As a product manager, one of the most difficult decisions you may need to make is when to pivot or persevere with a product that is underperforming. Knowing when to double down or make major changes versus pulling the plug entirely can make or break a product. In this comprehensive guide, we’ll cover:
- Signs your product may need to pivot
- Validating signs through data and research
- Understanding types of pivots
- Knowing when to persevere
- Recognizing when to sunset a product
- Best practices for pivoting products
- Case studies of famous pivots
Equipped with this knowledge, you’ll be able to make more informed, strategic decisions about the future of your products.
Signs Your Product May Need to Pivot
The first step is identifying signals that indicate your product may be a poor fit for the market or is failing to resonate with customers. Some top signs to watch out for include:
Low Adoption Rates
If a new product has been launched but customer adoption is minimal or stagnant, it could indicate weak product-market fit or failure to effectively get the word out. Set clear benchmarks and metrics to track here. Slow or low growth in daily/monthly active users or accounts is a red flag.
Low Engagement
It’s not enough to just get customers in the door – you need them to actively use and engage with your product. Metrics like session length, pages per session, and retention rates help gauge engagement. Low engagement suggests your product isn’t providing enough ongoing value.
Poor Reviews/Net Promoter Score (NPS)
Customer feedback provides direct indicators of satisfaction and areas for improvement. Monitor app store ratings, social media complaints, reviews, and NPS or CSAT (customer satisfaction) survey results. Consistently negative reviews or low/declining NPS suggest the product isn’t delighting customers.
Failure to Hit Business Goals
Every product should tie back to core business or revenue goals and metrics. If your product is failing to move the needle on sales, conversions, revenue, or other established targets, that demonstrates weak product-market fit. The product isn’t solving a problem people want to pay to have solved.
High Churn
Churn measures the rate at which you lose customers. Increasing churn suggests customers aren’t finding enough value from your product to continue using it. Segment churn metrics by customer cohort, plan type, and other factors to identify underperforming areas.
Missed Roadmap Milestones
Your product roadmap outlines key initiatives and milestones. Consistently failing to hit these goals due to lack of resources, deprioritization, or poor execution can stall meaningful product progress and innovation. Take it as a sign to evaluate strategy.
Lost Competitive Advantage
Over time, competitors may catch up to or undercut the uniqueness of your product with lower pricing or superior features. Track competitive benchmarking and landscape reports to stay on top of the market. Commoditization makes pivoting into a new positioning necessary.
Validating Signs Through Data & Research
The metrics above may suggest your product is off course. But data alone doesn’t give the full picture – you need to understand the ‘why’ behind the numbers. Combining quantitative data with qualitative customer and market research reveals the root causes and magnitude of issues, helping validate if a pivot is prudent.
Voice of Customer Analysis
Speaking directly to customers via interviews, surveys, focus groups or user tests offers clarity into frustrations and delights. You may discover UX pain points, desired features customers can’t find, changing needs, or underlying problems your product fails to address. Capture this qualitative data to complement usage metrics.
Market Evaluation
Re-examining target users, market size/trends, competitive offerings, and go-to-market positioning provides context to problems.
For example, a dip in sales could stem from increased competition, market saturation, or even an economic downturn vs. issues with the product itself. Consider if market dynamics have shifted significantly since the product launch to inform strategy.
Leading vs. Lagging Indicators
Some metrics offer early warning signs of issues (leading) while others reflect downstream impacts (lagging). Patterns in leading indicators like user engagement suggest future revenue challenges. Balance current results with projected outcomes to determine severity.
Financial Modeling
Build models to estimate the financial performance implications of continuing on the current trajectory vs. pursuing a pivot. Factor in projections on customer acquisition costs, revenue, profitability, and more. Does the status quo still meet business goals or justify further investment?
In many cases, a combination of factors points to the need for change. But radical product pivots shouldn’t be taken lightly either – especially for established products with existing customer bases. More research can ensure you make a considered decision.
Understanding Types of Pivots
If initial signs and validation prompt you to pivot, there are a few common routes products can take while preserving some existing work:
Feature Pivot
The core product or service remains the same but key features are added, removed, or adjusted based on customer feedback and market evaluation. This might mean expanding your MVP with more functionality, removing unused tools, or enhancing specific workflows.
Technology/Technical Pivot
The technology stack, architecture, or technical infrastructure underlying the product pivots to deliver performance, efficiency, or scale improvements. Examples include rewriting codebases, shifting from bare metal to cloud hosting, or adopting event streaming.
Business/Revenue Model Pivot
How a product generates value and revenue can pivot independent of the product itself, such as shifting from advertisement to a subscription model. Other examples include adding or removing tiered pricing plans or transaction fees.
