Minecraft, Dropbox, and Amazon Prime Use the Same Strategy to Keep You Hooked
How to build in high exit costs so your customers never leave
As the economy takes a hit, consumers are getting much more selective about where they spend their dollars. To hold onto customers, businesses try to build some kind of moat, to keep the competition away from their customers and market share and long-term profits. Most businesses build moats by erecting barriers to entry against competitors. Incumbents are able to direct large amounts of resources, expertise, and intellectual property toward their products, making it expensive and difficult for new entrants to disrupt them.
A less-explored area, however, is building products with a high exit cost for users.
Exit cost is the real or perceived or emotional cost faced by a user while leaving a product or switching over to another product. Good products have high exit costs. Great products have such exorbitant exit costs that users never leave them (leading to insanely high long-term retention and LTV). Poorly built products have zero to low exit cost.
Let’s look at a few examples of products that have high exit costs and the ways in which they use exit costs to build moats:
