WikiTips de mentorDay
Search
Close this search box.

Customer exit barriers

CUSTOMER EXIT BARRIERS

Accelerate your business with these tips "Customer exit barriers". Analyse and discover this TIP!

Exit barriers are the obstacles or difficulties faced by customers when they try to stop using a company's products or services. These barriers may include financial, contractual, emotional or time costs, y can be both real as well as perceived by customers.

Some examples of exit barriers for clients include

  1. Cancellation costs: If a customer must pay a fee to cancel a contract or subscription, this may deter the customer from abandoning a service.
  2. Investment of time and effort: If the customer has invested time and effort in learning how to use a product or service, they may be reluctant to abandon it and start again with an alternative.
  3. Loss of exclusive benefits: If by leaving a product or service, the customer loses access to exclusive benefits (such as discounts, special promotions, loyalty programmes), this can act as an exit barrier.
  4. Exchange costs: Costs associated with switching to a new product or service, such as installation costs, training or adaptation to new interfaces, can act as barriers to exit.
  5. Interdependence of products or services: If a company's products or services are closely linked to others used by the customer, abandoning one can cause inconvenience and difficulties.
  6. Personal relationships: If a customer has established personal relationships with employees or suppliers of the company, they may be reluctant to leave the company and those relationships.
  7. Emotional barriers: Emotional attachment to a brand, product or service can also make it difficult for customers to leave a company.

In my opinion a startup, especially an Internet startup, should invest more in creating exit barriers for the customer. However, and following the philosophy that should permeate the strategy of any start-up (customer first).

We should think about:

  • For example, in the Internet world, this is usually done by making it very easy to create a profile by asking for the minimum set of data (usually just name and email) and allowing, if it is a social utility, to easily send invitations to our contacts (linking to Gmail, etc.).
  • Not to impede or complicate in any way the free exit of our customers. We are in a free market in which the customer is not only the basis, but is also aware of it and claims his freedom to choose. Therefore, it should be very easy to delete our profile, deactivate it and leave the social network or utility.

So, what barriers are we talking about? We are talking about the tacit barriers that the customer himself establishes by using our product intensively and making it useful (which in the end are entry barriers to competition). Let's take an example:

"In a social network like LinkedIn, after having spent hours filling in our profile, installing applications on it, adjusting it and asking for recommendations, a new and wonderful professional social network appears. What would prevent us from going to it: precisely the tediousness of rebuilding that same profile, and feeling that the time spent on LinkedIn has been wasted.

In other words, we should NEVER prevent the free movement of the tooth, but rather we should make him invest time in creating his network of friends, filling in his profile, his music preferences, recommendations, uploading photos, videos and music... so that he himself generates his own exit barriers".

Although the example is from the Internet world, it is possible to transplant this philosophy to other types of startups: We want customers to stay with us because we are the best, because they have built a part of their life in our social network. That said, when faced with an investor, we need to establish these barriers to entry... but explain that they behave slightly differently on the Internet.

Why is it important for an entrepreneur to establish exit barriers to customers in his or her business?

IT IS IMPORTANT FOR AN ENTREPRENEUR TO ESTABLISH EXIT BARRIERS FOR A NUMBER OF REASONS:

  1. Customer retention: Exit barriers make it difficult for customers to leave a company and switch to a competitor. By keeping customers loyal and satisfied, a company can increase its long-term revenues and improve its profitability.
  2. Reduction of competition: If customers find it difficult to leave a firm because of exit barriers, competitors are less likely to be able to attract them with similar or slightly better offers. This can help protect market share and maintain a competitive advantage.
  3. Stability of income: Exit barriers can help maintain a stable customer base, which in turn provides a more predictable and consistent source of revenue for the company.
  4. Improved perception of value: When customers perceive that it is difficult to abandon a company because of the investment they have made in time, effort, money or personal relationships, this can increase their perception of value in the products or services offered.
  5. Increased customer engagement: Exit barriers can increase customers' commitment to the company, as they are more likely to continue to use its products or services and recommend the brand to others.
  6. Cross-selling and up-selling opportunities: With a more stable and committed customer base, a company is more likely to succeed in selling additional products or services to its existing customers.
  7. Improving the customer-company relationship: By establishing exit barriers that are based on value creation and strong customer relationships, a company can improve customer satisfaction and foster long-term loyalty.

However, it is critical that exit barriers are set ethically and do not unfairly restrict customers' freedom to choose between different options. The primary focus should always be on providing excellent value and customer service to retain customers naturally, rather than forcing them to stay through coercive tactics.

Practical examples of exit barriers that an entrepreneur can create in his or her new venture

HERE ARE SOME PRACTICAL EXAMPLES OF EXIT BARRIERS THAT AN ENTREPRENEUR MIGHT CONSIDER WHEN SETTING UP A NEW BUSINESS:

  1. Long-term contracts: Offer long-term contracts with incentives for permanence, such as discounts for committing for an extended period. These contracts can include cancellation fees to discourage early departure.
  2. Loyalty and rewards programmes: Establish loyalty programmes that offer exclusive rewards, discounts or benefits to customers who stay with the company. This can increase the perceived cost of leaving the company.
  3. Integration of products and services: Create products and services that integrate with each other, so that abandoning one means losing the value of the others. For example, a software company could offer a suite of applications that work together more effectively than if they were used separately.
  4. Customised training and support: Provide customised training and support to customers, enabling them to take full advantage of the company's products or services. This creates an investment of time and effort on the part of the customer that may be difficult to replicate with a competitor.
  5. Experience and expertise: Establish the firm as a leader in its field by offering specialised knowledge and expertise that is difficult to find elsewhere. Clients who depend on this expertise may be reluctant to switch to a competitor with less experience.
  6. Create a community of users: Foster an active and engaged community of users who support each other and share information, tips and best practices. This can increase the sense of belonging and make customers reluctant to leave the community.
  7. Personalisation and customisation: Offer products and services that are tailored to the specific needs of each customer, which makes the process of switching to a competitor more complicated and costly.
  8. Excellent customer service: Providing exceptional and personalised customer service can increase customer satisfaction and create a closer relationship, making it more difficult for customers to leave.

In implementing these strategies, it is important for the entrepreneur to focus on adding value and improving the customer experience, rather than simply trying to trap customers in the company. In this way, the exit barriers become a positive component of the relationship between the company and its customers.

APPLY THIS TIP TO YOUR PROJECT

QUIZ

THINK ABOUT YOU

THINK ABOUT HELPING OTHERS

COMPARTE

Facebook
Twitter
LinkedIn
Pinterest
WhatsApp
Picture of Jaime Cavero

Jaime Cavero

Presidente de la Aceleradora mentorDay. Inversor en startups e impulsor de nuevas empresas a través de Dyrecto, DreaperB1 y mentorDay.
COMENTARIOS
Todos los Comentarios
COMENTARIOS

Tabla de contenidos

  • mentorVIRTUAL: Soy tu mentorVIRTUAL. ¿alguna pregunta?

La respuesta tardará unos 20 segundos. Generando respuesta ...

barreras de salida de un cliente

Rate this TIP!

Tu opinión es importante para ayudarnos a mejorar

Nº votos «0" - Average " - Average0"

No votes yet, be the first to vote!

We are sorry you did not find it useful.

Help us improve this TIP!

Leave us a comment and tell us how you would improve this TIP

Ir al contenido