Marketing & SalesStrategy & Innovation

Hooked How to Build Habit-Forming Products Nir Eyal with Ryan Hoover

by Nir Eyal with Ryan Hoover

What makes the iPhone the most profitable product in the history of the world? How come one out of every seven humans on this planet is on Facebook? What makes these products so much more successful than others? The answer, Nir Eyal says, is that they make us form habits. We don't just view these products as tools we sometimes use; they have quickly become an integral part of our daily lives. Habits are powerful and hard to break; but how does that power translate to products? Nir mentions three things:

Because habits are tough to break, we usually become very loyal and long-time customers of the companies that sell habit-forming products.
Habit-forming products also gain an advantage over the competition, because in order to replace the habit they create, a competitor's product would have to be a lot better to make us break our habit and replace it with a new one.
Lastly, customers of habit-forming products are not very sensitive to price changes, because of 1 and 2, which means the creators can charge a premium and increase prices as they go, without losing a lot of business.

The Importance of Habits in Business

For many companies, turning their products into habits — behaviours requiring no conscious thought — drives a lot of value. This makes loyalty as important as gaining millions of customers.
Once a product has become a habit, it does not require extensive advertising to ensure usage; it is linked to users' emotions and routines.
The result is that users begin considering these products indispensable, which ensures repeated use and, in turn, continued success for the companies that manage to create such products.
But how do successful companies actually go about creating habit-forming products? Is this all chance, or is there a technique to it? This book covers some of the key aspects that any designer or seller of a habit-forming product would do well to keep in mind.

What are Hooks?

Hooks are a series of experiences that can together modify user behavior and encourage formation of new habits.
As we will see, greater accessibility, more data and improved speed of delivery have increased the likelihood of hooks being employed to drive habit formation in our times.
The hooks employed by companies essentially follow a four-phase process called the Hook Model. Successful products go through multiple cycles of these four phases to reach a refined stage where users keep coming back for more on their own, without any need for aggressive marketing by the company.

The Four Phases of the Hook Model are:

Trigger — External or internal cues that prompt certain behaviour
Action — Use of the product, based on ease of use and motivation
Variable Reward — The reason for product use, which keeps the user engaged
Investment — A useful input from the user that commits him to go through the cycle again

The Habit Zone

Benefits of habit-forming:

Getting consumers to form habits related to their products can be critical for many companies to succeed, but it is not necessary for every single company.
For cases where it is needed, and where a company successfully manages to achieve it, habit forming can have a number of benefits. These include:
1. Increased customer lifetime value (CLTV) — the amount of money that the company can make from customers before they move to competing offerings.
2. More flexibility in raising prices or charging for premium services.
3. Supercharged growth by word-of-mouth publicity (characterised by Viral Cycle Time — the amount of time taken by a user to invite another user).
4. Greater competitive edge, because the competition finds it difficult to make inroads, e.g. people continue to use the QWERTY keyboard despite better keyboards available.

But people are creatures of habits, and creating new ones requires them to forget certain old ones.

This means that for new types of behavior to really become ingrained into our decision-making systems, they need to be reinforced again and again.

The benefit is that once you have succeeded in turning your product into a habit, another competing product will find it tougher to displace your product, e.g. Google's ubiquity and synonymity with internet search has meant that products that are not particularly bad, like Bing, have failed to become as popular.

Hooked How to Build Habit-Forming Products Nir Eyal with Ryan Hoover

by Nir Eyal with Ryan Hoover

Because habits are tough to break, we usually become very loyal and long-time customers of the companies that sell habit-forming products.
Habit-forming products also gain an advantage over the competition, because in order to replace the habit they create, a competitor's product would have to be a lot better to make us break our habit and replace it with a new one.
Lastly, customers of habit-forming products are not very sensitive to price changes, because of 1 and 2, which means the creators can charge a premium and increase prices as they go, without losing a lot of business.

The Importance of Habits in Business

For many companies, turning their products into habits — behaviours requiring no conscious thought — drives a lot of value. This makes loyalty as important as gaining millions of customers.
Once a product has become a habit, it does not require extensive advertising to ensure usage; it is linked to users' emotions and routines.
The result is that users begin considering these products indispensable, which ensures repeated use and, in turn, continued success for the companies that manage to create such products.
But how do successful companies actually go about creating habit-forming products? Is this all chance, or is there a technique to it? This book covers some of the key aspects that any designer or seller of a habit-forming product would do well to keep in mind.

What are Hooks?

Hooks are a series of experiences that can together modify user behavior and encourage formation of new habits.
As we will see, greater accessibility, more data and improved speed of delivery have increased the likelihood of hooks being employed to drive habit formation in our times.
The hooks employed by companies essentially follow a four-phase process called the Hook Model. Successful products go through multiple cycles of these four phases to reach a refined stage where users keep coming back for more on their own, without any need for aggressive marketing by the company.

The Four Phases of the Hook Model are:

Trigger — External or internal cues that prompt certain behaviour
Action — Use of the product, based on ease of use and motivation
Variable Reward — The reason for product use, which keeps the user engaged
Investment — A useful input from the user that commits him to go through the cycle again

The Habit Zone

Benefits of habit-forming:

Getting consumers to form habits related to their products can be critical for many companies to succeed, but it is not necessary for every single company.
For cases where it is needed, and where a company successfully manages to achieve it, habit forming can have a number of benefits. These include:
1. Increased customer lifetime value (CLTV) — the amount of money that the company can make from customers before they move to competing offerings.
2. More flexibility in raising prices or charging for premium services.
3. Supercharged growth by word-of-mouth publicity (characterised by Viral Cycle Time — the amount of time taken by a user to invite another user).
4. Greater competitive edge, because the competition finds it difficult to make inroads, e.g. people continue to use the QWERTY keyboard despite better keyboards available.

But people are creatures of habits, and creating new ones requires them to forget certain old ones.

This means that for new types of behavior to really become ingrained into our decision-making systems, they need to be reinforced again and again.