This is the second installment in a 10 part blog on Microsoft as a practitioner of asymmetric marketing.
2. Customer Lock-in
To practice or resist this kind of category regime change I describe in Part One of this essay, you need to proceed from a base area of locked-in customers, the real asset of a natural monopoly. While CRM vendors tout their products by explaining how the ‘balance of power’ has been shifting to the customer in the IT customer-vendor relationship, you clearly can’t become a long term asymmetric market leader unless you mitigate against this power shift to the customer in creative ways. To accomplish this today it’s important that tech CEOs and marketing leaders detox from the coolaid of the ‘customer economy’ and begin to behave like asymmetric marketers by making ‘lock-in’ a key requirement of their products, programs and practices.
Lock-in is all about the art and science of what I call ‘barrier management’, i.e. systematically and programmatically keeping the customer from leaving your fold through both positive and negative inducements. The negative inducement can be summed up in the 4 letter word spelled PAIN. For example, if today I wanted to buy a Mac, or switch from Windows to the Scott McNealy thin Java client view of the universe, I’d experience serious pain since I have been locked-in to Windows for a long long time and use if for everything, hence the term ‘natural’ monopoly.
Barrier management 101 usually takes the form of the economic lock-in, i.e. business terms. Microsoft has been well known for its client OS lock-in of PC OEMs but it’s not a one-trick pony and that’s not the only arrow in their quiver. Their new server subscription model is a similar type of economic lock-in and despite early resistance to the switch to subscription pricing, it looks like Microsoft will stick with it and get it right because the whole structure of an asymmetric natural monopoly requires conscious attention to barrier management.
And they must be succeeding at it. The Yankee Group did a survey they released on Jan. 29, 2004 that documented that 43% of Microsoft SMB customers are ‘concerned’ about becoming ‘overly reliant’ on Microsoft, while 72% of the surveyed companies were ‘actively seeking to lessen the dominance of Microsoft’s products’ and were exploring ‘alternative vendors’. There’s that customer power rearing its head again. The key is to limit the customer power to ‘concern’ through making stealth barrier management a core competency.
At it's essence, barrier management must be 'designed in' to a tech company's product strategy. In my consulting practice, I use a concept called a 'continuous product' to replace the legacy 'chasm' concept of 'whole' product. A continuous product gains its asymmetric advantage from its use of network effects, which at a basic level, means its relationship to the internet as a medium of feature-updating. Examples of products that rely on network effects for their lock-in include ASP-based software (Salesforce.com), anti-virus and intrusion prevention software or services (Internet Security Systems, Counterpane Internet Security, Symantec), anti-spam products, search (Google, Yahoo), web conferencing platforms (Webex, Placeware) and others. The lock-in is aided by the 'addiction' of the customer to the new updates which are essential for the correct functioning of the application or infrastructure. More on this in future essays, since it's one important reason why .NET is so important for Microsoft's natural monopoly.
Comments