The Nature of Switching – Implications

In my last post I described a framework to understand how individuals make switching decisions. Using this framework, let’s examine its implications for marketers of technology.

At the most basic level the framework says that to maximize the chances of switching you should maximize Switching Benefits, minimize Switching Costs and make Research and Trial really easy.

Maximize Switching Benefits

If there isn’t a compelling feature or two in your product that will get a large percentage of your target user base to check out your product, it won’t work. When you introduce a product, it is more important to focus on the Switching Benefits than on lowering the Sacrifice. If the Switching Benefits aren’t there, you won’t get enough people into Research & Trial. If the Switching Benefits are there but the Sacrifice is somewhat high, at least you’ll get the trials and perhaps some early adopters to switch. You might also get some parallel runs, where users use both products for a while. But most importantly, you will get feedback.

Getting the Switching Benefits right is half the battle – that is the innovation, the idea. But sometimes it is not big enough. For instance, the challenge that online office competitors like Google apps and Zoho face is that their Switching Benefits over Microsoft Office are so slim that most of their users continue to use Office for the most part and use online spreadsheets for shared lists or some such occasional use case. Meanwhile Microsoft keeps making progress with Office Live.

Minimize Relearning

In recent years this has received a lot of attention. Design of software particularly has now entered an era where the bar on usability and aesthetics is getting higher and higher. This is partly because of enabling technologies like Javascript, AJAX and of course ubiquitous broadband. And partly because it needs to. It has become so easy to offer new software based services over the internet that, well, people are. In droves. When many services that do very similar things compete to keep users, user experience becomes very important.

Minimizing Relearning is not just about designing for better usability and aesthetics. There are other important considerations that are perhaps more strategic. Like not making it so different from what the user is using today, that they are totally lost. Or, holding off on introducing power user functionality to when a section of users are familiar enough with the simpler workflows and are ready for the power user functionality. And when you need to make the software more complex, layer the complexity so that a new user can still achieve simple tasks quickly. Many Web 2.0 companies do this really well. The poster child (if you don’t count Google) is perhaps 37signals.

The greatest design technology, will still leave some users looking for help for something or the other. When they do, they should be able to find answers to their questions quickly and in many different ways. A service that I use (and like immensely) called Wufoo has so many different ways of getting an answer to a question that is unlikely that anyone at the end of it will actually use the email support that is also available.

Performance

In Enterprise IT products were, and in some cases are still, bought based upon a comparison of features in presentations and marketing material. Here, having a feature is more important than how well it performs. But in software targeted at the individual, for personal use or for work, try before you buy has become so common that a technology marketer cannot hide a low performance feature.

Outlook 2003 could claim that it had a search feature, but one used it only under duress. Google Desktop changed that and Search became the natural way to find old emails. Now Outlook 2007 has better search, but Google Desktop and Spotlight on the Mac, are what users use even for searching email.

Integrating with peripherals

This one is important, but brings up the rear after Sacrifice and Performance. Sometimes, you won’t be able to integrate with peripherals even if you’d like to. Apple, for years, courted application software vendors to port software to the Macintosh platform. Some didn’t. Some did, but all new releases would be on Windows only and the Mac versions would follow after months.

Now Apple makes it easier to bypass this problem by allowing users to run Windows on the Mac. As momentum shifts to the Mac, application software vendors will automatically shift (or balance) allegiances.

Research and Trial

As I said in the last post, Research and Trial is a separate kind of Switching Cost. It is a component of the total Switching Cost, but in addition, it is something like an “investment”. Regardless of whether the switch happens or not, the individual has “sunk” in this cost. Also, a successful Research and Trial cuts through all the marketing hype and the fogs of the unknown usage patterns of each individual to uncover all the Switching Costs. What is still left uncovered becomes the Switching Risk. The higher it is the less likely is the individual to switch.

Thus it is important not only for the cost of Research and Trial to be low, it must appear to be low. Very often a potential user will not even go through the Research and Trial because it appears too costly in terms of time invested.

For tangible technology products, being able to touch and feel the product is very important. I remember how intrigued I was about the Segway a few years back. I read all the press about it, but nothing could beat the 30 second trial ride at the San Jose Tech Museum. Riding it was easy as pie. It’s another matter that I and a million other enthusiasts could never figure out when or where to use it.

In the world of software, free trials are the rule. But by itself that is not enough. One shouldn’t expect users to figure out how to use your product or even the purpose of it just by downloading your software and playing around with it. Most people don’t go through all the menus and screens just to figure out how it works. They want to know what it does and how it can help them in their jobs or their lives. And they are short on time.

Again 37signals and Wufoo do a great job here. They have Free Trials of course. But also product tours, video tutorials, FAQs, testimonials, forums…you can research their product any way you like.

These two posts turned out to be much longer than I thought they would. I hope I have done justice to the topic, at least what you might expect from a blog. But the downside of long posts is that you keep putting it off for when you have a stretch of free time from work and family commitments. In the future I’ll have to think about how to tackle deeper subjects – maybe break them into more posts.

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5 Responses to The Nature of Switching – Implications

  1. Krishna says:

    A good marketing strategy gives the user a handle to recoup if not eliminate switching costs. This can be done in two ways. A) Get a popular early adopter to make some positive noise about the product and make it known to prospective customers; (b) Back it up with adequate free trial / customer support / after sales service / money back guarantee.

    Marketers should pay greater attention to early adopters, especially if they are popular personalities that often unintentionally turn evangelists for new products. No other brand communication can be more authentic than a user’s testimony. I saw a post in Gridstone blog where the author expressed delight when a chart from GS platform was used by Om Malik in GIGA OM blog. That joy – of a celebrity blogger using company product – is unmatched and the mileage the company gets out of it easily offsets the beta / free trial costs. Much of the switching costs + switching risk feared by the user will pale if the free trial offer gets coupled with promise of targeted customer support and a money back guarantee to boot, if the product sucked, the chances of which rare since the celebrity had sung its paeans already.

    For a product like yours that helps an investor take snap decisions and get in-the-money quicker, no one would want the money back. Just that I wished you brought out an economical on-demand SaaS version and with an India tweak 🙂 I can try and bring in some of my broker/investor friends as early adopters.

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  2. ama says:

    can you give me a well definition of switching in/out metod in the marketing of services?

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  3. Satya says:

    Great piece Basab. On Switching Cost and Risk front, your arguments are irrefutable. Can I say that it is so far the best one 🙂

    From a purely techno managerial perspective though, I think Google Apps and Zoho are doing fine. One can not directly build a product like MS Office with killer apps when functionality use of MS Office is hardly 20% by normal users. Rather I guess, one has to build a competitive product first with a distintive market (can be unorthodox) strategy. And I think Flash will come close when user experience is concerned vis-a-vis WebUI compared to AJAX/JS.

    Google Apps or for that matter many of its other products such as Docs, Blogs, Scholar, Finance are not what Google is not aiming at, if Marissa Meyer is to be believed from her talk at NewTeeVee. Rather, I think she is quite right when she says that the core is search for Google and rest are clouds covering – so that they can have better monetization. Similarly Amazon with its WebServices – the main business as Jeff Bezos puts it is Booking the Book. Zoho is targetting SME segment and they will do well considering combination of price and functionalities.

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  4. Basab says:

    Satya,

    You may be right in that Google may have no other option other than to seek out users who aren’t wedded to Excel already. But that said I think Google will be very happy if usage and adoption of Google Spreadsheets goes up. Office is Microsoft’s profit engine. Hurting them there, hurts their competitor where it matters.

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  5. Pingback: Bookmarks about Zoho

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