In 1965, Theodore (Ted) Levitt penned his famous article about the theory of the product life cycle (PLC). PLC was introduced in the 1950s, so in 1965 it wasn’t exactly new, but many companies were yet to practically adopt the concept.
“The concept of the product life cycle is today at about the stage that the Copernican view of the universe was 300 years ago: a lot of people knew about it, but hardly anybody seemed to use it in any effective or productive way.”
Despite some criticism of the PLC, it is still a widely accepted marketing principle. From an academic point of view it has stood the test of time. But has it ever been applied in a meaningful way in the corporate or business world?
Are we simply inventing new products and services at a rate of knots without considering the maturity and decline stages of the PLC equation?
Do we just assume that our buyers will just upgrade products with us automatically?
In addressing these questions I have focused on B2B relationships in the IT sector.
The life cycle of IT products is getting shorter and shorter. A piece of hardware that had a useful life of 10 years in the past, is now outdated in less than 5 years. Some products can be obsolete after just one year! So businesses must manage product life cycles more effectively than ever before.
However most major IT organizations are so focused on launching their new products and services that they are not effectively managing the useful life of their already installed products and services. They forget that customers will not simply upgrade a company’s product if their old product was not effectively serviced, maintained and managed in the past. Once bitten, twice shy.
In the IT industry, we have not progressed in applying the theory of effective PLC management.
However, times are forcing change. There is growing recognition of the alignment between a PLC and management of the customer life cycle (now often referred to as ‘customer success’). And successfully managing the PLC requires not only better management of your installed products, but also better management of your relationships with your customers. This is now a priority for all organizations.
But with the continual focus on revenue generation from net new sales, how can this be achieved?
Keeping in mind the IT market is evolving (some might say revolving!), upfront major capex purchases for hardware (and software) are becoming an increasing rarity as customers migrate to month-to-month consumption and subscription contracts. This has had a major impact on the revenue lines of many vendors (see blog) swapping big upfront deals that have associated risk to predictable periodic streams of revenue.
So now is the time you must really get a handle on your installed products and implement diligent customer focused programs that more effectively manage your own product life cycles and those of your customers.
The companies who do are already leading the industry but it’s not too late to ring fence your customers!
So, think about how you can migrate your thinking to one focused on the life cycles of your products. Then, with this intelligence, continually hone appropriate and compelling offers that they can’t live without. Only then will you remain relevant to them during future next generations of IT deployments and will ‘lock in’ your revenues into the future.
As Levitt said of PLC…“it’s time to put it to work”. He just didn’t think it would take 50 years!