I’m going to use a term that probably doesn’t have a formal name in any textbook: value decline.
I’m calling it that because it’s the easiest way to communicate what it is. And once you see it, you can’t unsee it in almost every SaaS business that’s stuck.
Here’s the concept. Users come into your product to accomplish some jobs to be done. There’s maybe an overarching job and then a bunch of smaller, more task-oriented jobs underneath it. And usually, the product is really well designed to help them accomplish that first job. But then once that job is done, other jobs pop up. And if the product doesn’t address those, the value that users get starts to shrink over time.
That’s value decline. The product delivers less value over time, not because it got worse, but because it stopped expanding to meet what customers actually need next.
And here’s where it shows up in the numbers: net revenue retention. If you’re stuck at 70% NRR at 12 months, there’s a solid chance you’re experiencing value decline. If your NRR is actively getting worse, you’re definitely experiencing it. And if it’s stagnant, I would argue you’re still experiencing it for specific segments of users. It just so happens that you’re retaining enough other people that the overall number doesn’t look terrible.
NRR doesn’t lie. It’s probably the single most honest metric in your business.
The tax filing example
Let me make this concrete. Imagine the overarching job is “file my taxes.” There are a bunch of functional steps inside that: get all my documents together, upload them, make sure everything’s correct, figure out itemized vs. standard deductions, prepare the forms, and then actually file them. And then there’s the back end: receive the refund, pay what you owe, handle state vs. federal.
Maybe your product does 80% of that really well. But maybe it doesn’t address those last couple of steps. So the customer gets most of the way there, but then has to leave your product to finish the job. That’s normal. Every product has boundaries.
But the question is: what happens when you actively choose not to address those other jobs? And what happens when time passes and those unaddressed jobs start to pile up? The value the customer gets from your product declines. Not all at once, but gradually. And then one day, they start looking.
The forces that cause value decline
There are a few different forces that can dramatically change how someone experiences your product. Not all of them are in your control.
Force 1: Choosing not to expand. This is the most straightforward one. There are jobs your customers need done that your product doesn’t address, and you’ve decided (consciously or not) not to build for them. That’s a choice, and sometimes it’s the right choice. But over time, that gap widens.
Force 2: Market and world forces. Think about what happened during COVID. Any platform that offered virtual community or virtual meetings saw a massive spike. Zoom, HeySummit, Vito, all the virtual events platforms. The world changed, and suddenly those products were delivering enormous value. But when the pandemic subsided, the context shifted. Those same products now had to figure out other ways to provide value, because the external force that was driving adoption had faded.
AI is another example. Imagine if instead of you having to do everything in a tax product, an AI could populate all the information, pull from your forms, handle the filing. Market forces may push products like TurboTax to think about how to leverage AI to continue providing more value, reduce friction, and make it even easier to achieve the outcome. If they don’t, someone else will.
Force 3: Competitive forces. Competitors can make strategic moves that change how your customers perceive your product’s value. Maybe a competitor ships a feature that addresses a job your product ignores. Maybe they undercut your pricing. Maybe two companies merge and suddenly offer an integrated experience you can’t match. Integration and platform risk falls in here too. Think about all the businesses that depended on Twitter’s API. When API costs 10x or an integration shuts down, the value your product delivers can drop overnight.
All of these forces can change the context of how someone experiences your product and gets value from it. Some are controllable. Some are not. But understanding what’s happening is the first step.
What you can control
In the early days (and I’m talking less than $10M ARR), 99% of what happens in the market is going to be out of your control. That’s just the reality. And I would actually argue that’s true for most organizations, even larger ones. But the larger you get, the more you can make bets in more areas. Enterprise organizations have eggs in every basket because it’s too risky to have them all in one.
When you’re small, you don’t have that luxury. Your smaller bets may not have the same weight as going all in on one or two things. And that’s the game you’re playing. There’s a saying at this stage: it’s better to have firmly made a decision and committed to it than to have made no decision and not committed at all. Most CEOs are operating with 60-70% of the information they actually need. They’re not waiting for 99% because that’s never coming.
What is in your control is how you react. What choices do you make? What opportunities do you take?
I remember when the post-COVID layoffs were happening. Tech companies laying people off left and right. And yes, it sucked. But the silver lining was that bootstrapped founders and smaller companies were going to have more opportunity to hire incredible talent than they’d had in years.
That’s how I think about it. When you see other companies zigging, look for the zag. Does zigging work for you? If everyone is zigging and it’s smart to zig, then zig. But if it’s smarter for you to zag, do that.
The three real causes of preventable value decline
Here’s where this gets practical. There is always going to be some natural value decline. You’ve got limited bandwidth, limited resources, and you’re never going to be able to move as fast as your customers’ desires. Desires and wishes don’t decrease. They only expand.
That’s a natural tension. But a good portion of value decline is preventable. And usually when we see it (when NRR is stuck at 70% at 12 months, or when monthly revenue churn is creeping up), it comes down to three things.
1. We don’t understand the full job. We don’t have a clear understanding of what people want to accomplish after they’ve achieved initial value with the product. What does long-term life with your product look like? What does it look like at two years? Three years? Is it still relevant and valuable to them? A lot of conventional wisdom says you want to keep customers at least two years for the unit economics to work. If you’re losing them in the first year, you’re probably breaking even or losing money.
2. We don’t understand long-term life with the product. This is related but different. It’s not just about the jobs. It’s about how those jobs change over time. When someone’s been using your product for a year, their needs are different than when they signed up. Maybe they have more employees. Maybe their business has shifted. Maybe they’ve outgrown the plan they’re on but don’t see a reason to upgrade because the additional tiers don’t offer things they care about.
