Startups: 10 Reasons Customers Won’t Switch to Your Product

08/13/2010

No 150x150 Startups: 10 Reasons Customers Wont Switch to Your Product

It’s easy for startups to fall into the trap of thinking that customers will switch when given the option of a clearly superior product.  The problem is that switching is often much harder for customers than startups realize.  Having a clearly better product is only one piece of the puzzle.

Here are 10 reasons customers won’t switch to your product even though they understand the value of it:

  1. Migrating from the existing product is too expensive/time consuming – I put off migrating this blog from Typepad to WordPress for 6 months because I didn’t have the time to do it.  How much better would a photo sharing site have to be to get you to move your stuff off of flickr? I spent years marketing databases and data integration products.  If you want to give an enterprise IT guy a heart attack, tell him you need to migrate a gig or so of data from one platform to another.
  2. Skills – It took your potential customers a while to learn to use the stuff they have today and even if your product is much easier to use, the time investment required (even it it’s just their guess of what it might take) to learn it might be enough to turn customers off.
  3. Enterprise lock-in – Startups underestimate the power of an enterprise license agreement to stop even a small department from choosing to use a different tool from the corporate standard.  You may be able to fly in under the radar of a CIO that’s standardized on Microsoft or Oracle or IBM in a small department but the moment you attempt to expand to other departments or your solution becomes important enough that the CIO and/or your competitor gets wind that you exist, you’ll get the boot faster than you can say “competitive tiger team”.
  4. Your product functionality is too narrow – related to the above point, often companies buy from a larger vendor because they can get several products packaged together in a bundle.  Even though your point product might be better, the price and functionality offered by a suite might kill you.  At the larger companies I’ve worked at we regularly gave product away for free to win a larger, broader deal.
  5. Politics/Relationships – this is true particularly for larger accounts where a single decision maker holds a lot of control. I’ve lost a deal because the decision maker had a long relationship with the account rep for our competitor (we later hired that guy, but that’s another blog post) and I’ve won deals because a customer was on our customer advisory council. Relationships matter more than products (sometimes anyway).
  6. Customization/Implementation costs are too high – Just because your price is lower, doesn’t mean the total cost of getting your solution up and running doesn’t matter.  It does.
  7. Your company is too small – The more important your solution is for your customers, the more they will worry what would happen if you ever went out of business or got acquired.
  8. You can’t provide 24/7 service – if your services hours are 8AM to 8PM there are folks in geographies that won’t use your products because you can’t service them during regular business hours. If you are selling to global businesses, this can sometimes be a requirement you can’t get around.
  9. You can’t support the customer’s environment – Your product might be better but it doesn’t support IE6 or run on a Mac or have a Blackberry client.  It might use MySQL and the company standard is Oracle (and yeah I know it’s all the same company now but the SQL is still different).  Any of these might not seem like a big issues to you but can be deal-stoppers for customers.
  10. Your product is better but not THAT much better – “Do nothing” is the worst competitor you will ever come up against.  It’s always the cheapest, fastest, most risk-free decision a customer can make. You are going to have to offer some pretty serious compelling value to get folks to move away from what they’ve already got and a couple of extra bells and whistles alone isn’t going to do it.

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