Here is one of the harsh realities of being in the business of manufacturing and selling products: at one point or another, sooner or later, they will fail. Customers will no longer be interested in them, and thus stop buying them. No matter how profitable they have been at one point, the novelty will wear out eventually, and the business will have no other choice but to bid farewell to it.

How To Shut Down A Failing Product

© Shutterstock.com | jannoon028

In this article, we shed the light on 1) the reasons for shutting down a failing product, 2) steps in closing down a product, and 3) saying goodbye: doing it right.

REASONS FOR A PRODUCT SHUTDOWN

Once a product is failing to make a profit, it’s time to shut it down. It sounds simple enough, but that is not all there is to it. At which point should a business stop the manufacturing of a product or initiate the shutdown of an entire product line?

  • When continuing its production and distribution has become a financial burden to the company. A simple cost-benefit analysis will easily answer the question on whether it is a burden financially or not. If it is revealed that the cost of production – from the raw materials, labor, overhead, to the selling and distribution costs – far exceed the selling price, and the company is actually incurring a loss on every unit produced, then it is time to say goodbye to it.
  • When the company is having trouble finding the resources to continue making and selling the product. Is it becoming difficult to source out the materials? Is the business short-staffed and constantly looking for people for the operations pertaining to the product? If that’s the case, it is time to shut it down.
  • When the company can no longer keep up the technical developments of the product to keep it competitive. One of the reasons why products go out of the market so fast is because new products are cropping up to take their place, offering more, bigger and better features. If the business finds that it can no longer fund the development – or redevelopment, as the case may be – of the product, then they should give up and look for other ideas instead.
  • When producing that one product is adversely affecting the production of the other products of the business. It is possible that continuing producing the product is taking away vital resources that are used by the other products being manufactured by the business. In these instances, it would be a better idea to let go of the problematic area (products) and concentrate on the ones that are actually still working and making money.

There are two general ways being followed by business when shutting down a product: by letting it run without providing support and further development to it until such time that it runs its course and “fades away”; and instituting a proper step-by-step closure procedure.

The first option seems like the easier way, since it requires less work. However, when you think about the relationship that the business has established with its customers through the product, it does not bode well for the company’s customer service.

Keep in mind that, for a period of time, your customers had developed a connection or even an attachment to your products. Therefore, letting it go just like that, by washing your hands clean and free of any involvement with it, is a disservice not only to your loyal customers, but to the brand and reputation that you have already established. You owe it to your users, at least, to give them proper closure, and that is through shutting down the failing product properly.

STEPS IN CLOSING DOWN A PRODUCT

Shutting down a product is not done in one shot. It takes a certain degree of planning, and then it must be executed properly.

But first, let us look into the question on the duration. How long should the closure process be? Ideally, the earlier, the better. If you have decided to eventually shut down a failing product, you should immediately start the process of closing it down. The planning stage along could take as long as 6 months but you should not go lower than 1 month, at the very least. This is so you can execute the steps properly, and with no rushing or becoming pressured on your side.

There are two stages in closing down a failing product: the planning and the actual closure.

The Planning Stage

In all processes or activities, one of the most important stages happens at the beginning, during the planning. This is where you will map out all the steps that you will undertake, all the resources you will need, and how they will be put to use, and even the people involved. This is also the stage where you will be able to come up with alternative steps, should the original plan become derailed along the way, due to unforeseen circumstances.

The planning stage should normally take at least 1 month and at most 6 months before the target date of closure of the product.

1. Inform users

The very first thing that you should do is to inform your users or your customers that you will be closing down the product. This is so you can give them advance warning and allowing them time to come to grips with the announcement. This will also give them plenty of time to make appropriate adjustments on their end, if necessary.

For example, let us say that a business decides to stop manufacturing a specific kitchen utensil. It should inform its customers – which are mainly restaurants, hotels and coffee shops – early on so the latter can make new arrangements, such as find new manufacturers and suppliers of similar utensils.

In a similar example, a company offering web hosting services is planning to stop offering this service in the future. Two to three months prior to the target date of closure, it informed its registered users about it so they would not be shocked or taken by surprise as much as when they are informed about it, say, two to three weeks before the closure.

2. Help out your users

This is closely related to the first step. Aside from merely informing them of the upcoming closure, you should also help them out. Ease their way, so to speak. This will effectively let you close down your product without parting with your customers on a bad note. That way, they will remain to have a good impression of you as a company and, in the future, are more likely to be willing to do business with you again.

Put yourself in your customers’ shoes. What help do you require when you suddenly find out that the product you have been relying on for a long time will no longer be available sometime in the future? One of the things you can do is to make recommendations. For example, let them know about another company or business that makes a similar kitchen utensil. Let them know of any alternative product that they might be interested to look into. Not only will this earn you the appreciation of your customers, but it will also put you in a good light within the industry.

This is also a sign of good customer service and support provided by your company, and we all know that customer service is part of the overall experience that all users are looking for when conducting a transaction with any company or business.

3. Stop the creation of new users or customers

Understand that there are bound to be several users who would not have received the information about your upcoming closure of the product. Do not assume that one or two announcements will inform “everyone”. There are bound to be several new users looking for the product that you are offering and, incidentally, planning to shut down.

In the example shown above, once the web company announced it is shutting down its hosting services, its next move was to disable the utility in their website where new users can register and create an account with them. In the case of the kitchen utensil manufacturer, they should also stop entertaining new customers looking for new suppliers, and even stop receiving orders altogether.

