Why 80% of SaaS Features Are Copied in 6 Months (And How to Build Un-copiable Advantages)
Last quarter, your competitor launched the exact feature you spent 3 months building. Maybe that sound familiar?
If you’re a product manager or SaaS exec, this scenario probably makes your stomach churn. You’re not alone. Data from ProductPlan’s 2023 State of Product Management Report reveals a startling reality: 80% of software features are replicated by competitors within six months of initial release (With Agentic Coding, I expect that timeline to of compressed somewhat!)
This isn’t just an inconvenience – it’s an existential threat to your business. When every feature can be copied in weeks rather than months, traditional competitive strategies crumble. Price wars ensue. Margins compress. Innovation becomes reactive rather than strategic.
Yet within this challenging landscape, certain SaaS companies have built competitive advantages that transcend feature-based competition entirely. Companies like Slack, Zoom, and HubSpot have created what I call “insight-based competitive moats”; barriers that competitors can’t see, let alone replicate.
The secret isn’t in what they build. It’s in what they discover about their customers.
The Commoditisation Crisis in SaaS Markets
The software industry faces an unprecedented commoditisation challenge. Unlike physical products that require manufacturing investments, specialised supply chains, or geographic advantages, software features can be rapidly reverse-engineered and deployed by competitors with access to similar cloud infrastructure and development resources.
The data tells a sobering story. ProductPlan’s research indicates that not only are 80% of features copied within six months, but the time-to-replication is accelerating. What once took competitors a year to copy now happens in weeks. Advanced teams can ship feature copies in as little as 2-4 weeks.
This rapid replication cycle creates what economists call a “commoditisation spiral.” Companies invest heavily in feature development, only to see their innovations copied before they can recoup development costs or establish market advantages. The result is a race to the bottom where differentiation becomes impossible and price becomes the primary competitive factor.
Consider the project management software market. Tools like Asana, Trello (now Atlassian), Monday.com, and Notion all offer remarkably similar feature sets: task management, collaboration tools, timeline views, and integration capabilities. Each time one platform introduces a novel feature – say, a new visualisation method or automation capability – the others quickly follow suit. Users switch between platforms based on minor interface preferences or pricing rather than fundamental value differences.
This commoditisation pressure has forced many SaaS companies into what I call “feature wars” – endless cycles of reactive development where product roadmaps become lists of competitor features rather than strategic initiatives. Teams burn out building features that provide no lasting advantage. Innovation suffers as resources shift toward copying rather than creating.
The financial impact is devastating. When products become commoditised, companies lose pricing power and must compete on cost. SaaS companies that once commanded premium prices find themselves in bidding wars with competitors offering similar functionality at lower price points. Customer acquisition costs rise while customer lifetime value stagnates.
Why Traditional Competitive Strategies Fail in Software
Porter’s Five Forces framework, the gold standard for competitive analysis (an oldie, but still a goodie), assumes that industries have meaningful barriers to entry and differentiation opportunities. In traditional industries – manufacturing, retail, services – these assumptions generally hold. Building a car factory requires massive capital investment. Opening retail locations demands geographic presence. Developing specialised expertise takes years.
Software markets operate under fundamentally different rules. The barriers that protect traditional businesses simply don’t exist:
Low barriers to entry: Cloud infrastructure has democratised software development. A small team can build and deploy globally accessible software applications with minimal upfront investment. What once required server farms and IT infrastructure now costs hundreds rather than millions of dollars to launch.
Rapid copying capability: Software features are essentially algorithms and user interfaces—intellectual property that can be observed, analysed, and replicated. Unlike manufacturing processes or service delivery methods that involve tacit knowledge and operational complexity, software functionality is relatively transparent to competitors.
Minimal switching costs: Cloud-based software eliminates many traditional switching costs. Users can often migrate between platforms with minimal data export/import processes. SaaS companies have actually optimised their onboarding to minimise switching friction, inadvertently making it easier for customers to leave.
Network effects are rare: While some platforms benefit from network effects (more users make the product more valuable), most SaaS tools provide value independent of user base size. A project management tool or CRM system works essentially the same whether it has 100 users or 100,000.
The resource-based view of competitive advantage, another foundational strategy framework, also struggles in software markets. This theory suggests that sustainable competitive advantages come from resources that are valuable, rare, inimitable, and non-substitutable (VRIN). In software:
- Valuable resources are quickly copied
- Rare capabilities become common as talent moves between companies
- Inimitable processes are reverse-engineered from user interfaces
- Non-substitutable technologies are replaced by open-source alternatives
Traditional moats – patents, geographic barriers, proprietary technology, exclusive partnerships – provide little protection in fast-moving software markets. Patents are frequently worked around. Geographic barriers don’t exist in cloud software. Proprietary technology becomes obsolete quickly. Exclusive partnerships are rare and often temporary.
This doesn’t mean competitive advantage is impossible in SaaS markets. It means the source of sustainable differentiation must come from somewhere else entirely.
This doesn't mean competitive advantage is impossible in SaaS markets. It means the source of sustainable differentiation must come from somewhere else entirely.
The Hidden Power of Customer Discovery Advantages
While competitors can copy your features, they cannot copy your customer insights. This fundamental asymmetry creates the foundation for what I call “insight-based competitive moats”—advantages built on deep customer understanding rather than product capabilities.
