According to Ryan on The Office, selling to a new customer is 5x more expensive than a repeat customer. It might even be more expensive than that. It takes a lot of work to sell a ticket to a stranger, or get someone who’s never heard of us to buy our book. Even if our advertising costs us time instead of money, we have costs.
Being good isn’t the only way
Being the best option is a great way to get repeat business, and from an economist perspective, there’s a simple reason.
Consumers make a choice about their costs. This is just an example, please do not trust me as a source for mustard sale news.
I really like Jimmy’s Mustard, but Tommy’s Mustard is on sale for 50% less. I’ve never tried Tommy’s. The way I’ll instantly calculate cost in my head will be something like…
- The cost of Jimmy’s is $8
- The cost of Tommy’s is $4 + risk of not liking it + the energy of deciding + not knowing what the brand represents
Then, I decide which mustard costs more. If getting a guaranteed flavor blast is worth more to me than $4, I’ll go with Jimmy’s every time. Easy decision.
Amplify the cost of leaving
If I was disappointed with my cell phone company, it would take a lot for me to switch. The last time I got an upgrade, it took 3 hours. I do not want to deal with that at all. It was annoying, I had to negotiate, it was tiring and it took up my day. I know that every phone company is going to be difficult and I don’t know how difficult it will be to switch my service. So, here we have LOCK IN. I am not stuck with my phone service no matter what. Even with a contract, I can pay my way out of it. It is just way more costly for me to leave than to stay.
Here are some ways to lock in an audience
- Be the best. Then, every other choice is a demotion
- Build a relationship. Then, to get the same quality experience from other entertainment, our audience will need to build a relationship with them.
- Connect to a community. If we monopolize a community, then community members need to reject the community to reject us.
- Serve the audience more than one thing.
- Use the sunk cost fallacy to our benefit.
- Make apparent the cost of leaving. When consumers make these cost analyses, they do so quickly and emotionally from the top of mind. If we can keep our value and cost of leaving on top of their mind, we can make the decision easier for them.