In a similar vein, you may also use your usual customer support and service channels to disseminate information and stopping the creation of new users. For instance, when new users contact your business or visit your online page, they are bound to have questions about your products. In the normal course of things, you would have answered their queries. However, this time around, you will be telling them about the closure and what it entails.

4. Put a halt to the marketing of your failing product

If you have a long-running marketing strategy or advertising campaign pertaining to the product you are intending to shut down. This is one effective way to stop attracting new customers.

You can kill two birds with one stone when you spin your marketing into an announcement. For example, in the webhosting company’s website, the page where they usually placed ads for their hosting service, urging users to register or upgrade their subscription, will be transformed into a page announcing the upcoming closure. You will be informing users in no uncertain terms that the service will be discontinued and will no longer be offered, and you will also stop your marketing efforts.

If the marketing strategy involves having sales representatives going from house to house to personally advertise your product, have them stop their rounds. If you availed the services of an automated email marketing service provider, you should also properly and duly terminate your contract with them, so they will not be sending emails to potential users.

5. Providing reiterations

Consider the announcement as your initial information dissemination campaign. But that alone should not be enough. You also have to provide reminders – closer to the date, and even final reminders one or two days before the actual date of closure. At the risk of sounding repetitive or even nagging, this is to ensure that everyone will be truly aware that you are shutting down the product.

As you get closer to the target date of closure, there is a need to reiterate the fact to users. This is because, with the passage of time, the fact about the shutdown may have slipped their minds and they would not have had the opportunity to take proper action, if necessary.

Businesses with strong online presence do this by sending reminder e-mails. Making phone calls, especially to major customers, is also done by some businesses. When sending reminders, do it at least one or two weeks before the closure date, so as to prevent them from panicking due to its last minute nature.

Final reminders, on the other hand, are sent one (or two, in some cases) day prior to the closure of the product.

The Closure Stage

This is where you will finally make your goodbyes to your failing product. The target date of closure has finally arrived. The product has been discontinued; it is no longer being produced or manufactured, and it will no longer be offered to users or customers. What’s next?

1. Clear all your financial issues

This is where you have to clear all liabilities or accountabilities that you have related to the product. Do you, somehow, owe money to your users? How will you settle them?

For example, in the webhosting business, there is a chance that some subscribers may be demanding refunds of payment of hosting services that they have paid in advance. Will you refund their money outright? Or will you offer the application of their payments to other services instead? Perhaps you are offering other hosting packages, then you could probably see if the users you owe money to would be willing to switch to the other packages (in the event that they did not do so already during the planning stage).

Settle all outstanding financial obligations that you have in an appropriate manner to avoid conflicts in the future.

2. Clear all contact information pertaining to the product

One common error by companies that have closed down a product is failing to sever all ties relating to them. This is mostly seen in online or internet-based companies. They have already closed the product, but there are still vestiges of the product online, such as URLs or links to the product, and even email addresses where new users will still be able to send messages to regarding the closed product.

Make arrangements for any redirects, or devise a way so that all emails sent to the address will receive automated replies that the product no longer exists. The same is true for other accounts that are directly related to your product, such as Facebook, Twitter and other social media accounts. It does not make sense to maintain product pages on these platforms when the product is no longer available.

SAYING GOODBYE: DOING IT RIGHT

As some songs say, “there is no easy way to say goodbye”, but you can make the process easier and smoother for all parties concerned. Here are some helpful tips to facilitate the shutdown.

1. Craft your message clearly, completely.

Whether you are delivering your message via email, letter, or even a phone call, you have to make sure that you are communicating the closure in a way that your recipients will understand. Be honest and frank; do not make things up.

What should your message contain?

  • Let them know about the current status on the closing. How far along are you on the plans of closing the product?
  • Explain clearly the seasons for the shutdown, so they will be able to understand why you have to close the product.
  • Let them know that you are fully aware of the impact of closing the product on them as users. This will make you seem less uncaring about how the shutdown will affect them negatively.
  • You should also give them more than a glimpse on how the shutdown will impact or affect the business. Remind them that they are not the only ones losing a product they have relied on for a long time, but that you, the business, will also be losing a product that you have been manufacturing and selling to them for the same length of time.
  • Thank them for sticking with your product for as long as they have. In doing so, they have also stuck with your business and supported you, even in the smallest possible way. Show your gratitude and, often, the best way to do that is by expressing it in words. “Thank you” is already a powerful phrase by itself and conveys much of what you are feeling towards the users.

2. Do not stick to just one channel of communicating with your users.

Some stop at just sending emails. Keep in mind that not everyone reads their emails and, even if they do, there are high chances of your email ending up in their spam folder or the promotions tab that hardly gets any attention. If possible, make the announcement on a public platform, say, on print or on your business and product pages’ social media accounts. Put it on your home page. Make calls. Write formal letters. Choose two or three methods, but do not just stick to a single one.

3. In all your dealings with the users, show a reasonable degree of courtesy.

Be polite, from the time you have made the announcement, to the final reminder, and even when dealing with users even after the closure. Demonstrate class when dealing with them. There are bound to be complaints and whining, and even downright rude users. Even so, be gracious. Understand that they are losing something, just as you are, and so they cannot help but be displeased by the whole thing.

Share your thoughts and experience

E-mail is already registered on the site. Please use the Login form or enter another.

You entered an incorrect username or password

Sorry, you must be logged in to post a comment.