Hooked

How to Build Habit Forming Products

By Nir Eyal

If you need to check your phone every 15 minutes for emails or texts, or can’t start your day without a $4 latte fix, then you know what it’s like to be hooked. But how did you get to that point? How did your behavior become a habit? What keeps you coming back for more?

According to Nir Eyal, you were snared by a four-phase process he calls the Hook Model - something triggered your interest, and you responded with a particular action that earned some kind of reward, which led you to invest in repeating the process.

If you can tap into this sequence and apply it to your own business, you too could become the purveyor of the next habit forming product.

Nir Eyal is an expert in the science of influencing human behavior, teaching at Stanford at the intersection of psychology, technology and business. He’s also an advisor to several Bay Area

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startups, venture capital firms and incubators.

His book is a guide to building products that people can’t put down.

Why Habits are Good for Business

Cognitive psychologists define habits as “automatic behaviors triggered by situational clues” but, more colloquially, Eyal thinks of them as responses to a nagging “itch” that we just have to scratch, almost without thinking.

Habits probably account for nearly half of our daily actions, enabling us to focus our attention on other things.

Habit-forming products are good for business because:

• They increase Customer Lifetime Value - the amount of money made from a customer before they switch products or die.

• They provide Pricing Flexibility by reducing user sensitivity to price increases.

• They supercharge Growth because customers encourage others to use them.

• And they sharpen your Competitive Edge because, once hooked, habitual users are reluctant to change. Old habits die hard.

Inside the Habit Zone

Two ingredients contribute to a behavior’s habit-forming potential - how often it’s likely to occur (frequency) and how useful and rewarding the behavior is to the individual (utility).

A behavior that occurs with enough frequency and utility is said to be in the Habit Zone.

Eyal believes that, in most cases, frequency has to be at least once daily. Utility, on the other hand, is harder to quantify since it relates to the degree to

which we feel the need to scratch the itch.

With utility he draws a distinction between the concepts venture capitalists euphemistically call “vitamins” and “painkillers.” Put simply, a vitamin is nice-to-have and a painkiller is a gotta-have.

“Pain” here is a broad term, but if your cell phone vibrates when a text arrives and, for some reason, you can’t check it, you know what the author is talking about.

Hook Model Phase 1 - Triggers

There are two types of triggers which spark action: external and internal triggers.

The process begins with external triggers like advertising calls to action (paid triggers), favorable press mentions (earned triggers), word of mouth referrals (relationship triggers) and apps on your smartphone screen (owned

triggers).

They all call you to action, prompting repeated engagement until a habit is formed. Then internal triggers, like recurring thoughts or feelings, take over. “When a product becomes tightly coupled with a thought, an emotion or a pre-existing routine, it leverages an internal trigger.”

“Emotions, particularly negative ones, are powerful internal triggers and greatly influence our daily routines,” Eyal explains. “Feelings of boredom, loneliness, frustration, confusion, and indecisiveness often instigate a slight pain or irritation and prompt an almost instantaneous and often mindless action to quell the negative sensation.”

The photo-sharing app Instagram provides a good example of how external and internal triggers mesh to create a habit. An individual might begin to use it on the recommendation of a friend or a

blogger (relationship triggers), or perhaps through its promotion in an app store (earned trigger).

When they look at their smartphone screen, the app’s icon presents itself (owned trigger) and pretty quickly, they’re snapping and sharing photos. Now the internal triggers take over. Perhaps a desire for recognition or the fear of losing a special moment prompts a pang of anxiety that’s eased by snapping the photo.

Hook Model Phase 2 - Action

If you want people to take action, make things as simple as possible for them.

“Make your product so simple that users already know how to use it, and you’ve got a winner,” Eyal declares.

But simplicity is only part of the process. You also need to motivate people by influencing their

thinking about your product and their need for it.

Consider, for example, employing the scarcity effect like Amazon does when it declares on a product page “only 14 left in stock.” This hits the panic trigger.

Then there’s the framing effect, which refers to the way we perceive something according to the context in which it is presented.

For example, people may believe that a particular wine is of high quality (perception) because it is has been presented to them as expensive or highly rated by connoisseurs (the context). An experiment that monitored brain activity during a wine tasting showed how the pleasure regions of tasters’ brains became increasingly stimulated as they sampled what they believed to be more and more expensive wines. In fact they were tasting the same wine each time.

Another motivator is the anchoring effect, where

deals are made to look sweeter than they really are (for example: 30% off or buy-one-get-one-free) when the actual value is already priced into the “deal.”

The endowed progress effect is seen in coffee shop punch cards which keep us coming back for more. Here’s one interesting quirk about this effect. Research shows that if you inflate the number of punches required for a free coffee, but then give the customer those punches back “for free,” they’re 82 percent more likely to participate in the program.

