Habit-forming Products: What’s in the Secret Sauce?

With the ever-advancing technology we have nowadays, barriers to entry have become lower for almost all industries compared to a decade ago. Competition is increasingly fierce and a product can no longer differentiate itself from the crowd by simply being “good”. It needs some extra spice, something that entices customers, gets them hooked and keeps them coming back for more. In other words, a truly good product should possess a habit-forming attribute.

It sounds like an easy concept, but what does it take to change customers’ behavior and make them use a product out of habit?

Habit is defined as “a mode of behavior acquired by frequent repetition and has become nearly involuntary”. As human beings, we all have different habits and most of these habits are performed nearly or completely unconsciously. Nir Eyal, lecturer at Stanford and author of Hooked: How to Build Habit-Forming Products, says that habits are a powerful and invaluable thing for business because once it is built into a product, customers no longer require expensive advertising or spammy emails to reach it: They become engaged users and loyal supporters of the product.

Eyal argues that habits are formed due to pain points. A pain point is a problem that customers have and are actively looking for solutions to address. To help customers form a habit, a product needs to present a hook –  something that can connect customers’ problem to the company’s solution with enough frequency to form a habit. A hook is comprised of the following 4 components:

1.    Trigger – The goal of any habit-forming product is to create a trigger by mentally associating emotions or problems with the product. When such a trigger is formed, every time customers feel a certain emotion or face a certain problem, they will automatically reach for a product with little conscious thought. For example, YouTube is used for boredom, Facebook for loneliness, Google for problems, Fitbit for improving fitness.

2.    Action – The trigger prompts customers to take the intended action – reaching and using the product. To increase the likelihood of customers taking this action, this needs to be as easy as possible. Pinterest is a great example in this case because it reduces user action to simply selecting (pinning) things they like when surfing the web, automatically creating various lists quickly and effortlessly.

3.    Variable reward – After taking the intended action, customers will be rewarded by having their pain point resolved. Rewards alone, however, are not enough to create desire and form a habit. The trick here is to introduce variability and construct multiple levels of reward. This is because human beings are actually more motivated by the anticipation of reward than by the reward itself. Lotteries and gambling games are classic examples. Such variability keeps customers coming back in the future in order to obtain the highest level of reward.

4.    Investment – Lastly, to ensure the habit lasts in the long term, customers need to be engaged enough to invest in the product. This investment is generally some combination of time, data, social capital, or money. Fitbit is a great example when it comes to user investment. The fitness tracker makes it extremely easy and fun for a user to record various health-related data and activities on a daily basis. The more data it collects, the more valuable it becomes to that particular user because the resulting graphs and analyses are completely personalized. The user can also use these data to compete with friends who use Fitbit. Such user investment can help turn a product into a habit quickly and sustainably.

Different products have different ways to become habits for their customers. Additionally, a product does not need to be habit-forming for all of its customers. As long as there is a core user base in that habit-forming area, and the user base is growing continuously, the product will be able to grow and evolve. Of course, not all products need to be habit-forming to become viable and successful, but if leveraged in the right situation, habit formation becomes the secret sauce for cooking up a competitive product in an increasingly crowded market.

 

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