Develop a strategy to encourage customers to switch to your product.
I wrote a few weeks about how copying the competition doesn’t lead to innovation. That doesn’t mean you shouldn’t have a strategy to help users to switch to your product and service.
Introducing the Four Forces
In his book, Competing against Luck Clayton Christensen introduces the four forces and how they can help an organisation to understand how customers with switch between products. Or in JTBD vernacular hire a product to complete a job.
Two forces attract users to the new solution and two forces keep them with their current solution.
Understanding all Four Forces can help you develop a strategy to attract new customers and keep existing ones. All based on user needs and not dirt tricks.
The UK has no shortage of banks, many are hundreds of years old, let’s use Monzo vs the old guard to understand how the forces work.
Firstly, the draw of the new.
Attraction from social pressure, an exciting, emotional brand, helping save money, helping to analyse spending, low fees. There are many attractive reasons to switch.
The push and the pull explain why many people are opening Monzo accounts. But I’ve spoken to senior people in two large UK banks and of course they are concerned but they have seen a trend that customers are not fully switching to Monzo. The two remaining forces can help us understand why.
The two forces keeping customers with their current solution are equal to, if not a little stronger than push and pull.
3. Inertia / Attachment
It’s a hassle to switch bank accounts. It takes time and cognitive effort. There is even an industry service in the UK to make it easy but it’s still perceived as hard.
That perception is enough to create some inertia and slow or prevent the switch entirely. The customer ‘never get’s round to doing it’.
There is also a level of attachment to a bank. That memory of opening the account with a parent. The great free overdraft you got as a student. The mortgage you have with that same bank. The local branch, now probably closed, that you used to visit to withdraw money. Nostalgia is force keeping customers where they are.
What is something goes wrong? Monzo are after all a new business, they haven’t been around for 100 years and weathered financial storms. There is worry around loosing a month’s salary or missing a rent or mortgage payment. That anxiety is enough to prevent the switch.
Taking both Inertia / Attachment and Anxiety into account (no pun intended) you can see what is keeping customers from switching fully. Indeed my contacts at the UK banks have seen this. “Pocket money” payments are transferred over to Monzo, the discretionary money to buy coffees, beer and to shop. A way of monitoring and limiting spending. But salaries and savings? They are staying in the vaults under the doric columns of a trusted bank.
This of course will change, over time the strength of those bottom yellow forces will diminish. There won’t be a mass exodus to the challengers but there will be a slower, longer term trend away.
The Little Hire for Monzo
The ‘halfway’ switch can’t be a good thing for Monzo. Just being a bank for your discretionary spend still has the same infrastructure costs, per transaction cost, costs for mailing the cards out, staff costs. No full switch and the account balances and cash influx that brings.
Clayton calls this the Little Hire. The initial win for the new solution but then a slow draw back to the current.
In fact the Little Hire can be the making and the breaking of a startup.
The Four Forces tell you how to encourage a switch
Your product, its related services and marketing need to address all four forces to be successful. If there is only Pull attraction will be weak, if there is just Push and Pull you’ll attract more customers in the short term but they might not stay. To be truly successful need to address the more powerful forces, Anxiety and Inertia as well as the more straight forward Push and Pull.
Using all Four Forces can help you create a solid customer attraction and retention strategy.
The Four Forces are part of what I love about Jobs to be Done; it’s customer focused with a strong business appeal.
If you’d like me to run a Jobs to be Done Workshop or help you get started with JTBD in your organisation please get in touch.