Mo Shehu, PhD
Push and pull - switching costs

Understanding switching costs: Why it’s hard to get users to switch to your app

For every new product on the market, there are certain forces that conspire both for and against it when it comes to user adoption. This is because new products require users to change their behavior, and there’s a psychological and emotional cost to that.

You’ve probably heard of Newton’s First Law – the law of inertia – which states that an object at rest remains at rest until an external force acts on it.

Likewise, a user hooked on an existing solution will remain with that solution until a greater force (you) convinces them to switch over to a new solution (yours). There are many reasons for this, which we’ll look at next.

The 9x Effect

The 9x Effect states that customers overvalue what they already have by a factor of 3, while companies overvalue what they’ve built by a factor of 3. Multiplied, these forces make it harder for users to switch to any new product.

On the customer side, there are 3 things working against you:

  1. The Endowment Effect: People tend to overvalue what they already have, regardless of what’s available.
  2. Status Quo Bias: People will stick with an existing product even when presented with a better one. This bias gets stronger over time.
  3. Gains & Losses Theory: People tend to overestimate any losses in features or performance in their current product.

As a company, there are also 3 things working against you:

  1. Self-design: Products based on what designers or developers need have typically been hard for end-users to adopt.
  2. Over-serving the market: Companies improve products in ways that customers can no longer appreciate (a function of feature creep, which we’ll discuss in a bit).
  3. Missing the Job-To-Be-Done: Companies fail to understand the core job that users hired their product to do.

These switching costs are also why improving an existing solution by a little bit doesn’t get you many new users. For example, if you decided to create a Google Maps alternative that’s only 10% better (assuming you even had the resources for that), you wouldn’t suddenly see a mass exodus from their app to yours.

This is where the 10x rule comes into play. The 10x rule states that any new product has to be ten times better than existing solutions to convince users to switch. This improvement can be in terms of price, performance, or ease of use – but your value proposition has to be better than any existing solution to beat user inertia.

But to improve your own product innovation process, you first need to understand the invisible forces that control your customer.

Switching costs: push and pull forces

The forces we discussed in the previous section can be grouped into 2 categories: ‘Push’ forces and ‘Pull’ forces. These forces are emotion-based and offer insight into why customers stick to existing products – and how you can convince them to switch to yours.

On the one hand, customers will always find flaws with their current solutions and explore new ones. These are the ‘Push’ forces towards your product. On the other hand, customers get anxious around change because what if that new solution gives them the same problems as the current solution? They’ve also formed existing habits and loyalties to their current products. These act as “Pull’ forces away from your solution.

So how do you combat the ‘Pull’ forces and strengthen the ‘Push’ forces? This is where your marketing and messaging come in.

Your role as a SaaS founder is to do 4 things:

  1. Show how bad their existing options are.
  2. Show how much better your product solves their problems.
  3. Reassure them that switching to your app is quick and easy.
  4. Decrease their irrational and emotional attachment to the existing product.

The Mac vs. PC advertising campaign was an excellent example of this approach. By showing side-by-side comparisons of the two operating systems, Apple did 4 things:

  1. They showed how much worse PCs were, compared to Macs.
  2. They showed how much easier it was to switch over to Mac from PC.
  3. They presented PC users as bumbling buffoons; and
  4. They reduced people’s attachment to the PC.

In short, they created anxiety that could only be relieved by buying a Mac.

This is precisely the same playbook you need to follow for your product strategy. As a product manager or founder, do some digging around the push and pull factors your customers are facing and amplify the forces in your favor.

(Excerpt from the FMP blog – check it out to learn more about switching costs and how to market your product.)

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