3. We’re blocking our own success. This is common for bootstrapped founders, especially technical founders who left big corporations. You know the ones with thousands of developers, layers of management, and fundamentally broken products. You left that behind and swore you’d never build anything that bloated.
But here’s the problem. You’re comparing your small team to an organization with hundreds of employees and infinite money. That comparison doesn’t hold. You’re not at risk of building a bloated product. You can’t accidentally hire 5,000 developers.
I cannot tell you how many technical founders I’ve talked to who want $10M in revenue but have a single developer, act as PM themselves, and won’t hire anyone else because they don’t want to be bloated. If that’s you, you’re blocking your own blessings.
Yes, there will be friction when you bring someone new on. Yes, it’ll take six months for them to provide real value. But if the reason you’re holding back is fear of becoming the corporation you left, that’s fear of success.
If you don’t want to grow, if it’s more lifestyle for you, that’s completely fine. But then we have to temper expectations about hitting $5M or $10M. The contradiction of wanting significant growth while refusing to invest in development has to be called out.
“Customers lie” (sort of)
Here’s the thing that connects all of this: customers cannot tell you what to build. I keep coming back to this because it’s crucial for understanding how to prevent value decline.
They can tell you bugs. They can tell you quality of life improvements. “This filter doesn’t work when I click it.” “It would be cool if I could filter the report by date.” Great. Add that to the list.
But value generators? Net new features that extend the value by tackling a new job? That’s really hard for them to articulate. 90% of customers just aren’t going to think that way. They’re not product people. They can’t conceive of you deciding to acquire a company or build an entirely new capability. If they could, they’d be VPs of product, not users.
Now, there’s the vocal 10%. The loud few who know exactly what they want and will tell you nonstop. But the 90% either don’t think you’re serious about building it, or they just can’t conceive of the product evolving that dramatically. And when they can’t articulate what’s wrong, they start looking. Something feels off. They know something could be better, but they don’t have words for it. So they start evaluating alternatives.
It’s rarely one reason that causes a customer to churn. Usually it’s 10. But when they cancel and select a reason from the dropdown, they give you one answer. “Missing features.” “Went with another competitor.” “Things are just different now.” And you never really know the full story.
The process: discovery and validation
So what do you actually do about it?
I think about it one of two ways, and either can work depending on your team and how you operate.
Option 1: Sprint methodology. Pick a period of time (maybe once per quarter) and go deep. Talk to customers. Watch how they use the product. Get into the details. Where are they at the two-year mark? How are they using things differently now? Watch them actually complete tasks. Not session replays. Actually get on a 15-minute call and say “show me how you build this report” or “show me how you set up your schedule.”
Watching them is critical. Just asking is not enough. You have to actually see how they use the product. And if you’re really serious, I’d say get on a plane and go to their office. Watch them use your product in their world. You will be flabbergasted at how your product looks in their environment. You might cry. Because it makes sense to you, but it doesn’t make sense to anybody else.
Then map the jobs. We do this in Miro. Map out the phases of the overarching job. Every step, every task the user goes through to accomplish it. And then highlight where your product fits. Get specific: this feature is being used at this step. And you’ll see gaps. Tasks where they’re not using your product at all. That’s your opportunity space.
Option 2: Continuous discovery. This is the aspiration. Teresa Torres coined the term continuous discovery habits, and it basically means you have an ongoing process that identifies opportunities and problems, and a good process for strategically defining solutions. What we typically see is most teams have a continuous solution habit, but none of the discovery and very little of the validation. It’s “I have a whim, I’m going to build it, we’ll see how it works.”
Continuous is tougher because it requires real discipline. With sprints, you can commit to a defined period and rally around it. With continuous, you need it baked into how the team operates every single week.
Either way, the critical thing is: once you’ve identified opportunities, you still have to validate your ideas. I can’t tell you how many times I’ve come up with designs that made total sense to me, put them in front of someone, and they didn’t get it at all. Then someone way smarter than me at UX comes along, makes a few adjustments, and suddenly people get it. Solutioning is hard. But part of the process has to be that we validate our ideas and, when they’re invalidated, we go back to the drawing board.
What I don’t recommend is the status quo: making assumptions in a vacuum, building in a vacuum, and pushing code in a vacuum. No discovery. No validation. No UX research. And then being frustrated when nobody uses the feature you just shipped.
Don’t do random acts of product
Emily Kramer says don’t do random acts of marketing. I’d say the same thing about product. Don’t do random acts of product improvement.
If you’re PLG, product-led growth implies that you expect the most growth to come from product. And if product is the messiest, least-organized function in the organization, your PLG motion will suffer. We just talked to a company recently that’s at about $5M ARR. Super small product and development team (which is honestly impressive). No product analytics. No validation process. No discovery. And the irony is, they were thinking of giving all their investment to marketing. And I’m like, yes, let’s give some to marketing. But a lot of that needs to go to product. Product needs resources. You can’t conquer the world with a couple of sticks and some mayonnaise.
Incredible growth comes from balance across all of the growth levers. But what we usually find is all of the eggs are in acquisition. And so much of my job is saying: no, we need to spread these out. If you have money for more eggs, great. But if this is all we have, let’s redistribute. Because customer acquisition is probably your worst growth lever. And that’s the flag I fly the loudest.
What about you? Are you experiencing value decline and, if so, which of the three causes resonates most? And if you’ve built a discovery process that actually works for your team, I’d love to hear how you structured it.
Or if this is where you’re stuck (NRR plateauing, churn creeping up, product roadmap that feels reactive), this is exactly what we help with at DemandMaven. Book a discovery call with Asia.