Hook Model Phase 3

Variable Reward

Underlying all of these motivators is a pay-off, a feeling that we’re being rewarded. There has to be a reward for almost every action we choose to (rather than have to) take. If it isn’t good enough,

we’re likely to avoid doing it. If it’s pleasurable, we’re likely to want to do it again.

However, if the reward we receive is always the same, “we are like children in that once we figure out what will happen next, we become less excited by the experience,” says Eyal. Experiments have shown that variability increases activity in the brain’s pleasure center, so habit-forming products must have an ongoing degree of novelty, even unpredictability.

There are three types of variable rewards:

First, there are rewards of the tribe, feelings of acceptance and importance that we crave. “With every post, tweet, or pin, users anticipate social validation,” the author writes. “Rewards of the tribe keep users coming back for more.”

Second are rewards of the hunt. We actually get a kick out of the acquisition process. For example, even though we know the odds are against us,

we play slot machines for the unpredictability and variability of the rewards, or we scour our Facebook timelines in search of items of unexpected interest.

Finally, there are rewards of the self. Being driven to conquer obstacles just for the satisfaction of doing so is a part of human nature. That’s why we complete puzzles that have no prizes, play video games, and push ourselves to acquire more knowledge and understanding in subjects that have no immediate tangible benefits.

Hook Model Phase 4 - Investment

The more time, money or energy a person invests in a product or service, the more they’re likely to stay committed to it over time.

The big idea here is to leverage the user’s expectation so the reward they’re getting will improve with use. So, for example, Twitter

users invest their time following others with an expectation that others will reciprocate and their own social standing will grow.

The commitment of Facebook users involves writing status updates, posting photos, reading and “liking” others’ contributions.

“The collection of memories and experiences, in aggregate, becomes more valuable over time and the service becomes harder to leave as users’ personal investment in the site grows,” the author writes.

Building our online reputation on social networking sites and Internet sales sites like eBay and Amazon are also part of the investment process. We work to maintain our high feedback rating knowing that reputation can be a deciding factor on others’ willingness to deal with us.

The process, whether it’s acquiring rewards, knowledge or feedback, becomes a sort of

intangible asset that we can think of as stored value.

Even investing time learning how to use products like complex software programs stores value. This is because we don’t want to commit more time learning an alternative program after already committing so much time and energy to the first one.

Product designers should concentrate the investment they want from users into small chunks, starting with small, easy tasks and building up to harder tasks during successive cycles of the Hook Model.

Could You, Should You?

When considering whether or not to develop a new product, ask these five questions:

1. What pain will it relieve (internal trigger)?

2. What will bring the user to you (external trigger)?

3. What is the simplest action a user can take in anticipation of a reward, and can it be simpli-fied further (action)?

4. Are users fulfilled by the reward yet left wanting more (variable reward)?

5. What will users have to do to invest in the product and does their action store value to im-prove their experience over time?

Even if all of these questions can be answered in the positive, one other question should be asked when deciding whether a habit-forming product should be developed or not - the moral one.

The Moral Question

Eyal stresses that being hooked isn’t the same as being addicted. But both involve manipulation,

which can have a positive or negative vibe.

To shed more light on the Moral Question, he developed a manipulation matrix based on the answer to two questions: Would I use the product myself and will it help users materially improve their lives?

Superimposed on the matrix, are the answers to these questions which produce four types of manipulators: facilitators, peddlers, entertainers and dealers.

The facilitator is morally and practically the best option. You produce a product you would use and which also materially improves the end user’s life.

“(T)he well documented stories of the founders of Facebook and Twitter reveal they would likely see themselves as making products in the facilitator quadrant,” says Eyal.

Other examples might be products that encourage exercise, collaboration in the workplace and good parenting.

There’s nothing inherently wrong with being a peddler. You might have a strong motivation to improve the lives of others while not being suited to use the product yourself, as is the case with advertisers.

One drawback of being a peddler is that they sometimes fall short because they don’t fully understand their users - not being one of them, themselves.

Being an entertainer is okay morally, but it has it practical limitations. “Entertainment is a hits-driven business because the brain reacts to stimulus by wanting more of it,” the author writes.

Entertainment is an art and art is fleeting, which means its appeal can fade quickly and the user is ever-hungry for change and novelty. You have to keep up with demand and keep the pipeline full of fresh ideas.

Finally, the dealer is a master practitioner of exploitation, whose products inhabit the borderland of addiction.

Eyal says: “Certainly, there is money to be made addicting users to behaviors that do little more than extract cash; and where there is cash, there will be someone willing to take it.

“The question is: Is that someone you? Casinos and drug dealers offer users a good time, but when the addiction takes hold, the fun stops.”

