hooked-how-to-build-habit-forming-products.markdown

Hooked: How to Build Habit-Forming Products

by Nir Eyal and Ryan Hoover

Introduction

• Today, amassing millions of users is not good enough. Companies find that their economic value is a function of the strength of the habits that they create. They must understand what makes makes users click, and what makes them tick.
• Habit-forming companies link their services to users' daily routines and emotions. They are a "first-to-mind" solution. You must manufacture these habits.
• Habit-forming products start by alerting users with external triggers like email, a website link, or the app icon on a phone.
• The next step is the action, or behavior done in anticipation of the reward. Companies increase the likelihood of action by making it easy and tapping into our psychological motivation to do it.
• The next step is the reward. Making the reward variable suppresses the areas of the brain associated with judgment and reason, and activates the parts associated with wanting and desire.
• The final step is investment, where the user puts something into the product such as time, data, effort, social capital, or money. It implies an action that improves the service for the next go-around.

Ch 1: The Habit Zone

• Habits give us the ability to focus our attention on other things by storing automatic responses.
• Fostering customer habits is an effective way to increase the value of a company by driving higher customer lifetime value, and a business is worth the sum of its future profits.
• As customers form routines around a product, they depend on it and become less price-sensitive. See free-to-play video games, where developers delay asking for money until the user plays consistently and habitually.
• Hooked users become brand evangelists. When this happens, the most important factor to increasing growth is the "Viral Cycle Time," which is the amount of time it takes a user to invite another user.
• John Gourville, a professor of marketing at HBS, says that "many innovations fail because consumers irrationally overvalue the old while companies irrationally overvalue the new."
• Products that require a high degree of behavior change are doomed to fail even if the benefits of using the new product are clear and substantial. Because old habits die hard.
• Non-transferable value created and stored inside a service discourages a user from leaving.
• New behaviors have a short shelf-life. The habits that we've most recently acquired are also the ones that are likely to go soonest.
• Frequent engagement with a product, especially over a short period of time, increases the likelihood of forming new routines.
• For an infrequent action to become a habit, the user must perceive a high degree of utility, either from gaining pleasure or avoiding pain.
• A behavior that occurs with high frequency but less utility, or an app that occurs with low frequency but more utility, has habit-forming potential.
• Habit-forming services seem, at first, to be offering nice-to-have vitamins, but once the habit is established, they provide an ongoing pain remedy.
• Addictions are self-destructive. A habit is a behavior that can have a positive influence on a person's life, but can be healthy or unhealthy.

Ch 2: Trigger

• External triggers are embedded with information, which tells the user what to do next.
• An external trigger presenting multiple choices can cause hesitation, confusion, or worse, abandonment. Fewer choices increases the likelihood of the desired behavior occurring unconsciously.
• External triggers include paid triggers, earned triggers, relationship triggers, and owned triggers.
• Since paying for re-engagement is unsustainable, companies generally use paid triggers to acquire new users and then leverage other triggers to bring them back.
• Earned triggers require time spent on public and media relations. Awareness generated is short-lived, so to drive ongoing user acquisition, companies must perpetually keep their products in the limelight.
• Relationship triggers require building an engaged user base that is enthusiastic about sharing the benefits of the product with others. They can create the viral growth entrepreneurs and investors lust after.
• Employing dark patterns may lead to some initial growth, but it comes at the expense of the social currency of users, including their goodwill and trust.
• Owned triggers consistently show up in daily life and it is ultimately up to the user to opt into allowing these triggers to appear. They prompt repeat engagement until a habit is formed.
• When a product becomes tightly coupled with a thought, an emotion, or a pre-existing routine, it leverages an internal trigger. Unlike external triggers, you can't see, touch, or hear them.
• Negative emotions like boredom, loneliness, frustration, confusion, and indecisiveness can serve as internal triggers: They instigate pain or irritation and mindless action to quell the negative sensation.
• In the case of internal triggers, the information about what to do next is encoded as a learned association in the user's memory.
• To design a product, we must know users' internal triggers, or the pain they seek to solve. But asking to users to reveal these wants is ineffective, since users don't know which emotions motivate them.
• The "5 Whys Method," used by Toyota, asks to ask the question "why" as many times as it takes to reach an emotion explaining why someone uses a product. This usually happens by the fifth "why."

Ch 3: Action

• Dr. BJ Fogg of Stanford posits that to initiate any behavior, the user must have motivation, the user must have the ability to complete the action, and a trigger must be present to active the behavior.
• He states that we are motivated to seek pleasure and avoid pain, seek hope and avoid fear, and seek social acceptance and avoid rejection. These sides can increase or decrease motivation.
• An ad that motivates some people will not motivate others, which is all the more reason to understand the needs of your particular target audience.
• Any technology or product that significantly reduces the steps to complete a task will enjoy high adoption rates by the people it assists. Easier equals better.
• Fogg describes "six elements of simplicity," which influence a task's difficulty: Time, money, physical effort, brain cycles, deviation from social norms, and deviation from routine.
• To increase the likelihood of a behavior occurring, Fogg instructs designers to focus on simplicity as a function of the user's scarcest resource at that moment.
• Prioritize increasing ability over motivation. Increasing motivation is expensive and time consuming. But increasing a product's ease-of-use has the greatest return.
• The scarcity effect states that a product can decrease in perceived value if it starts off as scarce and becomes abundant.
• With the framing effect, perception alone can form a personal reality, even if there is little relationship with objective quality.
• The anchoring effect leads people to anchor to one piece of information when making a decision, while ignoring other factors.
• With the endowed progress effect, users are more likely to complete an action if the product communicates that they have already made some progress.

