Wednesday, June 16, 2010

Minimize Switching Costs

Whenever we ask somebody to change their behavior, we want to make it worthwhile for them.
  • It could be us asking a member of our target market to start shopping with us for a certain category of product instead of continuing to give their business to another store.
  • We might be wanting one of our staff members to start asking each customer, as they enter the store, an open-ended question to open up a conversation, such as, “What product might I help you find?” instead of a yes/no question that usually closes the conversation with a “no,” such as “May I help you?”
  • It might be asking a customer to switch from a pay-per-usage schedule to an unlimited use plan.

     Our natural tendency when thinking about how to make a switch worthwhile is to offer ample positive benefits and then let the target population know about those benefits. This is a good start. People need to see the potential gains in order to put out the energy to form and maintain new habits.
     However, we too often forget about the importance to the consumer or employee of the costs of the switch.

  • How difficult will it be for me to master skills necessary to carry out the new behavior? If I’m to shop at your store instead of my current one, what time will I spend deciding how to fit that into my schedule? If I’m your employee and I’m to start asking customers a new set of questions, how hard will be for me to always remember to do it?
  • What social costs would I need to pay? If your store doesn’t carry the prestige of my current shopping place, will I want to hide from my friends what I‘m doing? If I start carrying out new procedures as your employee, how much teasing will I get from my fellow employees? Do I think they’ll be irritated at me for increasing pressure on them to make the changes I’ve made?

     Researchers at National Kaohsiung University of Applied Sciences in Taiwan found that these switching costs significantly interfere with the positive value a person sees in the change. So when planning your next set of performance improvements for your business, minimize the switching costs. Introduce the changes by saying, “Give this a try.”

Click below for more:
Use Closed-Ended Questions Selectively
Reduce Unwanted Risk for Your Shoppers
Emphasize Possibilities, Not Probabilities

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