Switching Costs & Customer Lock In

20 07 2009

In the day and age of increased competition and homogenus services, what are you doing to maintain your customer base?  In the past, the camera guys were able to get you to lock into their brand by giving you the body of the camera while charging higher fees for the different lens.  Because the switching costs were so high, they essentially we able to maintain their customers.

Look at frequent flier mile programs.  They are basically taking a similar service and creating customer lock in to make sure that customers maintain their status.  If the airline industry can do it with all their issues (lost luggage, long lines, delays and cancellations), why can’t you do it?

  • Do you have a marketing program aimed at creating this type of loyality or lock in?
  • How does your program compare to your competition?
  • Could you do something differently?
  • Do you offer something that is bought in quantity by your customers?  If so,  how can you leverage it more?
  • What is the cost of acquiring a new customer?

Often we think about creating new features to bring in new customers, while we try to force our existing clients to repurchase.

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