Giving customers an exit strategy

So you’ve uploaded your data to the cloud — maybe Flickr, Google Docs or YouTube, and you decide to change services. Now what? After wrestling with downloads, re-formatting, and complex account closing procedures, most of us stay put. The added benefit of changing services almost never outweighs the cost of the move. Remember when you couldn’t take your mobile phone number with you when you changed carriers. Countless people stayed in bad plans with bad coverage because they wouldn’t risk changing phone numbers.

As we enter the adolescent phase of Web 2.0, the ability to switch services easily is detrimental to the growth of cloud and subscription-based services. “Oh crap,” the potential customer says, “I’m marrying this company without a pre-nup.” So he puts off giving the service a try, fearing he will be locked in when a better service comes along.

They teach us in business school that high switching costs are a good thing. It keeps customers locked up. It also frustrates the living hell out of them and they become determined to jump ship at the first reasonable opportunity. A short term advantage can easily be erased by long term ill will.

Google is addressing the issue with its Data Liberation Front. Simply stated, you can leave and take your data with you in a usable format anytime you like. Old schoolers, don’t be so sure this is so bad even in the near term. Experience taught me with Xprove that making it easy to opt in and out of the service at will gives users confidence. It also says, “We’re so damn good we don’t worry about you ever wanting to leave.” A simple website tweak that made that point clearer increased paid subscriptions overnight.

Webmonkey has an interview with Brian Fitzpatrick of Google on the Data Liberation initiative. It’s good reading for any business looking to move into cloud-based or subscription-model businesses. One excerpt:

To be very clear: It’s not that Google is just an altruistic, lovable, huggable company. I think we’re a good company, but we get a benefit from this. We benefit from the work we do with open web standards, open-source and data liberation. But if you’re using a Google product now and you decide to go somewhere else, the easier we make it to leave and take your data with you, the more likely you are to come back and use something we come out with in the future.

There’s also the “rising tide floats all boats” analogy — the more we contribute to the success of the internet, the more we contribute to our own success since we’re such a big player.

A nice Web 2.0 addendum to the Innovator’s Dilemma.

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