Ch 4: Variable Reward

• With the promise of a reward, what draws us to act is not the sensation we receive from the reward itself, but the need to alleviate the craving for the reward.
• Variable rewards come in three types: tribe, hunt, and self. Habit-forming products utilize one or more of these variable reward types.
• Rewards of the tribe are social rewards that are driven by our connectedness with other people. We seek awards that make us feel accepted, attractive, important, and included.
• Once we hunted for food for survival. That same determination, or the rewards of the hunt, is what keeps us wanting and buying today.
• Rewards of the self are fueled by "intrinsic motivation," where we seek to gain a sense of competency.
• Variable rewards are not a panacea. Rewards must fit into the narrative of why the product is used and align with the user's internal triggers and motivations.
• "Reactance" is a response to a threat to our autonomy. By coupling a request with an affirmation of the right to choose, reactance is kept at bay, and compliance increases.
• No one makes us use the most successful consumer technologies. A company should not build a product betting users will do what they make them do, instead of letting users do what they wan to do.
• Companies that successfully change behavior present users with an implicit choice between their old way of doing things and a new, more convenient way to fulfill existing needs.
• Experiences with finite variability eventually become predictable and thus less engaging. Products with infinite variability maintain user interest by sustaining variability with use.
• Understanding what moves users to return to habit-forming products gives designers an opportunity to build products that align with their interests.

Ch 5: Investment

• Adopting the "IKEA effect," businesses that leverage user effort confer higher value to their products simply because their users have put work into them.
• We seek consistency with our past behaviors. It is easier to make a small investment followed by a large investment, instead of a large investment outright.
• We irrationally change our preferences and view of the world to ease cognitive dissonance, or to reconcile two conflicting ideas.
• Collectively these tendencies lead to a mental process known as rationalization, which helps us give reasons for our behaviors, even if those reasons might have been designed by others.
• Investments are about the anticipation of longer-term rewards, not immediate gratification.
• The investment phase increases friction; it is not effortless. The timing of asking for investment is critical, and should come soon after the reward.
• Investing time and effort into learning to use a product is a form of investment and stored value. It becomes more familiar, and thus more simple.
• Progressively stage the investment you want from the user into small chunks of work, starting with small, easy tasks and building up to harder tasks through successive cycles of the Hook model.
• To create a habit, the user must go through multiple cycles of the hook model. Therefore, a product should load the next trigger when the user invests in it.

Ch 6: What Are You Going To Do With This?

• The hook model has us look for the internal trigger, form the external trigger, the simplest action, the variable reward, and the investment that loads the next trigger.
• The manipulation matrix has two questions as its axes: "Would I use the product myself?" and "Will the product help users materially improve their lives?"
• You are a facilitator when you create something that you will actually use and that you believe makes the user's life better, because you are facilitating a healthy habit.
• You are a facilitator if you have experienced the problem firsthand, and you are building something that you would use now, or would have used if you were younger.
• Estimates for pathological users of the most habit-forming technologies, such as slot machines gambling, is just one percent. Addiction manifests in people with a certain psychological profile.
• You are a peddler if you create something that you believe is useful, but that you don't use. Consequently, designing a successful product is difficult because you lack the empathy and insight of users.
• You are an entertainer if you create something that you would use, but it is not useful. But entertainment is ephemeral, and so building an entertainment enterprise is tiring.
• You are a dealer if you create something that you would not use, and which is not useful. It is exploitive and you are likely only looking to make a buck.

Ch 7: Case Study: The Bible App

• If you build only for fame or fortune, you will likely find neither. But build for meaning and you can't fail.

Ch 8: Habit Testing And Where To Look For Habit-Forming Opportunities

• The Hook Model can help filter out bad ideas with low habit potential, and identify room for improvement in existing products. But building habit-forming products is still an iterative process.
• "Habit Testing" helps clarify who your devotees are, what parts of your product are habit forming, and why those aspects of your product are changing user behavior.
• First, define engagement targets for a devoted user. Then dig into the numbers and identify how many and which type of users meet this threshold.
• If you classify less than five percent of your users as habitual users, then either you identified the wrong users or your product needs to go back to the drawing board.
• Among those habitual users, look for similarities of behavior. This is the "Habit Path," or the actions that are critical for creating devoted users. Modify the experience to promote this behavior.
• Tracking users by cohort and comparing their activity to habitual users should guide how products evolve and improve.
• First and foremost, observing your own behavior can inspire the next habit-forming product or inform a breakthrough improvement to an existing solution.
• By looking to early adopters who have already developed nascent behaviors, we can identify niche use cases that can be taken mainstream.
• Technology happens in waves. Infrastructure advances combine with enabling technologies and platforms to create the basis for new applications, which lead to penetration and customer adoption.
• Changing user interactions with products can create new routines, which in turn can form new habits. To uncover these user interface changes, look forward, toward the future.