Switching Costs

A few weeks ago I was having a major technical issue with GoDaddy. For whatever reason, our virtual server would stop communicating with our database every other day. GoDaddy was not helpful in the least in resolving the issue. After a few days trying to troubleshoot on our own, I decided it wasn’t worth it. I visited Amazon’s cloud services site and fired up a new server in about 3 minutes. My developers then installed the relevant software, transferred the database files and edited a couple lines of code with the new server address. In essence, it wasn’t much harder than a “ control+c, control+v.”

Last night when I was ready to head home I opened the Lyft app to request a car. The request timed out a couple times and when it finally went through, the app informed me that prices were %15 higher than normal due to high demand. I canceled the request, closed the app and opened Uber. I sent a request, and within 2 minutes a Camry Hybrid was picking me up. No surge pricing.

So what’s the point? In this era of digitalization and cloud computing, switching costs are rapidly approaching zero in many markets. And when it’s so easy to switch to a different service, the user experience is paramount. If you’re building a company, product, or anything of value, don’t get lazy on this front. It will surely be your demise.