Customer discovery advantages operate through four distinct mechanisms that create barriers to imitation:
1. Underserved Market Segment Identification
Traditional market segmentation approaches based on demographics, firmographics, or observable behaviours often miss important customer groups that share common jobs to be done but differ in visible characteristics. Companies that segment markets around customer jobs and desired outcomes rather than traditional variables can discover profitable niches that remain invisible to competitors using conventional market research methods.
Zoom’s emergence in video conferencing exemplifies this principle. While established players like Cisco WebEx and Microsoft focused on enterprise IT departments, Zoom’s customer discovery revealed an underserved segment: end users who needed “productive meetings without friction” rather than “enterprise communication systems.” This insight enabled Zoom to capture massive market share by serving a segment that competitors didn’t recognise existed.
2. Switching Cost Creation Through Workflow Integration
When organisations understand the complete job that customers are trying to accomplish, they can design solutions that become embedded in customer operations in ways that are difficult to replicate. These switching costs aren’t merely technical – they’re operational and organisational, arising from the customisation and workflow optimisation that results from deep customer understanding.
Salesforce demonstrates this approach through its comprehensive understanding of the sales process. Rather than providing a simple database for customer information, Salesforce designed its platform around the complete sales workflow, from lead generation through deal closure and customer success. This deep integration with customer processes creates substantial switching costs that extend beyond technical migration complexity to include workflow disruption, training requirements, and organisational change management.
3. Outcome-Focused Capability Development
Understanding the metrics that customers use to measure success enables organisations to prioritise development efforts on capabilities that create genuine value rather than feature parity. This outcome-driven approach to product development enables differentiation on customer value rather than feature counts, creating competitive advantages that are difficult for competitors to understand or replicate.
Slack’s transformation of team communication illustrates this principle. By understanding that customers measured success by their ability to find information quickly, reduce meeting frequency, and maintain context across conversations, Slack designed features like threaded conversations, searchable message history, and integration capabilities that addressed these specific outcomes. Competitors who focused on matching Slack’s visible features missed the underlying customer outcomes that drove product decisions.
4. Network Effects Through Interaction Pattern Understanding
When organisations understand not just individual customer jobs but the social and collaborative dimensions of customer work, they can design products that become more valuable as adoption increases. These network effects are particularly powerful when they emerge from genuine customer needs rather than artificial platform constraints.
Understanding customer interaction patterns enables the design of features that create natural network effects. Slack’s channel structure, for example, emerged from understanding how teams actually share information and coordinate work. As more team members join a Slack workspace, the value increases exponentially – not because of artificial constraints, but because the product architecture matches natural collaboration patterns.
The Four Mechanisms of Customer Discovery Advantage
These customer discovery advantages share several characteristics that make them particularly sustainable:
Invisibility to competitors: Customer insights are tacit knowledge that cannot be easily observed or copied by competitors. While competitors can reverse-engineer product features or analyse pricing strategies, they cannot directly access the customer understanding that guides strategic decisions.
Cumulative and self-reinforcing: Customer insights build upon themselves, with each customer interaction providing additional data that deepens understanding and improves decision-making. Companies with established customer discovery capabilities get better at customer discovery over time.
Organisational capability building: Customer insights create organisational capabilities and cultural advantages that extend beyond specific products or markets, enabling sustained competitive advantage across multiple business areas.
Market evolution resistance: Because customer jobs remain relatively stable even as technologies and solutions evolve, customer discovery advantages can persist through market transitions that destroy technology-based competitive advantages.
However, insight-based moats also face vulnerabilities that organisations must address:
Insight obsolescence: Customer needs and market conditions evolve over time, requiring continuous investment in customer discovery to maintain relevance.
Organisational change risk: Leadership transitions or cultural shifts can erode customer-centric capabilities if not carefully managed.
Competitive disruption: While competitors cannot directly copy customer insights, they can still disrupt markets through alternative approaches or breakthrough innovations that change customer expectations.
Building Your Customer Discovery Advantage
The transition from feature-based to insight-based competition requires systematic investment in customer discovery capabilities. Organisations must develop new processes, measurement systems, and cultural approaches that prioritise customer understanding over internal expertise or competitive benchmarking.
This transformation begins with recognising that customer discovery is not a project or research initiative – it’s a core competency that must be developed and maintained over time. Like other organisational capabilities, customer discovery improves with practice and degrades without consistent investment.
The companies that will thrive in increasingly commoditised SaaS markets are those that build sustainable competitive advantages through superior customer understanding. While your competitors focus on copying your features, you can build moats they can’t see, understand, or replicate.
The choice is clear: compete on features that can be copied in weeks, or compete on insights that take years to develop and cannot be reverse-engineered. In an industry where 80% of features are copied within six months, the most sustainable competitive advantage may be the one that’s completely invisible to your competition.
The framework for building these advantages exists. The methodology has been proven. The question is whether you’ll invest in customer discovery capabilities before your competitors do-or whether you’ll continue fighting feature wars while others build un-copiable moats.
The framework for building these advantages exists. The methodology has been proven. The question is whether you'll invest in customer discovery capabilities before your competitors do-or whether you'll continue fighting feature wars while others build un-copiable moats.