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Product switching cost strategies for customer acquisition

Business product strategies are always positioned and designed in a way that the customer journey is seamless for higher adoption and the switch to a different product is tedious for better retention.

The answer lies in the ratio of Customer Lifetime Value to Customer Acquisition Cost. Businesses should strategize and estimate the ratio to be as minimal as possible while profiling potential clients.

The usual contracts are big enough such that the acquisition costs are just a fraction of it. Knowing this, businesses pitch customized transition packages that help their clients have a seamless switch.

Some common strategies are discounts in data migration, free user training & online modules, personalized product customization, extended support, and many others.

One of my favorite switching cost strategy was adopted by Apple. When Windows Vista did not perform well in the market, Apple offered data migration and OS support to Windows users for free. They estimated that the lifetime value per user outweighed the service costs for acquisition incurred for its new customers.


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