Markets · 6 pages · 12 min

How switching costs hold a customer

Switching costs are the frictions a customer must pay, in money, time, or risk, to leave a supplier.

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From the opening

Switching costs are the burdens a customer bears to move from one supplier to another, including money, time, retraining, lost records, broken habits, and the risk that the new choice fails. Those burdens can hold a customer even when a rival's posted price looks attractive. The opening covers leaving has a real burden, price cuts may not be enough, and embedding creates the friction.

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Inside

Leaving has a real burden
Price cuts may not be enough
Embedding creates the friction
A date can release the hold
Where the idea stops applying
A distinction worth keeping

Sources

Customer switching costs
Technology lock-in

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How switching costs hold a customer

From the opening

Inside

Sources

Also on the desk