As Product Managers one of the toughest challenges we face is to determine when to withdraw our product from the marketplace. Its much easier to build and launch a product then to discountinue a product, especially if there are a few remaining customers still using the product. I have personally closed a handful of services and for me, it was sad to close a service which I had spent much time building. However, there comes a time when it makes good business sense to cease the service offering, to stop selling and supporting the product in the marketplace.
So When is the Right Time?
Closure of a service or product should come as no surprise. The Product Manager will see clear signals that the product’s ability to satisfy consumer needs, to generate sales and subsequently revenue is no longer sustainable.
The following signals should give the Product Manager an indication that its time to reconsider the product’s viability in the marketplace:
- If the product is mature in its lifecycle and is seriously heading towards the decline stage. There are other solutions in the market that better solve the same customer needs.
Dial Up Internet for example is one service which is past its maturity stage and various Broadband services resolve the same customer need. The video player for example also falls into this category with the onset of DVD player.
- When the business changes its course and consequently, so does the product strategy.
For example, a company may decide to stop servicing the business market and focus its efforts only on the consumer market. B2b products may consequently be withdrawn from the market as a result of this shift in strategy.
- The cost of the product increases significantly because the economies of scale previously enjoyed is diminishing and the company is unable to increase the selling price of the product. For example, if the cost of maintaining an Internet network becomes too expensive because the number of subscribers on the network has reduced but the price of the Internet retail service is extremely competitive, the company may have to discontinue the Internet service to its customer base.
- The product or service the company created simply did not meet the needs of consumers. Efforts to aggresively market the product or service have not made any difference to the subscriber numbers or volume of purchases. The Apple Newtown springs to mind in this instance. Touted as the future of computing in 1993 it came with a price tag of $1000 and a whole host of problems. It was withdrawn from the market 6 years later.
- Customers switch to a competitor product with better features, with a better product experience or a more competitive offering.
Will the Blackberry be replaced by the iPhone or an Android phone? Interactive TV casual games that are available on many Satellite and Cable networks for example also fall into this category. There are better casual game experiences on offer and customers have preferred to switch to competitor
So the signals are clear and the decision is here. How do you go about retiring the product… gracefully?
Taking the Next Step
This time its super important to put ‘pen to paper’. When closing a service or discontinuing a product, you’re affecting real, more than likely paying customers.
We recommend preparing a Product Exit Plan before a final decision is made. The Product Exit Plan should be tailored to the situation and the particular product.
Remember, you’re writing this plan from a Product Manager’s perspective and should pay attention to the needs of the consumer.
A standard Product Exit Plan should consist of:
- Brief description of the product and its history.
- Reasons for discontinuing the product.
- Financial impacts on the business of discontinuing the product.
- The exit plan itself describing the process of discontinuing the product. Include an exit date and work back from that point.
- The communications plan to customers. There might a migration component if you have a substitute product.
- The communications plan to internal sales and customer service teams and other external sales channels.
- Risks of your exit plan and any contingencies to mitigate the risks.
When this plan is approved, the company should organise for the closure. Generally speaking closing a service or discountinuing a product involves a team of people. The Product Manager plays a role but should not be responsible for all aspects of the project.
Creating a Product Exit Plan provides a structured framework for Product Managers to consider all aspects of the product closure.
Closing a product is not easy but sometimes it has to be done.