The Overlooked Switching Cost


Many action movies have a high-stakes bomb scene.  It usually goes something like this:

In 45 seconds, a bomb will destroy the world unless the hero can diffuse it.  The hero cuts the last wire, there is a 5-second dramatic pause, and then the timer stops with only 1 second remaining.  Everyone then breathes a collective sigh of relief.

If today’s newsletter made it to your inbox, know that I am now breathing that same sigh of relief.

I switched CRM/email systems this week, and despite multiple internal tests, when I hit the send button, I didn’t know if it was going to function correctly or blow up an entire year’s worth of work.  Fun times.

Today’s newsletter is partly inspired by my recent CRM switch.  To the newsletter:

Topic of the Week: The Overlooked Switching Cost

You are all familiar with the term “switching cost.”  These are the costs a person or organization must bear to move from one method of doing something to another.   It’s the cost of change.

Typically, when we hear “switching costs,” it’s things like:

1)    The dollars it takes to switch.

2)    Loss of functionality / capabilities by switching

3)    The time it takes to learn a new product

4)    Time taken away from other priorities

However, there is one switching cost which is often overlooked and represents one of the largest hurdles to change.

When an organization or person evaluates a new way of doing something, they must admit the current way of doing things is inferior.

You must admit you were wrong.

No one likes to be wrong.  I certainly do not. It’s my job to develop strong opinions on some matters, so I am inevitably wrong in some of those opinions.  Even with a lot of practice at being wrong, I still hate it.  Just ask my husband.

When you are wrong, there is uncertainty that comes along with it.  Will your job be at stake? Will your managers lose trust in you? Will your reputation suffer?

It’s because of this uncertainty and fear of admitting wrong that a new product or service could make every sense in the world for an organization to adopt, but internal protectionism prevents an organization from moving forward with change.

The “admitting wrong” switching cost needs to be factored into every sales process.

In fact, the best sales professionals I’ve worked with can deliver a compelling value proposition that arms the folks who were wrong (or those taking over for them) with the tools they need to be a hero.

Have a great weekend everyone.

About the author

Danielle O'Rourke

Recovering Investor. Mom. Wife.

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By Danielle O'Rourke

Danielle O'Rourke

Recovering Investor. Mom. Wife.

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