Book: Hooked – How To Build Habit-Forming Products, Nir Eyal

Review

A must read. If you build any kind of products, you need to read this book.

Buy on Amazon.com.

tl;dr

Customers are less price-sensitive about products around which they have formed habits. They increase the dependency by storing value in the product. Two factors for habits: frequency and utility. The more users invest time and effort into a service, the more they value it. Identify habitual users, codify the steps they took (“Habit Path”) and modify the product to fit the new insights.

Summary

The Habit Zone

  • fostering consumer habits is an effective way to increase Customer Lifetime Value
  • as customers form routines around a product, they become less price-sensitive
  • new products need to offer dramatic improvements to shake users out of old routines
  • users also increase their dependency on habit-forming products by storing value in them
  • two factors: frequency (how often) and utility (how useful/rewarding)
  • habit zone:

habit-zone22

  • a habit is when not doing an action causes a bit of pain
  • pain = itch which causes discomfort until satisfied

Trigger

  • triggers cue the user to take action and are the first step in the Hook Model
  • types of triggers
    • external triggers: paid (marketing), earned (free media), relationship (referrals), owned (piece in user’s environment)
    • internal triggers: emotions, positive and negative
  • in the case of internal triggers, the information about what to do next is encoded as a learned association in the user’s memory (takes day or weeks of frequent usage)
  • identify particular frustration or pain-point in emotional terms
  • write user narratives: stories from the user’s side

Action

  • to initiate action, doing must be easier than thinking
  • Fogg behavior model Behavior = Motivation x Ability x Trigger
  • motivation is energy for action
  • core motivators: seeking pleasure/avoiding pain, seeking hope/avoiding fear, seeking social acceptance/avoiding rejection

“Take a human desire, preferable one that has been around for a really long time… Identify that desire and use modern technology to take out steps.” – Evan Williams

  • remove steps until you reach the simplest possible process
  • six elements of simplicity: time, money, physical effort (labor), brain cycles (mental effort), social deviance, non-routine (disruption)
  • greatest return on investment is generally from increasing a product’s easy-of-use
  • scarcity study showed that a product can decrease in perceived value if it starts off as as scarce and becomes abundant
  • perception can form a personal reality based on how a product is framed, even when there is little relationship with objective quality (the framing effect)
  • people often anchor to one piece of information when making a decision (the anchoring effect)
  • when people believe they’re nearing a goal, it increases motivation (the endowed progress effect)

Variable Reward

  • what draws us to act is not the sensation we receive from the reward itself, but the need to alleviate the craving for that reward
  • to hold our attention, products must have an ongoing degree of novelty (variability)
  • three types of rewards: Tribe (social), Hunt (resources, information), Self (mastery, competence)
  • maintaining a sense of user autonomy is a requirement for repeat engagement (“but you are free to accept or refuse”)
  • variable rewards must satisfy users’ needs, while leaving them wanting to re-engage with the product

Investment

  • the more users invest time and effort into a service, the more they value it (IKEA effect)
  • little investments can lead to big changes in future behaviors
  • three tendencies influence our future actions: effort investment, being consistent with past behaviors, avoiding cognitive dissonance
  • investments are about the anticipation of longer-term rewards, not immediate gratification
  • asking users to do a bit of work (invest) comes after users have received variable rewards
  • leverage user’s understanding that the service will get better with use (and personal investment)

5 fundamental questions:

  1. What do users really want? What pain is your product relieving? (Internal Trigger)
  2. What brings users to your service? (External Trigger)
  3. What is the simplest action users take in anticipation of reward and how can you simplify it? (Action)
  4. Are users fulfilled by the reward, yet left wanting more? (Variable Reward)
  5. What “bit of work” do users invest in your product? Does it load the next trigger and store tha value to improve the product with use? (Investment)

Manipulation Matrix

  • Facilitator (useful to users, uses the product)
  • Dealer (not useful to users, doesn’t use the product)
  • Entertainer (not useful to users, uses the product)
  • Peddler (useful to users, doesn’t use the product)

 

  • “humblebrag” – a reward in portraying oneself in a positive light; people are willing to forgo money to disclose about the self

Habit Testing

Step 1 – Identify habitual users (min 5%)
Step 2 – Codify steps the users took to understand what hooked them (find the “Habit Path”)
Step 3 – Modify the product to fit the new insights.

Discovering Habit-Forming Opportunities

  • “scratch your own itch”
  • look into the future and new interfaces

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