A Lock-in effect exists when a customer is so strongly tied to a company that a change is only possible with considerable effort and cost. In the B2B environment, this can be achieved by strongly integrating the provider into the customer's processes. However, a lock-in effect can also be achieved with bonus and discount campaigns.
Winning new customers is an important concern for companies. However, it is often easier to retain a company's existing customer base. The systematic creation of lock-in effects is a sensible way to achieve this goal.
Through an ongoing customer relationship, the provider delivers ever greater added value to the customer, which they would lose as soon as they switch to a competitor. This creates a progressive dependency, which is reflected in increasing sales opportunities for the provider. These barriers to switching can be designed by companies in different ways:
Examples of lock-in effects:
- - Specific specialist knowledge that has been learned for the application cannot be transferred to competitor products. (for example with digital products such as Photoshop)
- - Binding through contractual agreements
- - The search for a new provider would take time and incur costs.
- - The loss of privileges granted by the provider that cannot be transferred to other services or products.
- - The individualization of the service offered is increasingly binding the customer to a service.
- - Related products are only offered by a company in a compatible manner.
- - Even if the customer has become accustomed to a product over a long period of time, this can lead to a lock-in effect.
Lock-in effects in service
In the service sector, it is often not possible to retain existing customers based on brand awareness alone. Brand loyalty and other dimensions of customer loyalty, such as the familiarization effect, are not always After-Sales-services are not as decisive in terms of the Repurchase rate. It is therefore important to be particularly close to customers and to know their needs, habits and processes precisely.
This makes it possible to make yourself indispensable to the customer over time by tailoring your own services precisely to them. Also Value Added Services can offer added value that the customer will not want to miss out on over time and that cannot be easily copied by third parties. If you have achieved this, then it will be difficult to award the contract to another company and the lengthy training period of that company will act as a deterrent.
Lock-in effect and data-driven services
In technical customer service, VAS can consist of on-site training on the machine, consulting services or service contracts, for example. However, data-driven services in particular offer an excellent opportunity to impress customers. Here, for example, the implementation of projects in the area of Predictive maintenance or the often-discussed smart services that create added value for the customer based on interpreted data. The possibilities for getting creative here are almost limitless. Think about which machine data is of interest to the customer and prepare it in the required form.