Platform Pivot
Products transform into (or integrate with) two-sided marketplaces or platforms, creating value for distinct users or customer segments vs. just one group. Think of how YouTube became both a consumer video platform AND a creator monetization engine.
Positioning Pivot
Messaging, branding, packaging, or targeting gets reframed to reach new users without changing the product. For example, a B2B tool could successfully pivot to target consumers or specific industries. This might precede marketing mix changes.
Category Pivot
The product shifts from one distinct product category to another to better fulfill consumer needs. One example is how PayPal pivoted from security software to online payments. Another is Nintendo’s transformation from a playing card to a video games company.
Structural pivots like these preserve existing development work while delivering something fresh to the market. They should align with customer demand and offer new pathways to growth. In some cases, multiple pivots build on each other over time.
Knowing When to Persevere vs. Pivot
Deciding whether to stay the course or embark on a pivot also requires carefully weighing a few key factors:
1. Current Traction & Growth Potential
Most products take time to gain momentum and will endure early growing pains. Assess both current traction and realistic future potential. Low adoption today doesn’t preclude hitting critical mass with more optimized messaging and features.
Set trajectory benchmarks to determine if you’re on a path to achieve target metrics within a reasonable timeframe. If the market is nascent or you solve a novel problem, persisting a bit longer before a pivot may make sense.
2. Existing Differentiators & Competitive Advantages
Do you still maintain differentiated positioning that’s hard for competitors to replicate? Lean into any sources of sustainable advantage as foundations for future pivots or next-gen products. Unique data assets, proprietary tech, and talent also hold long-term value worth persisting for.
3. Customer Loyalty & Goodwill
For products with an existing customer base, assess loyalty and sentiment. Are buyers frustrated but willing to stick around if issues get addressed? Prioritize remediating pain points over a full reset. Measure willingness to recommend and repeat purchase rates to estimate turnover risk.
4. Sunk Costs & Expected ROI
Factor in resources already invested and total addressable market potential against further spending. But avoid throwing good money after bad purely based on past efforts. Gauge if incremental product changes justify more time and dollars or if you’ve hit the point of diminishing returns relative to starting totally fresh.
5. Team Alignment & Momentum
A demoralized team that has lost confidence or momentum in the current product direction will resist marching ahead. But pivots also demand added energy and resources from staff pulled in multiple directions. Assess bandwidth, risk of burnout, and openness to change before committing to pivots.
These considerations help pinpoint if issues seem surmountable or more systemic, guiding the next steps. Smaller course corrections may suffice when current positioning still demonstrates market viability. However, attempting too many minor pivots can result in product fragmentation vs. evolution.
Knowing When It’s Time to Sunset
In some cases, all metrics and research will clearly demonstrate that an idea, product, or service is simply not meant to be. Reaching the decision to sunset can be extremely difficult after investing significant time, money, and emotional equity into a product. Look for these signs it may be time to wind down operations:
- Pivots haven’t meaningfully revived business performance
- The market has moved on with competitors offering superior solutions
- Key differentiators have eroded over time
- The underlying problem you set out to solve is less relevant
- Continued investment exceeds realistic ROI
- Leadership focus has shifted to other strategic priorities
- Talent and resources could better apply to new products
While sunsetting legacy products frees up resources for something new, it obviously also means customers lose access to a valued solution. Manage the end-of-life process carefully with plenty of advance notice and consider alternatives like open sourcing.
Sunsetting is usually the last resort after pursuing multiple alternate pivots that don’t pan out. But dragging out a doomed product also wastes precious startup resources better directed elsewhere. Know when to pull the plug.
Best Practices for Pivoting Products
Attempting a pivot is filled with risks and unknowns. But several strategic best practices boost your odds of success:
Get Team & Leadership Buy-In
Rally support from both leadership AND product teams behind any pivot early on. Present convincing evidence of why change is needed and your proposed plan. Brainstorm all potential options before aligning everyone behind a single approach.
Develop a Strong Value Hypothesis
Outline assumptions around target users, their needs, and proposed solutions. Form hypotheses about how a pivot drives growth, then quickly validate or invalidate those assumptions with experiments. This discovery-focused approach helps test new directions.
Create Transition & Communication Plans
To avoid alienating existing customers, outline detailed plans for migrating them to new offerings or sunsetting legacy products. Over-communicate to users, partners, and internal stakeholders across the transition.
Set Metrics & Milestones
Establish clear success metrics and at what points you’ll evaluate progress after a pivot. This allows for quickly determining if the new strategy is gaining traction or if additional course correction is required. Build in go/no-go decision gates.
