Direct Selling Is Great at Launching Products, We’re Terrible at Retiring Them

Written by Brett Duncan. Brett specializes in helping direct selling companies evolve into modern social selling models while still maintaining the culture and essence of who they are and what makes them different. He is co-founder and managing partner of Strategic Choice Partners, a business development firm that helps direct selling companies take their next steps.

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Direct selling loves a product launch.

We love the anticipation. The reveal. The videos. The samples. The convention stage. The training. The promotions. The social posts. The field excitement.

There’s nothing quite like a great new product launch to inject some energy into a direct selling company. And because of that, we spend a LOT of time figuring out what to launch next.

You know what most of us aren’t nearly as good at? Figuring out what needs to go away.

I’ve worked with a lot of direct selling companies over the years, and I’d say almost all of them have some version of the same problem:

• They know they probably have too many products.
• They know some of those products probably shouldn’t be there anymore.
• But they don’t have a consistent and objective way to decide what to do about it.

So the products stay… And stay… And stay.

Someone loves that product. A founder helped create it. A top Distributor swears by it. Someone in Product Development remembers how hard everyone worked to get it launched. Someone in Marketing is convinced it would take off if we’d just promote it the right way. Everyone else is convinced Marketing never knew how to promote it to begin with…

And, to be fair, sometimes they’re right.

But sometimes a product has simply run its course. And we don’t like to think about products that way.

Every Product Has a Lifecycle

I certainly didn’t invent the concept of a product lifecycle. It’s a pretty standard approach to product development and management. The terminology can vary, but I typically break it down something like this:

Ideation → Definition → Development → Launch Planning → Launch → Ongoing Management

I’ve used this basic framework with many companies over the years.

I first learned a lot about the discipline behind product lifecycle management when I worked at Mannatech. I had the opportunity to work alongside some really smart people in R&D who helped shape how I think about product development and management to this day. So kudos to them.

Over time, I’ve simplified some of what I learned and adapted it specifically in a way I think most direct selling companies can actually put to use. And here’s one of the biggest things I’ve learned:

Most direct selling companies don’t really think in terms of a product lifecycle. We think more like: Launch it and leave it.

We understand that products need to be conceived, developed and launched. We struggle with the idea that eventually they may also need to die. But that’s what a lifecycle means.

Launch Isn’t the Finish Line

One of the most important parts of any good product development process is what happens between the phases. I call them gateways.

Before moving a product from an idea into development, for example, we should be asking questions like:

• Does the market research support it?
• Does it fit our brand?
• Can it drive incremental sales?
• Is it worth pursuing?
• Do we have the bandwidth to give this product a legitimate opportunity to succeed?

As a brand, do we have the right to sell something like this? Does it make sense to our customer base? Does it make sense for our sales force to share it?

Then, as we get further into development, the questions become more specific. What’s the target retail price? What does our cost need to be? What’s our sales forecast? How much could it cannibalize existing products? What claims can we make? What’s the expected cash investment?

Put another way, does it make sense financially? Too often, this question doesn’t come up this early. But it doesn’t, then what are we doing?

And before launch, we should already know how we’re going to support the product after launch and how we’ll determine whether it succeeded. What do we need to track to actually determine success? How do we prove that the launch is an incremental success?

That last part is especially important.

Not every product has to become a bestseller to be successful.

Some products serve a specific niche. Some complete a regimen. Some strengthen your credibility in a category. Some make your hero product work better. Some are strategically important even though they’ll never represent a massive percentage of revenue.

That’s all fine.

But determine that before you launch it. Otherwise, two years later, when the product isn’t selling much, everyone gets to make up their own definition of success. That’s when things get subjective.

“It Just Needs More Promotion”

If you’ve ever participated in a product discontinuation discussion, you’ve probably heard some version of this:

“The product is great. We just haven’t promoted it enough.”

Maybe.

I’m a marketing guy. I’m certainly not going to argue that better marketing can’t produce better results. Of course it can. But great marketing starts with the market.

If we create something our audience doesn’t really want, then we’ve already made a mistake upstream. No amount of brilliant creative, promotions or field training can completely make up for that.

And there’s another reality we don’t talk about enough. Sometimes the reason a weaker product doesn’t get more marketing attention is because there are other products that deserve the attention more.

Marketing bandwidth isn’t unlimited. Neither is field attention. Neither is your promotional calendar.

If you have three hero products generating the vast majority of your revenue and ten other products begging for more attention, I’m probably going to tell you to spend a lot of your energy helping more people discover those three hero products.

Which brings us to something I think many companies underestimate.

There’s a Cost to Keeping a Product

When companies evaluate whether to discontinue a product, it’s easy to look at its sales and say:

“Well, it’s still selling something. Why get rid of it?”

Because sales aren’t the only thing that product is generating. There’s a cost to complexity.

Every additional SKU potentially requires:

• Inventory and cash investment
• Forecasting and purchasing attention
• Minimum order commitments
• Warehouse space
• Operations and fulfillment support
• Website and ecommerce maintenance
• Customer service knowledge
• Product education and training
• Marketing resources
• Promotional consideration
• Regulatory and compliance attention
• Field attention

That last one can be especially expensive in direct selling. We want our Distributors to confidently talk about our products. The more products we give them, the more products they have to understand, remember and explain. At some point, more choices don’t make selling easier. They make it harder.

Your products aren’t just competing against competitors’ products. They’re competing against each other for attention.

That’s why keeping a mediocre product isn’t necessarily a neutral decision. It can actually be stealing resources from your best products, and from the next great product you haven’t launched yet.

So How Do You Decide What Goes?

This is where I’ve tried to make things extremely simple for companies. Take as much subjectivity out of the process as possible.

