Hooked: How to Build Habit-Forming Products by Nir Eyal – Summary and Key Takeaways

I can’t decide whether I’m more interested in designing habit-forming products or in finding out how to prevent products from forming my habits. Either way, Nir Eyal’s book, Hooked, is a fascinating read. It walks you through the steps that lead to forming new habits around a product using loads of real life examples and also offering a way to approach the inevitable moral questions. What follows is a subjective summary of the book with its key takeaways and some of my own thoughts attached. (Emphasis is from me.)

Introduction

In the introduction, we get a useful definition of habits:

““automatic behaviors triggered by situational cues”: things we do with little or no conscious thought.”

And a clue why companies employ this tactic in the first place:

“Companies that form strong user habits enjoy several benefits to their bottom line. These companies attach their product to internal triggers. As a result, users show up without any external prompting.”

Perhaps a not so surprising, but nevertheless extremely important fact:

“The convergence of access, data, and speed is making the world a more habit-forming place.”

A question comes to mind and before searching your own mind, you search Google. You feel a tad bored, lonely or frustrated and you go to one of the many social media outlets for some instant gratification. These are the internal triggers the author talks about.

Then we get a quick overview of the Hook model, which “describes an experience designed to connect the user’s problem to a solution frequently enough to form a habit”:

Trigger

  • the actuator of a behaviour
  • external or internal

Action

  • the behaviour done in anticipation of the reward
  • two things make the action more likely
    • ease of doing it
    • motivation to do it

Variable Reward

  • “Feedback loops are all around us, but predictable ones don’t create desire.”
  • The variable quality of a reward makes us come back and want more of the thing

Investment

  • “The investment phase increases the odds that the user will make another pass through the Hook cycle in the future.”
  • “The investment occurs when the user puts something into the product or service such as time, data, effort, social capital, or money.”
  • “…the investment implies an action that improves the service for the next go-around”

“…this book teaches innovators how to build products to help people do the things they already want to do but, for lack of a solution, don’t do.”

 1. The Habit Zone

This chapter starts with some more details of why habits are good for companies.

Increasing Customer Lifetime Value

“Fostering consumer habits is an effective way to increase the value of a company by driving higher customer lifetime value (CLTV): the amount of money made from a customer before that person switches to a competitor, stops using the product, or dies. User habits increase how long and how frequently customers use a product, resulting in higher CLTV”

 Providing Pricing Flexibility

“You can determine the strength of a business over time by the amount of agony they go through in raising prices.” – Warren Buffet

When is the best time to hit your users with offering a paid version of something they’ve been using for free? Apparently not before they developed a habit of using it so that having to give it up would be a bigger pain than coughing up the price you’re asking.

“…after the first month, only 0.5 percent of users paid for the service; however, this rate gradually increased. By month thirty-three, 11 percent of users had started paying. At month forty-two, a remarkable 26 percent of customers were paying for something they had previously used for free.”

That’s not surprising if you know that it refers to evernote, a web app that makes collecting, storing, organizing and referencing pieces of content easy.

Supercharging Growth

Building a product with viral potential is a good start, but designing one with a short Viral Cycle Time (time it takes a user to invite another user) can make all the difference.

“For example, after 20 days with a cycle time of two days, you will have 20,470 users,” “But if you halved that cycle time to one day, you would have over 20 million users!”

That’s why products that become part of people’s everyday lives can spread through the entire population like wildfire.

Sharpening the Competitive Edge

“User habits are a competitive advantage. Products that change customer routines are less susceptible to attacks from other companies.”

Here, the author makes the point that habit forming products are a worthwhile business strategy, as they provide some level of protection against competitors, even if their solution may be better.

He illustrates the point with the widespread adoption of the QWERTY keyboard layout, even though it’s not the most efficient one.

“…many innovations fail because consumers irrationally overvalue the old while companies irrationally overvalue the new.”

Approaching the matter from the innovator’s side, if your product is too innovative in a sense that it requires the user to turn his life around to be able to use it, it’s not going to work. That’s what is usually referred to as “ahead of its time”, which may be true some of the time, but the real thing might be that while the product itself is very much needed in the marketplace, its design prevents it from being adopted. The key thing to remember is don’t expect your users to make a big change or investment just to try your product. So design a product that requires incremental changes.

Building the Mind Monopoly

“The fact is that successfully changing long-term user habits is exceptionally rare.”

 “The enemy of forming new habits is past behaviors, and research suggests that old habits die hard. Even when we change our routines, neural pathways remain etched in our brains, ready to be reactivated when we lose focus.”

 “Adapting to the differences in the Bing interface is what actually slows down regular Google users and makes Bing feel inferior, not the technology itself.”

Can a company ever become so confident as to advertise its direct competition (and make money off them)? Apparently that’s exactly what Amazon is doing when it shows you related products sold not by Amazon but individual sellers. The reason why Amazon can afford to do that is because it’s become the “go to” shopping place as well as:

“By addressing shoppers’ price concerns, Amazon earns loyalty even if it doesn’t make the sale and comes across as trustworthy in the process. The tactic is backed by a 2003 study, which demonstrated that consumers’ preference for an online retailer increases when they are offered competitive pricing information.”

Would this work for your business? Hard to say. But it’s also hard to deny that as a user, you appreciate the straightforwardness of a business that doesn’t want to sell to you by all means, and puts your interest before its own (by the looks of things at least). I’d be more likely to go back to such a place – we all are.

 In the Habit Zone

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