Startups: 10 Reasons Customers Won’t 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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71 thoughts on “Startups: 10 Reasons Customers Won’t Switch to Your Product”

  1. Hi April,

    Great post!

    Four additional ones from my experience:

    1. Budget Cycles. The budgeting cycle doesn’t align with your sales cycle- you need to wait 9 to 18 months.

    2. Unseen pockets of resistance. Sales didn’t connect with the economic buyer and technical buyers, and have only showed value to some of the involved buyers. Some companies I’ve worked with have a 3×3 sales strategy- 3 wide and 3 deep- to counteract getting too excited talking to 1 champion. This isn’t really politics or relationships, but engaging the broader buying process. Overall, this depends a lot on deal size and company size.

    3. Blocking initiatives. Another initiative was underway consuming resources and you have to wait till that initiative concludes- often six to eighteen months. It could also be just finished and the department is in rest mode. This could be SCM waiting on ERP, CRM waiting on SCM, Marketing automation waiting on CRM, etc.

    4. The incumbent isn’t 3 years old. They may have a terrible solution, but if it’s less then 3 years old they may not be emotionally ready to switch or try again.

    For all these reasons the best opportunity is one that has a compelling event or initiative- a mandate to replace, a need to scale, a leader with vision and money. I find operational efficiencies usually are only compelling when an entire market is moving in a direction as with ERP and SCM. i.e. early majority markets and beyond. We often falsely attribute early buyers to our value prop, but it’s actually an unrecognized internal motivation that moved them.

    Regards,
    Nick

      1. April,

        Can’t let this one go by. Great post again.

        A note about budget cycles and why someone does buy: a compelling event or disruption like a failed audit, an outage, lost customer, missed deadline, etc. Don’t write it off completely because there’s “no budget.” If there’s been an event, there will be budget.

        I used to use this as a theoretical example for retraining sales guys until it actually happened to me. “Do you have $3500 set aside in your personal budget to replace the transmission in your car?” (Unanimous answer: no) “Then what would you do if you blew the transmission? You’d find the money to fix it.”

        Look for that compelling event and you will have a better chance of getting them to switch. Without it, all the reasons above will get in the way.

  2. RG,

    Another great post. The psychology of new product adoption is also really important for entrepreneurs to understand. I’d suggest reading:

    http://hbr.org/product/eager-sellers-and-stony-buyers-understanding-the-p/an/4516-PDF-ENG

    and Dan Ariely’s new book, the Upside of Irrationality;

    http://danariely.com/2010/06/01/the-upside-of-irrationality-is-out/

    He and his team do some interesting work furthering the ideas that we overvalue things we create.

    This is a logical extension to customers overvaluing the solutions they already have (the premise of the HBR article/research) and that sellers do the same.

    In short, if your solution doesn’t offer a preceived 10x benefit…well, you’re pooched. Not exactly a low hurdle.

    Thanks again.

    1. Hi Mike,
      Great points. I was thinking about Dan Ariely’s stuff when I was writing that post. I was also thinking about Dan and Chip Heath’s book Switch and their whole discussion about “the rider” vs. “the elephant”. So much is working against you when you are trying to get folks to move from one thing to another, it’s important to take the challenge seriously and have your plan of attack ready.
      April

      1. Absolutely, the change effort required to get people over the hurdle is the next difficult challenge. This might come after they’re already convinced they stand to gain a 10x benefit, however.

        Just because you get the customer to the altar doesn’t necessarily mean you get to consummate the relationship…in a manner of speaking.

  3. Hi April.

    Really great post. And I have to say I completely agree with it for most companies. One thing I have noticed in the financial world I have recently moved into is you can take anyone of these points and multiple the significance factor by 10 if they are a financial institution.

    I was in a meeting with a vendor a couple of weeks ago. They are a small vendor. Great product. Although I could tell they were aware of these points above, they did not comprehend the weight the points you make had on a decision. I could see the vendor underestimating them (partially because I have been on their side of the table). I tried to ‘help’ the vendor realize it. Although they were cordial, my sense was they concluded that my message was not correct — I mean how could it be — they obviously have the best solution!

    And they do have the best solution. But until they understand the gravity of the points above, they will not be in any critical infrastructure in the bank. If you look at your points above, the vendors that are in the critical areas of the bank or are deployed enterprise wide, get all the points you make above very clearly. You can see it in their presentations, interactions, and responses consistently – it is not lip service to those vendors — they actually do get it.

    -mike.

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