engineering, support, sales, and design.
Usually, enough data is gathered to support the product launch and the gap it will fill in the market, but product managers validate the need of the product in the market after its launch.
To summarize, the role of the product manager during this stage is to:
- Work with the marketing, sales, support, and design teams to help them understand the product’s core values
- Validate assumptions before launch and evaluate how willing customers are to buy the product
- Analyze the user personas and add any new personas based on the adoption of the product
- Track usage metrics and validate the user journey flows
- Drive the product toward product-market fit
- Strategize to improve the product per evolving user needs
Measuring product performance
Once the product is launched, the product manager must measure its performance. Some key product metrics to keep an eye at this stage include:
Product activation rate
The activation rate is the ratio of users who have reached the activation point versus the total number of users who signed up. The activation point refers to a user action that indicates engagement with the feature.
Feature adoption
The adoption metric indicates whether users are actually using a feature or product. It can be calculated using the following formula:
Adoption rate = feature MAU / monthly logins * 100
A higher feature adoption rate indicates that users like the feature and are deriving value from it.
Customer acquisition cost
Customer acquisition cost represents the cost spent by the organization to acquire a user. This can be calculated by dividing the total amount spent on marketing and sales by total acquired customers during a given time period. The focus should be to decrease this number going forward so you can acquire more users with less expenditure.
Revenue
If your product is saleable, revenue is an important metric. It is crucial to measure the revenue generated monthly and yearly, along with the revenue growth rate.
3. Growth
The growth stage is when the product has proven that it has a market and its demand begins to rise. With higher sales volume, other competitors typically enter the market. Increased awareness, profit, market share, and competition are indicators that a product is in its growth stage.
Marketing campaigns aim to establish brand value to gain an edge over the competition. As a product manager, you must direct the path of the product toward growth.
During the growth stage, product managers should:
- Maintain or improve customer satisfaction by adding new features and services
- Collaborate with marketing and sales to ensure the product is competitively priced
- Work toward maximizing revenue and market share while establishing brand value
Measuring growth and reach
During this stage, as sales increase, it’s important to keep track of metrics that measure growth and reach of the product.
Some metrics to focus on during this stage include:
Revenue growth rate
Obviously, revenue grows as sales increase, but it is important to track the rate at which revenue is growing. A declining revenue growth rate is concerning and may indicate that the product is entering its maturity stage.
Expansion revenue
Expansion revenue is the additional revenue that can be gained by upselling to existing users. This is a great technique to grow revenue with the existing user base.
Referrals
Referrals from active users can be really helpful to increase the user base. You may be able to boost referrals by providing small incentives to existing users, which can lead to more growth.
Customer satisfaction
The likelihood of a user to remain with your product depends on how happy it makes them. It is crucial to gauge the customer satisfaction level by collecting regular feedback from users. Net Promoter Score is another metric that measures customer happiness and loyalty.
Stickiness
Stickiness is your product’s ability to retain users because of the value it offers.
Stickiness is calculated with the following formula:
Stickiness = DAU / MAU
High stickiness means the product has the power to engage users again and again.
4. Maturity
There comes a time in the life of a product when sales have peaked, you’ve maximized your pool of customers, and income is constant. This is a good time to take stock of past mistakes to improve the product and boost retainment.
Stagnant sales, declining customer growth, and heightened competition are all indicators of product maturity. During this stage, the focus of product managers is to retain the existing market share. This can be done by differentiating the product from the competition.
The objective is always to steer the product back toward the growth stage, for example, by attempting to enter new markets. Retaining customers and maintaining high customer satisfaction is a key to prolonging this stage.
Every product goes through the maturity stage. The trick is to minimize the time it spends there.
Measuring maturity
The maturity stage focuses on maintaining what has been achieved and figuring out new ways to move the product back to the growth stage. To accomplish this, product managers should track the following metrics:
Churn rate
Churn rate is the rate at which users stop using the product — for example, canceling a subscription. Churn can be calculated by dividing the customers lost during the previous quarter by the number of customers acquired during that quarter. The goal should be to lower the churn rate and retain existing users.
Retention rate
Retention rate measures how many users continue using the product over a given period of time. The higher the retention rate, the more satisfied users are with the product.
Churn rate and retention rate go hand-in-hand. The higher the retention rate, the lower the churn rate.
5. Decline
Inevitably, for any multitude of reasons, all products reach a period of decline. This can happen due to the emergence of new technology, increased competition, the availability of cheaper solutions, and a wide variety of other factors.
Classic indicators of decline include decreasing market share, decreasing sales, and waning customer interest. The product manager must evaluate the reasoning behind the decline.
Managing a product in decline
One way to respond to decline is to attempt to leverage the existing brand value and enter a new market. This is known as the pivot approach. Alternatively, you could shift the focus to reengaging inactive users by working closely with the marketing team.
If the product’s decline is inevitable, the final responsibility of the product manager is to facilitate a smooth offboarding for existing customers. When you’ve exhausted all other options to revive the product, circumstances may require that you take the product off the market.
The least you can do during this stage is to minimize customer complaints and address them as soon as possible. It might be useful to track the customer complaint count and collaborate with the support team to resolve issues.
Conclusion
Developing a new product and bringing it to market is a roller coaster: everyone is excited before and after the launch, momentum reaches a crescendo during the growth and maturity stages, and adrenaline levels start to normalize during decline.
Each stage of the product lifecycle has its own set of challenges and requirements. The product manager plays an important role during each stage, providing direction and support and measuring progress all along the way.
The post The product manager’s role at each stage of the product lifecycle appeared first on LogRocket Blog.
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