As a group, consumers are a lazy bunch. Once we start moving in a direction, it is hard to get us to switch to do something else. The switching costs may not be high, but we keep buying and shopping the same places we always do. Just because. Retailers and service providers count on this. Even if we are offered lousy service, it takes alot for us to switch. Even if we are offered a better or cheaper deal, it still takes alot to switch. We are lazy consumers. Case in point:
I had been a Netflix customer since they got started and fell in love with their service. When Blockbuster introduced a similar service, I did not switch even though there is a Blockbuster 2 blocks from my house. With Blockbuster, I could turn the movies in there and get them much faster. Finally after 5 years, I made the jump to Blockbuster. It was scary , but now 6 months later I love it. It is much more convenient and flexible than Netflix. I wished I switched 5 years ago. Netflix kept me as a customer simply because I was too lazy to switch. It made no economic sense. I stayed with Netflix even when Blockbuster was faster, better and cheaper.
Faster, better, cheaper does not always win the day. Habits and inertia win alot of the time. That is why I always ask entrepreneurs: Why will the customer switch to you?
Barry,
Great observation! I would argue that faster, better or cheaper really matters a lot. But it’s the consumer’s perception that matters, not reality.
I would believe that while you knew Blockbuster might be faster, better and cheaper… it wasn’t in fact more convenient. Hence, your perception of the aggravation of change would make Blockbuster (or at least the change to) in fact not better. It would be worse, because it is “painful” to change from the easy way out. Hence no change.
I think to convert a client from a competitor you need to make the conversion very easy, and very painless. Otherwise, like Blockbuster, we will need to sit around and wait for the prospect to be overwhelmed with pain.
– Mike