That doesn’t mean judgment disappears. It shouldn’t. There are always going to be strategic considerations that can’t be captured perfectly in a spreadsheet.

But we can at least agree on some criteria before we’re sitting in a room arguing about everyone’s favorite product. Here are criteria I’ve used as a starting point with companies:

Any ONE of the following criteria should automatically be considered for discontinuation, reformulation or replacement: (NOTE: the actual numbers used here are somewhat arbitrary. You may decide, for example, that 1% or less, not 1.5%, makes more sense for your company).

1. Unit sales account for 1.5% or less of total unit sales.

If a product represents a tiny portion of what customers are actually buying, it deserves a closer look.

2. Retail price is less than six times product cost.

Margins matter. Especially when you consider everything else a direct selling company’s economics need to support. If a product doesn’t meet an acceptable margin, it shouldn’t matter how great it is; discontinuation should at least be considered.

3. The technology, trend or science no longer reflects where the market is today.

Products age. Ingredients age. Technologies improve. Consumer expectations change. Trends change. What was innovative or fashionable seven years ago may not be innovative today.

4. The product no longer aligns with your brand, positioning or product standards.

Companies evolve. Product strategies evolve. Sometimes a product that made perfect sense when it was launched simply doesn’t fit where the brand is headed. In fact, sometimes an older product can directly contradict a promise your brand is currently making. That can be dangerous.

5. Another product in your line addresses the same need in a better way.

Why make your customers and Distributors choose between two products when one has clearly become the better answer?

These aren’t magical numbers or universal rules. The 1.5% and 6x thresholds, in particular, should be discussed and adjusted based on your company’s economics and product strategy. But they’re good places to start.

Then I add one more rule that really helps:

If a product meets one of the criteria, we discuss it. If it meets two or more, there needs to be a very strong case for why we DON’T discontinue, reformulate or replace it.

Notice what we’ve done. We haven’t automatically killed anything. We’ve simply changed the burden of the conversation.

Instead of someone having to build a case for why their colleague’s favorite product should be discontinued, the data has triggered the discussion. That’s a much healthier place to start.

Don’t Let One Department Make the Decision

The criteria are only half the solution. The other half is who reviews them. I strongly recommend establishing a cross-functional Product Roadmap Committee.

At minimum, I’d want representation from: Product Development, Marketing, Sales, Finance and Operations.

Why? Because every one of those people sees a different product. Product Development sees the formulation and innovation. Marketing sees the positioning, customer and promotional potential. Sales sees what the field is experiencing and saying. Finance sees the economics. Operations sees inventory, forecasting, sourcing, warehousing and all the other realities involved in actually delivering the product. You need all of those perspectives.

I generally recommend the Product Roadmap Committee meet quarterly to review the overall product pipeline and roadmap. Then, at least every six months, dedicate part of that process specifically to discontinuation and reformulation.

Put the data into a standard report. Sales. Units. Percentage of total sales. Cost. Margin. Inventory. Trends. Whatever other metrics matter to your company.

Then go through it. Every six months. Not just when the warehouse is overflowing. Not just when Finance starts asking questions. Not just when you need to free up cash. Make it normal.

What About the Field?

This is direct selling, so there’s an obvious question: Should field leaders participate in this committee? Generally, I don’t think so.

I absolutely believe the field perspective needs to be represented. Corporate Sales leadership should come prepared to represent what they’re hearing and seeing in the field. There may be other appropriate ways to gather field feedback as well.

But that doesn’t necessarily mean field leaders themselves should participate in the formal review. There’s a lot of sausage being made in these discussions that they shouldn’t be exposed to. You’re reviewing costs, profitability, inventory, strategic direction, product performance and potentially some very preliminary ideas. Opening every part of that discussion to field leaders can make an already emotional process even more emotional.

Once the corporate team has reached a direction, there may absolutely be value in discussing it with an advisory committee or selected leaders before finalizing or communicating the decision.

But don’t turn product portfolio management into a popularity contest. That’s exactly what the process is supposed to prevent.

Discontinuing a Product Doesn’t Mean It Failed

I think this may be the biggest mindset shift of all: Discontinuing a product isn’t an admission that launching it was a mistake.

Every product has a lifecycle. Markets change. Customers change. Science changes. Costs change. Your brand changes. Your other products change. Your strategy changes.

Sometimes a product did exactly what you needed it to do for five years, and now you don’t need it anymore. That’s not failure; that’s product management.

And sometimes a product really didn’t work. That’s OK, too.

If you have an effective product development process, you’re going to miss occasionally. I’d much rather work with a company willing to try new things, measure them objectively and move on when they don’t work than one that’s so scared of a product failing that it never does anything interesting.

The failure isn’t launching a product that eventually needs to be discontinued. The failure is knowing a product should probably be discontinued and allowing emotion, history and inertia to keep you from doing anything about it.

One Question Worth Asking

If you’ve never gone through a formal product discontinuation exercise, start here. Pull up your entire product line. Look at each product individually and ask:

“If we didn’t already sell this product, knowing everything we know today, would we launch it now?”

Don’t automatically discontinue everything that gets a “no.” But pay very close attention to those products.

Then put some objective criteria around the discussion. Get Product Development, Marketing, Sales, Finance and Operations in the room. Review the numbers. Listen to the different perspectives. Make some decisions.

And schedule the next review six months from now.

And if you need some help getting this process off the ground, let me know. Sometimes adding a third party automatically makes everyone think more objectively.

Launching new products will always be more exciting than discontinuing old ones. That’s fine.

But if we’re going to take the product lifecycle seriously, we need to get just as disciplined about the end as we are excited about the beginning. Because eventually, every product has a lifecycle. We should probably start managing it that way.