Xero enjoys a great 'trap door' moat -- very sticky product due to high switching costs (largely the cost of time and effort in this case). Another great example is enterprise software; just look at companies like SAP and Oracle, or Technology One (ASX:TNE) here at home.
So I agree @PeregrineCapital, its a huge pain to switch. Especially when business owners always have a thousand other more pressing issues to deal with. And that's why these companies also have great pricing power too, as @actionman alluded to.
(It's also why the banks hate the idea of portable account numbers)
Given all of that, competitors have tried to make switching a much more seamless experience. EG. Apple has an app for android users to easily switch from android. Chrome makes importing data from other browsers super easy. VOIP companies put a huge emphasis on portable phone numbers back in the day to overcome customer intransigence.
There's probably better examples, but you get the point. Switching in these areas is laughably easy nowadays, but I remember when it was a real hassle.
I note that Intuit uses a product called Dataswitcher to import from Xero to Quickbooks. It's not yet available in Australia from what I can tell, and the process seems fairly involved, but I'm wondering if such programs become better and more widespread over time?
ie. Could it be that in (i dunno) 5 years time switching between one accounting package to another, at least for a small business, is really just a matter of going through a 5 min guided process? And, if so, does this have a material impact on retention and pricing power?
And, of course, it goes both ways (xero uses JetConvert to import Quickbooks data).
I honestly don't know, and am just wondering aloud.