marketing
Switching Cost
What it costs a customer to leave you for a competitor - financial, operational, or psychological.
Definition
Switching cost is what a customer pays - in money, time, risk, or hassle - to leave one provider for another. High switching costs are a moat: even unhappy customers stay because moving is too painful. Switching costs include: data migration (moving from one CRM to another), retraining (learning a new system), integration rebuilds, change-management risk, and contract penalties. Designing your service with embedded switching costs - deep integration, accumulated data, custom workflows - dramatically improves retention.
In your business
- →Design switching costs in - deep integration, accumulated data, custom workflows
- →Make migration easy on the way in, hard on the way out
- →High switching costs are why enterprise software valuations are so high