Darryl.net

In reading that Citibank needs an extra $10 Bil in this weekend’s WSJ, I was reminded of the power of switching costs. It occurred to me that I would rather stay with the bank through some government takeover than to try to extract myself from the web of accounts and Quicken links and auto-pays I have set up there.

Here’s the rub though – if I wasn’t mostly happy with the product (I like their online banking, iPhone app, high-interest accounts, credit card link, global access, etc. etc.), I’d be out of there faster than you can say “bank run.” So, a few things to learn:

• Once you have a good product in place, set up switching costs to make your customers stay around longer.
• Get your customers who are using only one aspect of your product to use as many as possible. If they are not getting the full benefit, it will be easier for them to leave.
• If you feel like you are at a point in some business cycle where your customers are more likely to leave, perhaps you should give them an add-on product for free or at a discount (ahem, Citibank). ;-)