Switching Costs

Earlier this week I switched my RSS reader from Bloglines to Google Reader.

I’d been meaning to check out Google Reader for months, if not years, but had never gotten around to it, as Bloglines was serving me well enough for what I needed, and I’d gotten used to its quirks.

But over the past couple weeks, Bloglines started failing at its primary purpose, delivering RSS feeds on demand, as it stopped properly updating feeds. It didn’t bother me too much at first as I was busy enough that reading blogs was a luxury, but it was starting to get annoying. And then somebody twittered about a TechCrunch article describing how Bloglines users were fleeing to Google Reader, which provided instructions on making the move. Ten seconds later, I was moved to Google Reader, and now I probably won’t go back.

Let’s parse out what happened here, as I think it’s instructive.

  1. A few years ago, I started reading enough blogs that updated infrequently that checking them one by one was becoming ridiculous. So I started looking for an RSS reader, and chose Bloglines as it met my requirements well enough at the time (Barry Schwartz, of The Paradox of Choice, would call this “satisficing” – speaking of which, I need to review that book at some point). In particular, it was web-based so that I could read blogs from work or home without duplication, which was the key differentiator from Thunderbird, the other major contender.
  2. I stuck with the choice for several years, even as bits of it started to annoy me, as the perceived switching costs were too high. Given that there are no lock-in effects in this software (no data that I couldn’t export), the switching costs were purely cognitive. In other words, the cognitive effort of switching was the major lock-in for this product. Also, the benefits of switching were minimal – Bloglines was meeting my needs, so it was unclear how other software would be better in that core functionality.
  3. Once Bloglines started to fail in its primary purpose (making it easy for me to see the latest in my desired feeds), the benefit of switching became relatively greater (other RSS readers were succeeding where Bloglines was failing).
  4. Once I read the TechCrunch article, I had “social proof”, the term Cialdini uses to label our tendency to want to see others doing something before doing it ourselves. Knowing that there were dozens of other people making me the same switch helped convince me to make the jump. That was the critical tipping point.
  5. The actual switch took about ten seconds (export from Bloglines, import into Google Reader). To reiterate, the effort of switching had nothing to do with the actual work it would take to switch – it was the cognitive effort of having to re-open a decision that I had already made.

What’s my point here? In the Web world, switching is often fairly painless, as most vendors provide a way to easily get one’s data out of their system (and if they don’t, that’s a bad sign). Companies are generally relying on us to pick a system and get comfortable with it, so that habit and the perceived cognitive effort of making a change is a far greater impediment to switching than other possible lock-in effects. In such a situation, the company has to never make it easier to contemplate the switch; in other words, if the company continues to fulfill its value proposition to the user, users will stick around, but as soon as they lapse, users may leave in droves (as appears to be happening to Bloglines).

Another way of thinking about it is that the game between companies and users is all played in people’s minds. While economists may believe that people are rationally maximizing their potential economic gain, most of us are far less rational in our decision-making. We use brand names over equivalent generics because of advertising or because we “trust” the brand name more. We stick with products or services that are clearly inferior to newer ones because it’s too much effort to re-open the decision we originally made. Companies that understand this game will be telling stories to convince people to use their products or services, rather than trying to convince them with data. For instance, the book Positioning is all about creating new primary needs in the minds of consumers to give them the necessary impetus to switch.

So focus on the value proposition your company offers to its customers. If you can make sure that the value of your product keeps on increasing, you can benefit from the perceived effort of switching and keep customers even in situations where they might rationally choose another product or service. Ideally, of course, your product is the best in class, but every little edge counts, right?

Now I just have to get over the cognitive effort of switching from Windows to Mac…

P.S. I have been at Google for exactly one month as of today. Crazy how the time flies!

3 thoughts on “Switching Costs

  1. Actually, I was just thinking of switching the other way as Google Reader is just such a sloppy piece of code. It provides no easy way to do anything on a meta-level. You’ve got folders and that’s it. God forbid you want to put something on hold or take it out of your regularly scheduled reading but don’t throw it away: there’s no good system to do that. So I was hoping that Bloglines was going to suck less. Alas.

  2. While economists may believe that people are rationally maximizing their potential economic gain, most of us are far less rational in our decision-making.

    I think it’s a mistake to call this ‘irrational’ decision-making. People are really sophisticated when it comes to decisions about potential gains and losses. The thing is, we’re optimizing across a lot more dimensions than just economics. We make decisions on the basis of available resources, time, effort, identity, social pressures, expected futures, emotional response, aesthetics, and a jillion other things, all at the same time.

    What’s irrational is thinking that money is the only part of that equation that matters.

  3. Now, you’ll be assimilated into our insular world of Google Reader Sharing! RSS has not been the same since sharing & sharing with notes got enabled on Google Reader.

    What is your google identity? I am first syllable period second syllable.

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