A couple of weeks ago I blogged about some brilliant advertising I saw at a petrol station. The increasing petrol (gas) prices are an interesting illustration of how pricing changes people’s behaviour. Here in the UK, petrol is about £1.20 a litre. That works out at around $9 for a US gallon. How will people react? And what has that got to do with software? I’ll try to explain.
To understand people’s behaviour, it’s useful to differentiate between the short and the long term. In the short term, we’ll cycle more, drive less and share cars. There’s not much more we can do about the money we spend on fuel while we’re stuck with our current cars. In the long term, however, we have other options. If fuel prices remain high then, as we replace our cars, we’ll ditch our SUVs and buy hybrids, or more fuel efficient cars.
If you’re Shell, or Exxon, or the UK government (more than 60% of the price of petrol is tax in the UK) then these are heady days. In the short term, your customers have no choice but to buy your product. For now, we’re locked in to petrol. The costs of switching (to a cheaper car, or to alternate fuels) are too high to be feasible, in the short term. In the long term, that changes.
Locking in your customers muffles an important signal. As I’ve blogged about before, getting negative feedback is hard. If your customers are locked in then you can maltreat them and not notice their squeals. Prod them with pointy sticks and they might rattle the bars of their cages but they’re safely locked in and cannot leave. One day they’ll break the lock and escape and then you’ll have a horde of unhappy ex-customers on the loose. It’s much better to have willing customers than hostages.
I write from personal experience. A few years ago, I chose InstallShield as the installer for Red Gate’s products. Bad decision. It became apparent, quickly, that it’s a shoddy product. Each heftily priced new version introduced unwanted new features while old features remained untested and buggy. Always one to make the same mistake twice, I signed up to their hosted update ‘service’ (I use the word loosely) and had the same experience. By the time I realised I’d made a dumb decision I was locked in. Our installers all used InstallShield, and the switching costs were high. But I was only locked in for the short term: in the long term – and it was too long – we switched to Wix. Because I was locked in, it was easy for InstallShield to ignore my feedback, and they ignored it impressively actively. Presumably, sales were up and life was good. But only in the short term.
If your customers are locked in then be careful. Look after them, and keep an ear out for the rattling of cages.