Recently we watched as people were encouraged to switch banks. Forget the politics, this is about competition. For the average person, switching banks to save some money or to “put it” to some large multi
-national bank sounds great until they realize what it will cost them to switch. Think about all the linkages you have to your bank account, bill paying, Dwolla account, investment accounts just to name a few. What is stopping most people is the cost in time that switching to a new bank will take.
The same holds true with software services. As an example, I use a product called Toodledo. I like it for several reasons not least of which is the synchronization across devices. Now I am sure tha
t there are products with more features, a better interface or better synchronization. Here is the point. I am not going to switch if the cost to me of switching is high in time or money. I pay about $20 per year for Toodledo. For someone to get my business, they are going to have to cross a high bar to get me to move.
As you bring your product to market, understand your customer’s switching cost in both time and money. As competitors to your product come forward make sure you maintain your barriers to exit through the same switching cost concept.