When I was in business school, we learned (amongst other things) about developing various competitive strategies. One of the ones hardly anyone seemed to pay attention to, but was fascinating to me, was the concept of creating “Barriers to Exit”.
This is the complement to the better known “Barriers to Entry”, which typically implies that if you can enter a market first, and make it either so expensive or so time consuming to a competitor to consider entering that it would not be worth their while to follow you into that market, they would therefore concede it to you.
Barriers to Exit implies that you make it so expensive, time consuming or otherwise difficult to leave a market (or a product) that you have captive control over it. And that’s where Quicken comes in.
Quicken is one of the few examples of an independent software company which has successfully fended off Microsoft’s entry into its domain. Their original product was and is a personal finance and check writing program. Over the years (and decades now), it has evolved from a simple checkbook balancer to a complex combination of tax reporting, investment handling and personal finance adviser. Its foundation, though, is still basically a checkbook program and, as such, it’s very convenient. Many of its customers, myself included, have been using one version or another of Quicken for over 15 years, even predating Windows back to the DOS era. Think of the brand loyalty implied in that record of accomplishment! We were glad to be able to support an upstart company which beat back the Microsoft juggernaut with a superior product and a great customer orientation. As the need would arise, usually when some significant improvement in the software would occur, I would upgrade to the newer version, which they would make available to past customers at a reduced rate.
Unfortunately, over the past several years, there have been increased numbers of complaints about both the Quicken software and its dedication to the customer. Reports of buggy software are common now, and the annual version upgrades seem to offer little improvement over the previous year’s. So, most people would keep their old versions, with which they were perfectly content.
Of course, without annual upgrades by enough of the user base, company management can’t drive the requisite increases in revenue they need to justify their positions. So, they’re forced to choose between happy customers, and greater revenue growth. Guess which they choose.
So, Quicken now has adopted a “sunsetting” policy on its old software. Now at most software companies, that just means that they just stop supporting the old software with patches, fixes and so forth. Not at Quicken. They actually inform their customers that the online components of their software, including some basic functionality that users need every day to download bank balances and credit card transactions, will be turned off. That’s right. Even though these functions work fine, they’re going to shut them off. Leaving customers with three choices: upgrade, find some other program, or go back to entering all transactions manually.
What makes this particularly ugly is that when one does a little research into the new upgrade versions, one finds that the customer satisfaction levels with those new versions are terrible. Not just so-so or mezza-mezza. Awful. People generally hate the new versions as buggy, non-functional or just plain unnecessary. And reviews of the once-great Quicken customer service are similarly poor. Check some place where there’s customer input, like Amazon or elsewhere. It’s shocking. Review after review of people saying “I’ve used Quicken for (5, 10, 15) years and now I hate them” or similar. It’s hard to imagine a company doing a more successful job of ruining its reputation without actually dumping oil into a village of baby seals or releasing poison gas into a highly populated third world hellhole. But they have.
And that’s where Barriers to Exit comes in. Because despite all these facts, you really have no choice. You have to upgrade because you depend on it. Over fifteen years of comprehensive personal finance records, several loans, a mortgage, a handful of bank accounts, IRAs, 401(k)s and the lot. All currently kept up to date at the push of a button. Until shut off time. And from all accounts the Microsoft competitor is even worse. And there’s nothing else out there.
So you’re stuck.
And they know it.