Retiring a Product: How to Gracefully Say Goodbye

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Deciding to retire a product isn't easy, but it's often necessary to keep your portfolio healthy. Here’s a comprehensive guide to making the call—and doing it right.

Profitability isn’t the only measure of success

Regular financial analysis and profitability tracking can help identify underperforming products early, but profit isn’t the only factor to consider before retiring a product.

• Is it critical to certain customers?

• Does it lead to other purchase decisions?

• Are there new options to reduce costs that don’t negatively impact customer experience?

• Are there other rational business factors to consider?

Nonetheless, if a product costs more to support than it generates in revenue, it's a potential candidate for retirement. Don’t cling to a sinking ship—focus resources on profitable ventures.

For instance, Google regularly reviews and retires products such as Google+, Google Wave, and Google Reader when they fail to deliver sufficient returns.

For that matter, cutting off the five years of spending on your CTO’s pet “innovation project” that generated no revenue is a pretty good idea.

Misalignment with Strategic Goals

Sometimes, a product simply no longer fits your long-term vision or strategic objectives. Hanging onto products that stray from your core mission dilutes your efforts and confuses stakeholders. Periodically reviewing your product portfolio against strategic goals ensures alignment and clarity. Apple, for example, retired its iPod line as the company’s strategic focus shifted toward integrated devices like the iPhone.

Market Demand Has Shifted 

Products can also become obsolete due to shifting market demands or technological advancements. Staying attentive to market trends and customer feedback helps product leaders recognize when it's time to phase out offerings that no longer meet customer needs. Famously, Kodak’s slow response to the shift toward digital photography (which it invented!) highlights the importance of staying aligned with evolving consumer preferences.

Alternatives Before Retiring

Hey! Not so fast. Although you may not want the product, there are alternative approaches available. Here are some other considerations.

Keep It but Raise the Price (Substantially)

Sometimes, price hikes are a viable strategy—especially for customers in heavily regulated industries. You may not have too many customers, but a substantial price increase can make the product profitable again. Some customers will prefer paying more for a critical piece of their implementation rather than undergoing costly and disruptive recertifications. Clearly communicate the rationale behind the price increase to maintain trust and justify the added costs. Specialized software providers often use this approach, successfully maintaining customer loyalty despite increased costs.

Bundle It

Some products are natural options or complements to other products. If a legacy product still provides value but doesn’t warrant standalone investment, consider bundling it with a more strategic offering. The idea is that 1 + 1 = 3—but only if your buyers see value in the combo.

Explore Selling or Licensing the Product

Before retiring completely, consider selling or licensing the product to another company that might be better positioned to serve its market. This approach can create additional revenue streams and maintain the product's legacy. Intuit sold Quicken to a dedicated buyer when shifting its strategic focus to other financial products, allowing the product to continue serving loyal customers.

Give it to the Product Team

Consider giving passionate product teams the autonomy to continue operating the product independently, if feasible. Allowing internal champions to manage legacy products separately can sustain niche customer bases without significant resource drain.

For example, when Twitter acquired and shut down Posterous, two of the original founders, Garry Tan and Brett Gibson, weren’t ready to let their vision disappear. They relaunched the idea independently as Posthaven, proudly promising longevity and simplicity.

(It’s super easy to set up and maintain. You should try it!)

From the Posthaven website:

“Posthaven is a long-term project that aims to create the world's simplest, most usable, most long-lasting blogging platform.”

Their straightforward pricing model—just $5/month—underscores their commitment to sustainability and customer value.

Communication is the Key to a Smooth Retirement

Inform Your Customers Early

Don’t surprise your customers. Clearly communicate your intentions and timelines to help them plan accordingly. Provide multiple notices and updates, ensuring transparency throughout the retirement process. Adobe provided extensive advance notice and migration assistance when transitioning users from Adobe Flash Player to newer technologies.

Conduct an “Unlaunch”

Make a coordinated effort across your organization to formally "unlaunch" your product. This is about managing expectations, ending marketing efforts, and ceasing new customer acquisition. This might also include formally archiving any related documentation and updating internal systems. When Microsoft retired Windows XP, they systematically removed the product from their sales channels and actively directed users toward modern alternatives.

Stop Paying Commissions Immediately

There's no sense in incentivizing sales for something that's on its way out. Clearly communicate the new direction to your sales team and adjust commission structures promptly. Be proactive in providing alternate opportunities or products for your sales force to maintain motivation and morale. For example, Salesforce clearly communicated commission changes when transitioning from Salesforce Classic to Salesforce Lightning.

Facilitate Customer Migration

Provide guidance and active support to help your customers migrate to alternative solutions. This maintains trust and demonstrates genuine customer care. Offer training, transitional support, or incentives to ease the process and minimize disruptions. When Atlassian sunsetted its on-premise products, it provided detailed migration guides and tools to help customers transition smoothly to cloud-based solutions.

Provide Comprehensive Documentation

Ensure thorough documentation outlining the reasons behind the retirement, transition timelines, customer responsibilities, and alternative solutions. Clear documentation helps maintain transparency and sets proper expectations. Oracle provides extensive documentation whenever they retire products, ensuring clarity and minimal confusion for affected customers.

Retiring with Integrity

Retiring a product might seem like an ending, but it's also an opportunity to refocus and reallocate resources strategically. Done thoughtfully, it strengthens customer relationships, preserves your reputation, and positions your business for continued success.

Always approach retirement as a strategic decision, backed by clear communication, thoughtful support, and a commitment to integrity.