Bible Study

In the closing stages of the book, Eyal devotes a chapter to a case study of a mobile app that takes users repeatedly through the Hook Cycle.

Simply called Bible, it’s a testimony to how a tech company, YouVersion, created a powerful user habit while staying true to the moral calling of founder Bobby Gruenwald.

The foundation of the app is the text of the Bible. It sends out daily readings and reminders. Preachers can also post their sermons for members of their congregations to follow and store.

But its particular strength is the ability of users to choose a themed reading plan, perhaps relating to a problem or issue they’re grappling with, and receive timely messages on the subject.

Initially, external triggers create the impetus for using the app. These might include becoming

aware of it via a friend’s recommendation (relationship trigger) or via publicity surrounding its success (earned trigger). Once installed on a mobile device, the presence of the screen icon and the reminders it issues repeatedly prompt users to use it (owned triggers).

The result: The app has been downloaded onto more than 100 million devices, and 66,000 people open it every second.

The repeated reminders and messages build up a subconscious internal trigger to check the latest reading or message, and the actions of reading, sharing and discussing follow naturally. The reward is a sense of validation, reassurance and social belonging.

Users invest time and thought to t he issues raised in the app and they may even modify their behavior because of it. Then, at the end of each day, they receive encouraging messages

like “Day complete!” which reignites the internal triggers to repeat the action the following day. It’s a manifestation of the endowed progress effect - users want to avoid skipping a day.

And, as Eyal notes: “(T)he more readers put into the Bible app in the form of small investments, the more it becomes a repository of the history of their worship.” In other words, the time they’ve invested, the progress they’ve made and the lessons they’ve learned represent a store of value.

Food For Thought

At the end of each chapter, Nir Eyal shares some takeaways to get you thinking about how you might apply his concepts.

To develop a habit forming product, answer the following questions:

• What habits does your business model

require?

• What problem does your product solve?

• How do users currently solve that problem and why does it need a different solution?

• How frequently do you expect users to engage with your product?

• What behavior do you want to make into a habit?

To develop triggers for that product, answer these questions:

• Why would someone want to use your product? What’s the “itch” they need to scratch? Why do they have that itch? Use the five whys technique (ask “Why?” five times) to drill deeper down into their underlying drives.

• What are the internal (emotional) triggers that make them want to scratch that itch?

• What are at least three ways to (externally) trigger your user with technology (e.g., emails and texts) into using your product?

On the action front, what is holding users back? Is it time, money or effort? What could you do to make taking action easier for them?

Brainstorm ways to heighten rewards via social approval (rewards of the tribe) possessions (rewards of the hunt) and competency (rewards of the self). And learn from your existing customers by asking them what they enjoy about your products.

For the investment phase, Eyal suggests looking at existing products and identifying actions that increase the likelihood of them coming back for more. For example, do they have to commit time or money to make progress, carry out research or get feedback? How can you harness this? And are there ways you can help them store value - for

example by enhancing their expertise or reputation from using your product?

In terms of idea development, consider where your ideas fall in the manipulation matrix. “Ask yourself if you are proud of the way you are influencing the behavior of others,” he urges.

Looking for Habit-Forming Opportunities

Creating user habits is easier said than done.

Through discussions with entrepreneurs at many successful habit-forming companies, Eyal has distilled their techniques into a three-step process he simply calls Habit Testing.

First you must identify your habitual users, determine what it means to be a devoted user and consider how often the product should be used.

Second, you codify, or identify, the steps users took or would need to take to create the habit, and

what hooked them. If you already have habitual users, are there similarities in the actions they all took to become loyal users? In other words, is there, what the author labels a Habit Path?

You can also learn a lot by studying habit formation in other successful ventures. For instance, Twitter discovered that once new users followed 30 other members, they hit a tipping point at which they became much more frequent and active users.

Third, you might need to modify your product based on the information found in two previous steps. Do you need to add or remove features or simplify the user process? And are there better ways to nudge new users down the Habit Path?

Finally, if you’re looking for inspiration for a new product, consider these questions:

• What problem do I wish someone else would solve for me?

• Which seemingly niche products could be ripe for introducing to a broader market? What are early adopters using?

• What new technologies will simplify people’s behaviors and actions?

• How might I simplify an existing task by changing the way people do it? (Think of the way Google’s interface revolutionized the search process.)

Conclusion

Although the subtitle of this book suggests the Hook Model can apply to a wide range of products, the content and thrust of Eyal’s thinking seem to be directed mainly at tech products and applications.

Certainly that’s where the most convincing examples are found. But a little serious thinking

could apply the idea to almost any product or service as long as you invoke the Hook’s key components - trigger, action, reward and investment.

Map these out for your product, identify which category of reward they satisfy and test them against the manipulation index. Then you might just have the formula for the Next Big Thing.