Customers stay for three reasons that outlast a good product: habit, the cost of searching for something else, and the cost of switching. Awareness isn’t one of them.
Bruce Greenwald and Judd Kahn’s Competition Demystified argues that real competitive advantages are rare, and that one of the few on the demand side is customer captivity. It comes from three sources: habit, search costs and switching costs Published. In their account, a famous brand isn’t an advantage by itself; it helps only insofar as it creates captivity. That’s a useful test for a DTC brand whose retention plan is “build the brand.”
| Source | What it is | DTC examples | The signal in your data |
|---|---|---|---|
| Habit | Buying and using without deciding again | Daily supplements, coffee, pet food, a skincare step | Regular reorder gaps; use tied to a time or place |
| Search costs | Finding and judging an alternative is hard or risky | A shade that matches, a fit that works, a formula the dog tolerates | Reorders of the exact same item; low browsing before reorder |
| Switching costs | Leaving loses something or takes work | A saved profile, a device that takes your refills, a learned routine | Retention that holds even when satisfaction scores dip |
Paul Klemperer’s survey of switching costs lists where they come from: the need to stay compatible with equipment you own, the transaction cost of changing supplier, the cost of learning a new brand, uncertainty about the quality of one you haven’t tried, loyalty discounts, and plain psychological attachment Published. Several of those are search costs in Greenwald’s terms; the categories overlap, and that’s fine. Klemperer also describes the pattern that makes switching costs dangerous: firms compete hard to win customers, then charge the ones they’ve won more. Customers learn to expect it.
Thomas Burnham, Judy Frels and Vijay Mahajan split switching costs into three kinds: procedural (time and effort), financial (money or benefits lost) and relational (the discomfort of breaking a bond with a brand or a person). In their survey, all three predicted whether customers intended to stay, and together they predicted it better than satisfaction did Published.
Satisfaction explains less of staying than the costs of leaving do. That’s a warning as much as an opportunity.
The scorer below rates each source with three statements, 0 to 2, and adds a fourth group that measures resentment. Be strict: score 2 only if you could show someone the evidence.
With the example scores, habit is 3, search costs 4, switching costs 2 and resentment 2, for fair captivity of 42%. The scorer sends that brand to habit first, even though switching costs score lower, because habit and search costs are the sources customers don’t resent.
This is one chapter of Used, Not Bought, which is free and readable in full on a single page with no form in front of it.