How to see the 7 warning signs your product is in the sunset zone!
July 10, 2018
If you’re a product manager at an enterprise level organisation, the chances are that you and your team have a significant sized product portfolio to manage. Moreover, while you might (or might not) have the resources to handle that portfolio, there's an excellent chance you have products which are hurting your efficiency and bottom line. These are so-called ‘zombie products’. Products which are out in the market but which if you looked at their end-to-end proposition they fall into the sunset basket.
If you’re struggling to sunset these products, you’re not alone. As part of a global research programme conducted by our CEO, Leica Ison, we discovered that some businesses had failed to sunset any products in the previous 36 months.
Why aren't product managers seeing the warning signs that a product is heading into the sun setting zone?
One of the apparent reasons that came out of our research was that many companies don’t have a framework or the tools to simply run the kind of product review which brings front of mind the warning signs that a product is heading into the zone.
Market scanning on a consistent basis is critical to ensure you don’t let your competitor sideswipe your product with new technology. However, market scanning alone is not enough. These days set-and-forget is a high stakes game.
So if you are a business with an extensive product portfolio, we recommend you start with a health-check audit that gets on top of the warning signs your heading into the sunset zone.
Here is a sunset zone traffic light:
|Warning Sign Metric||Sunset Zone Signals||Traffic Light|
|1. Customer feedback||Customers are highlighting deficiencies in your product to the sales team.
Your sales team may even have frequent requests and a long list of feature updates for your product roadmap.
|2. Revenue & Services in Operation (SIO's)||When you gather the data and look at performance over 3-5 year horizon the trend is decline.||Amber|
|3. Buying decision or contract inflexion point||When customers need to make a buying decision for example end of the contract term - they are leaving you and choosing another product or technology.||Red|
|4. Customer satisfaction||Customer surveys highlight feature gaps in your product and overall value rating of product value is declining.||Amber|
|5. Product margin||Sunset zone products can still be high margin however the trend shows typically year-on-year margin compression.||Amber|
|6. Competitor costs||Challenger economics will be entirely different to your cost structure. Your product business case or your return on investment won't show this view so hold that thought.||Amber|
|7.Opportunity||The financial investment to optimize the product or number of people across the business supporting these zombie products comes at the expense of innovating new products. Lifespan is now getting short. About 50 percent of the S&P 500 companies will be replaced over the next 10 years, if Innosight's forecasted churn rate holds.||Amber|
Note: If you rate more than one red in your traffic light at your quarterly health-check, start the conversation about moving the product to sunset zone and prepare for an exit plan.
Start your exit planning with these five checklist actions:
1. Plan a product exit into several levels - cease sale, exit, and migration to an alternative solution.
2. Review performance metrics of your product but also map any 'pull-through' revenue from adjacent products as these will be impacted in the exit or may change or defer the decision.
3. Review other metrics of value for the company, e.g. customer engagement stickiness & reputation.
4. Review your contracts, terms, and obligations for the product.
5. Highlight any risks - consider a customer was leaving you (churn), any potential disruption to service and legal/regulatory impacts.
We probably don’t need to tell you that having a considerable portfolio is a strain across all touch points in business from sales to IT, customer service and technology teams. However, did you know that there is research to show that high performing organisations are actively more diligent than their competitors when it comes to taking products out of the market?
Once you have a sunsetting process in place, your next winning move is to review regularly.
Based on feedback from early users of our platform at Skyjed we baked fast or ‘lightweight’ options for six month or quarterly reviews into our platform with the aim of helping product managers move products toward an exit.
If you’d like to see Skyjed and how our smart software can be used specifically for product reviews of the kind that we’ve discussed here, please request a demo, and we’ll be happy to assist.