Secure & Align Resources
A successful pivot requires dedicated focus, staffing, and budget. Secure executive sponsorship and align product roadmaps, talent, and finances toward supporting the established game plan.
Prioritize Incremental Delivery
Adopt an iterative approach of releasing incremental enhancements soon after a pivot vs. going dark to rearchitect everything. Quick changes demonstrate momentum while allowing for flexibility to continuously tweak based on user feedback.
Pivoting is filled with ambiguity and unknowns. But concrete plans backed by leadership buy-in set up initiatives for success – or at least fail fast feedback to spur additional change.
Now let’s explore some famous examples of impactful pivots.
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Case Studies: Game-Changing Product Pivots
Many wildly successful companies today didn’t start out on a straight path to the top. In fact, some of the biggest names in tech only gained traction after major business model pivots. Let’s take a look at a few pivotal examples.
Twitter: From Podcasting Platform to Global Real-Time Messaging Phenomenon
It’s hard to imagine now, but Twitter originally launched in 2006 as a podcasting platform called Odeo. After seeing meager user adoption, the founders returned to the drawing board just a year later.
They had noticed their internal corporate communication via simple status messaging proved popular. So why not build on that? This realization sparked the idea for Twitter’s new focus as a global real-time messaging system.
Key Pivot Takeaways: Sometimes what works for market research is right under your nose. Twitter pivoted from a failed initial product concept into a tool staff was already voluntarily using internally. The rest is history.
Flickr: From Multiplayer Game to Photo Community
Originally designed to support an online multiplayer game, Flickr pivoted after recognizing how users were more interested in uploading and sharing photos than gaming itself. So Flickr redirected its focus towards evolving exceptional tools, storage, and capabilities for amateur and professional photographers.
Key Pivot Takeaway: Don’t be afraid to completely reframe product-market fit when new opportunities present themselves organically. By doubling down on photo-sharing capabilities instead of half-hearted gaming mechanics, Flickr found its niche.
Nintendo: From Playing Cards to Arcade & Home Video Games
Nintendo was founded way back in 1889 as a playing card company in Japan and maintained that focus through the 1960s. However, the company suffered declining card sales due to competition from both Western brands and Japanese conglomerates.
Instead of stubbornly pushing their legacy product, Nintendo assessed market signals and emerged as an early pioneer in the arcade video games market with hits like Donkey Kong. The rest writes itself – Nintendo would go on to become a household name in home gaming consoles and interactive entertainment.
Key Pivot Takeaway: Nintendo demonstrates the value of agility and foresight to recognize industry shifts. Rather than clinging to fading original products, the company pivoted hard into an entirely new category. The results reinvented Nintendo for the next century of success.
PayPal: From Security Software to Online Payments Platform
You know them today processing billions in digital payments, but PayPal began in 1998 as an encryption and security software company called Confinity. After a rocky start, PayPal added digital wallet capabilities designed to simplify eBay purchases in late 1999.
Revenue immediately skyrocketed as millions of eBay users flocked to utilize PayPal payments. Confinity shrewdly responded by redirecting 100% of its focus to payment tools and officially rebranding to PayPal in 2001. They had discovered their golden ticket product seemingly by accident!
Key Pivot Takeaway: Sometimes initial products unexpectedly unlock bigger opportunities. PayPal might still be fighting for relevance as a security software company if they didn’t pursue payments early on. Instead, they now lead a multi-billion fintech empire. Never be afraid to walk away from what’s not working!
As these wildly different examples demonstrate, there’s often no clear signpost showing the exact route to success at the outset. But by continually testing assumptions against market feedback and demonstrating flexibility to change course, companies give their products the best possible chance to resonate.
Conclusion & Key Takeaways
Deciding when products require refactoring, repackaging, or retirement makes up one of the toughest balancing acts in any technology leader’s career. However, arming yourself with the right frameworks, metrics, and market insights transforms guesswork into informed strategic planning.
In closing, remember these key lessons when evaluating pivots:
- Carefully monitor leading and lagging indicators suggesting your product is off track from targets
- Validate signs with holistic data analysis coupled with the voice of customer insights
- Weigh factors like current traction, competitive differentiation, ROI, and team alignment to decide between doubling down and pivoting
- Consider types of pivots that best align with market opportunities and leverage existing strengths
- Know when to sunset legacy products after multiple failed pivots to free up resources
- Secure executive backing, plan detailed transitions, and set post-pivot success metrics to de-risk major changes
With this comprehensive perspective, you’ll view pivots not as signs of failure, but as opportunities for product evolution. While certainly difficult, the brands that become household names all share an ability to tactfully reinvent themselves as market landscapes shift. With the right approach, your next product pivot could just cement your path to success.