Three Ways to Kick-Start Your Product Sunsetting Engine
- High-performing organizations are significantly more diligent than their competitors about retiring products
- Organizations that fail to rationalize their portfolio often have less satisfied customers and can show slower growth
- Developing a consistent approach to product lifecycle decisionmaking and retirement planning allows for decreased risk and increased customer satisfaction
If your organization is struggling to retire products, you are not alone. According to data from the SiriusDecisions Command Center®, about 30 percent of B2B organizations either struggle when it comes to retiring products or do not retire products at all. While SiriusDecisions has long hailed the benefits of an optimized portfolio, further data indicates that a simplified portfolio is strongly associated with greater revenue growth.
The SiriusDecisions Command Center brings together feedback from product, marketing and sales leaders from nearly 3,000 B2B organizations in seven broad industries from around the world. To identify some key best practices in product management, we compared survey data from fast-growing organizations (i.e. those with 30 percent rate of revenue growth) with that of slow-growth organizations (i.e. those with 10 percent growth and less). The data indicates that organizations showing high growth rates take a more active approach toward retiring products: 82 percent said they are diligent about retiring products, compared to only 50 percent of slow-growth organizations. The data appears to support the idea that discontinuing products allows organizations to put funds into more lucrative investments.
Fast-growing organizations also appear to do a much better job when retiring products. We asked product management leaders about their customers’ satisfaction with product retirement efforts, and 72 percent of high-growth organizations indicate that their customers are highly satisfied with their product retirement schedule, while only 33 percent of slow-growth organizations indicate such high satisfaction. This was striking! What are the high growth organizations doing right? It’s likely that organizations that retire products more often can leverage their experience and create a more seamless experience for their customers. Additionally, their customers are more likely to expect and be prepared for the retirement process since they have experienced it on an ongoing basis.
Organizations that struggle to retire products often don’t have a process to review older products, focusing instead on launching new offerings or features. There may be a perception that products on the shelf don’t cost anything, and therefore create little incentive to do something about them. Additionally, there are often psychological factors (e.g. fear of losing jobs or business) that are often hard to move past. The following steps can help make organizations develop a healthier approach to product retirement:
- Set criteria for discontinuation. Work with product management, marketing and sales to develop comprehensive criteria for discontinuing offerings. SiriusDecisions recommends product teams use a scoring model to look at the continued importance of the market opportunity and the offering’s ability to compete, as well as the cost of maintaining the product and its ability to meet financial goals. Score offerings with an investment oversight team at least twice per year.
- Use consistent end-of-life processes. Many organizations don’t discontinue offerings because, lacking a process to do so, they fear there are just too many insurmountable risks. Undoing a product can be just as complex as creating one, especially when customers must be migrated to a new offering, and the planning should be just as detailed. When organizations have an agreed-upon process for the discontinuation with process oversight, details are not overlooked and risks are lessened.
- Have a clear communication plan. When the communication plan for a discontinuation is an afterthought, customers, support team members and partners are often left confused and dissatisfied. Best practice is to identify all the audiences that require communication (e.g. customers, channel partners, development partners, thought leaders), and identify what the messaging should be and how that message should be delivered.
For more on the benefits of an optimized portfolio, download the brief “The Benefits of an Optimized Product Portfolio.