Most product management activities and processes are about creating, delivering, and maintaining products.
But what about products at their end-of-life?
Not much has been written on this topic so there aren’t many resources available.

We often hear “I want to sunset product features, but a small handful of my customers are holding me hostage and I don’t know how best to move forward.”

Why should you sunset?

Sunsetting is the process of pulling a product from market. The term can also be applied to removing obsolete features from a product. Sunsetting involves making the business decision to remove the product or feature and then communicating the decision to customers and sales channel. Sunsetting a product removes the product from the sales channel; sunsetting a feature removes the feature but keeps the product.

In either case, the primary reason for sunsetting is that the cost of development and maintenance exceeds profit. There may be other reasons but in the end, sunsetting is a business decision, not a technical decision. Look at the revenue from maintenance and the cost of maintenance. It should be a pretty easy decision.

Making the case

A quick estimate of product profitability shows whether the product makes good business sense. Determine how many people are staffed on the product in development and support. That’ll give you a sense of the cost. Then get Finance to provide annual revenues for licenses and maintenance. Voila! You have a definition of profit.

Some companies continue to “support” obsolete products even though they have no developers or support staff that know anything about the product. You know that will bite you in the end. If your product isn’t making profit, it’s time to kill it.

Suppose you need to pull a feature? A SaaS or hosted solution should make this a snap! Not only can you easily pull the feature, the product itself can tell what features are being used. For the rest of us, a quick customer survey will probably do the job. Survey a few dozen customers—or maybe all of them—and ask if they use the feature. One question. Yes or No? Resist the temptation to extend the survey for some other marketing or sales objective because you don’t want to burden a survey with too many questions. And don’t forget about web stats. Your webmaster can easily tell which operating systems and browsers are being used on your website. So if you want to discontinue support for an obsolete technology, you can quickly determine what percentage of your customers are affected.

You need to support your customers’ environments but not one customer’s environment; that is, you must support the environments of a statistically relevant set of customers. Most industries upgrade quickly while others continue to use old platforms. Your customers may need continued support for a platform long after the vendor has dropped support. Check the statistics on your customer-focused website to identify which operating systems are being used. Microsoft is very upfront about the lifecycle of their operating systems. Go to support.microsoft.com and search for “lifecycle” to see exactly when support will be discontinued for various products.

The tricky thing of course is knowing what is right for your product. Sure, nobody at your company uses obsolete technologies but do your customers? You might be surprised how many people don’t upgrade their operating systems or browsers. They just use whatever came on their computers. Is that true for your customers? Find out before you assume that your developers’ tech environment is similar to your customers’.

Factors to consider when sunsetting

A product or feature should be removed from the market when it’s no longer profitable to maintain. There may be other considerations as well. To your colleagues outside the technical part of the organization, there seems no downside to keeping products around but keeping products past their prime confuses customers, distracts developers, and annoys customer support. A trouble ticket related to a product on its last legs pulls time and attention from the company’s core business. Customers will wonder whether to buy the old product or the new, and will certainly question why they are paying for maintenance on a product that you clearly are not maintaining. Sales and Marketing will care about the distraction when they realize that maintaining an old product comes at a cost of not producing or upgrading a new product.

Beyond the profit factor, older products may not align with company strategy. If your company is embarking on a new strategic direction, older products will confuse the market and your own portfolio strategy.

It’s a bad idea to have two products that appear to do the same thing. Look at your product portfolio across the company and ensure there is no confusion about capabilities. If you have two products in the same category, one of them should probably be retired.

Many product managers discover contractual commitments with customers that have to be worked out with your legal team. Most customers are reasonable; they understand that you’re running a business. But understand what the contractual commitments are and discuss alternatives with your team. A great solution for many customers is a free upgrade to your current product in the category. Since many customers do not upgrade for financial reasons, you may find that the contractual commitments disappear if you can make upgrading free or at least inexpensive.

Continuing to maintain old product impacts the market’s perception of your company and portfolio. You probably don’t want the reputation of being the company where “old technology goes to die.”

Technology does become obsolete. It doesn’t make sense for most companies to support OS/2, Windows 3.1, DOS 3.3, old versions of databases, platforms, browsers, and so on. Keeping the code around makes it cumbersome to maintain and often slow to use. Refactoring for the purpose of improving product performance is hampered by obsolete or unnecessary code.

Impact to customers

Change is often perceived as negative by many of your customers. Some, of course, have already upgraded and make every attempt to stay current. Others would rather stick with what works and not have to re-implement anything.

Any change has a customer impact so explore options to alleviate the stress and costs of change. Free upgrades from the old to new product, automated conversion of data and scripts to the new platform and assisted conversions using your professional services team are all methods to make it easy for a customer to change. Imagine if you had to format your hard drive and reinstall all your data every time Microsoft put out a service pack! That’s what it feels like to your customers when they have to upgrade from version 6 to version 7.

Communication to customers

The real key to sunsetting products is to get customers to understand why you’re doing it and how it affects them. Explain the business decisions. Solicit their ideas on how to best make the transition. Explain their options for converting themselves with automation or with your assistance.

One trick is to do positioning. Those who have attended Pragmatic Marketing’s Practical Product Management seminar know how to do this. You want to crystallize your thinking. Any time you plan to create a marketing program or sales tool, you start with positioning. So do a positioning document for the end of life, too.

This notification is usually done via letter or email to the buying contact in the client site.

Most of all... be clear. Nobody likes ambiguity. You don’t want them thinking “okay, what does this really mean?” Tell them your decision, tell them their options, and give them a switchover date.

Be sure you’ve got executive support for the decision. For some customers, sunsetting a product will spark a phone call to their sales rep, asking for an exception. And the sales rep thinks he doing the customer and the company a favor by “saving” this client. You need to be able to say with assurity that the product is being discontinued. Period. No discussion.

Opening up the account

One negative aspect of discontinuing a product is that it invites the client to look for alternative products from other vendors. “After all, if I’m going to have to re-implement anyway, maybe I should look at some other products.” Discuss with your sales management approaches that encourage customers to upgrade rather than switch.

However, if you’re obsoleting a product and don’t have an upgrade path within your own company, you’ll need to recommend products your customer should consider, particularly those from your partners’ portfolios. Again, a discussion with sales management goes a long way in reducing the thrashing that occurs when a customer starts evaluating alternatives.

Un-launching the product

Okay. You’ve done the profitability analysis. You’ve decided how to communicate to the customers and help them move. Now you have to un-launch the product. Remember all the things you did to launch the product? Now we have to un-do it all. You’ve got to revise the website to say “This product has been discontinued” and send them to a product page for the replacement or alternative. You’ll have to remove it from the price list. What else will you have to revise or remove? Look to your current launch plan for any product, walk-through each item and create an un-launch plan. This is probably one of those places where a team can see items a single person cannot.

Obsolete products confuse the customer and sales channels. Obsolete technologies become increasingly difficult—or
impossible—to maintain. Most of all, obsolete products are not profitable. And they distract you and your team from focusing on the company’s new initiatives. Help your customers switch from old to new. Put together a team, divvy up the areas of responsibility, and make it happen so you can get back to working on tomorrow’s products instead of yesterday’s.

Steve Johnson is a recognized thought-leader on the strategic role of product management and marketing. Broadly published and a frequent keynote speaker, Steve has been a Pragmatic Marketing instructor for more than 10 years and has personally trained thousands of product managers and hundreds of company senior executive teams on strategies for creating products people want to buy. Steve is the author of the Product Marketing blog. Contact Steve at sjohnson@pragmaticmarketing.com.