Locking In Customers
by Tom MurckoThe ability to detect switching costs and predict how they'll change as time passes is an important business skill. Some types of lock-in rise over time (called creeping lock-in), others fall. Here are some examples of each: contractual commitments (falls over time), durable purchases (falls), brand-specific training (rises), information and databases (rises), and loyalty programs (can rise or fall).
For example, as a supplier, switching costs are the key to valuing your installed base. As a buyer, show the seller you understand how you'll be locked in with them, and explain what your switching costs would be from your current vendor, and use these factors to negotiate a better deal.
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