Respondents to our 2018 Confidence and Clarity Survey expressed a strong likelihood to add new products and enter new markets this year. The corollary to that was that they also said that it was highly unlikely they were going to abandon any markets.
This post is about why you should strongly consider abandoning your best product and market. Right now.
Yes! I know this is contrary to traditional thinking, but if you take a critical look at what you are providing to your customers, and after reading this post, you may understand why.
- Many of your products and/or services are being provided to industries that are not growing. Therefore, your historical prosperity is no promise of your future prosperity.
- Your service and/or product is no longer adding value to your customers. Have you questioned whether this product or service is really necessary for your customers’ business? Have your customers found an alternative product or method to accomplish the goal that your product or service was designed to solve? If so, you need to abandon now.
- Your continued investment in this product and/or service, including your sales and marketing investment, and capital expenditures to keep you current, is really providing you an Internal Rate of Return (“IRR”) or Return on Investment (“ROI”)that is lower than alternative investments. First, if you don’t use these measurement tools you must start now. And second, if the IRR or ROI is too low, abandon now.
- Your product and/or service no longer provides you with a competitive advantage. For many, many years, you may have been the leader in the marketplace, but as that marketplace grew, other businesses invariably entered and tried to poach your business and your customers. You see this business stagnating or even trending downwards slightly. Even if it’s your most profitable business, it’s time to abandon it.
- Your product and/or or service is now a commodity. As technology becomes ubiquitous and as AI gathers steam, your product and/or service may become obsolete if you cannot find a way to add value beyond simply providing the product or service. If this is the case, then you better abandon now.
PLUS, here are two BONUS reasons:
- Many businesses simply fail to properly analyze the true cost of a business. In many cases, they simply look at revenue, direct costs, and then allocate portion of overhead. However, if your customers are a drain on your Customer Service Department, or if they are a mental drain on your employees, there may be a very high cost that can’t be quantified in dollars.
- And, my favorite, this product is simply not consistent with your core competency, the mission of your company, or where your passion lies. So, at the end of the day, you are likely to see a decline in this business, because your heart just isn’t into it.
The moral of the story is that before you think of expanding in new markets, developing new products, it’s sometimes better to prune your existing business. Sometimes your best and most profitable strategy is not to expand, but to remove products and services that are draining your resources or that don’t have a future.