A tiny habit is not working out for an hour everyday. Or a slow and home-cooked meal every day. A tiny habit is much smaller.
Habits are associations that relate aspects of your world to an action. Your brain is a habit creating machine that allows you to perform those actions without having to think. Whenever there is a consistent relationship between the world and an action, and you repeat that action several times, you will develop a habit.
Here’s a quick bite: Lots of offline products are habit-forming. The impulse to watch television at the same time of night, cheer for your local sports team every season, have your favorite cup of coffee from Starbucks each morning, visit your favorite store when you feel stressed or even attend religious services each week are all examples of behaviours we do, with little or no conscious thought, out of habit.
The ultimate goal of a habit-forming product is to solve the user’s pain by creating an association so that the user identifies the company’s product or service as the source of relief. The company must first identify the particular frustration or pain point in emotional terms, rather than product features.
5 reasons why brands should build habit-forming products
Clarity of purpose
Who is your product’s user? What do users really want? What pain is your product relieving? (Internal trigger) What brings users to your service? (External trigger) What is the simplest action users take in anticipation of reward, and how can you simplify your product to make this action easier? (Action) Are users fulfilled by the reward yet left wanting more? (Variable reward) What “bit of work” do users invest in your product? Does it load the next trigger and store value to improve the product with use? (Investment)
Gain more users
Users who continuously find value in a product are more likely to tell their friends about it. Frequent usage creates more opportunities to encourage people to invite their friends, broadcast content and share through word-of-mouth. Hooked users become brand evangelists, bringing in new users at little or no cost. Products with higher user engagement also have the potential to grow faster than their rivals.
Effectiveness of business strategy
Stay competitive in market. User habits are a competitive advantage. Products that change customer routines are less susceptible to attacks from other companies. A classic paper by John Gourville, a professor of marketing at Harvard Business School claims that for new market entrants to stand a chance, they can’t just be better, they must be nine times better. The high bar comes about because old habits die hard and new products and services need to offer dramatic improvements to shake users out of old routines. Products that require a high degree of behaviour change are doomed to fail even if the benefits of using the new product are clear and substantial.
Increase Customer Lifetime Value
Customer Lifetime Value (CLV): 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.
Provide Pricing Flexibility
As customers form routines around a product, they come to depend on it and become less sensitive to price. Habits give companies greater flexibility to increase prices.
How Apple build habits around their ecosystem?
With 1.6 billion devices in use, it may be natural to conclude that devices are the source of Apple’s ecosystem power. This has led some to position the iPhone as the sun in Apple’s ecosystem with other products being the planets revolving around the sun.
The secret to Apple’s ecosystem is that instead of selling products or services, Apple ends up selling experiences made possible by controlling hardware, software, and services.
Instead of thinking of Apple’s ecosystem in terms of the number of people or devices, a different approach is to consider the number of experiences Apple is offering. Having an ecosystem of experiences ultimately represents the biggest challenge to Apple competitors. So, Apple Ecosystem is a unique experience that you’ll get when you have a plethora of Apple devices from their desktops and laptops to their watches and wireless earbuds. Their unique differential factor is that they control the entire stack so they have a unique, tailor-made experience for you.
Bottomline: This is how Apple builds a habit forming brand – Experiences. Using service design Apple build the entire ecosystem seamless. Through well-designed services, providers hope to build and maintain a relationship with you, the customer. This relationship means that they can predict their revenue better, re-invest in improving customer experiences, up-sell and introduce new products and services more effectively to their existing customer base.
How to build habit-forming products ?
Habits are good for business. In fact, many industries could not survive without them. The incentive systems and business models of the companies that make habit-forming products require someone gets hooked. Without consumer habits, these habit-forming businesses would go bust. Here is how you can get your people “hooked“.
💡 Did You Know? Larry Page, CEO of Alphabet (the company formerly known as Google), has a quirky way of deciding which companies he likes. It’s called “The Toothbrush Test.” According to the New York Times, when Page looks at a potential company to acquire, he wants to know if the product is, like a toothbrush, “something you will use once or twice a day.”
Catchy Content Creates Habits
The first way is by making a habit of consuming great content. Frequency is Key. Habits are most likely to take hold when a behavior occurs frequently. It can take anywhere from 18 to 254 days for a person to form a new habit and an average of 66 days for a new behavior to become automatic.
Don’t just think about how to get customers to check out. If you want repeat engagement, you’ve got to find ways to get them to check in.
Another way infrequently used products form a habit is by building a community. Let’s say you’ve got a product people tend to buy just once a year — like Christmas ornaments. One might assume interest in such a product is nil for 11 months of the year.
However, for members of Hallmark’s Keepsake Ornament Club, engagement with (and revenue from) the seasonal product goes strong year ’round. The Keepsake Ornament Club (or KOC as members call it) is a surprising example of the power of community.
As examples, Eyal says, “When we’re lonely, we check Facebook. When we’re uncertain, we search Google. When we’re bored, we watch videos on YouTube. With each habit there is an underlying uncomfortable emotional state.”
Use Good Triggers
A trigger is the actuator of behavior — the spark plug in the engine. Triggers come in two types: external and internal. Habit-forming products start by alerting users with external triggers like an email, a website link, or the app icon on a phone.
When a message prompts users to act the moment they feel the urge, that’s magic. Help customers repeat a new behavior enough times for a habit to form. Get to know how your customers interact with you and work to create that practice for them.
Here are four types of external triggers:
- Paid Triggers (advertising through various channels, mainly used to acquire new users)
- Earned Triggers (press mentions and features, usually acquired through media relations built over time)
- Relationship Triggers (the audience sharing the benefit of the product with others — virality, in one word)
- Owned Triggers (newsletters and notifications that the user has opted in to receive)
Make the Habit Simple
The goal is to make the key behavior as simple as possible. As much as your customers may like your business, they do not want to have to think about every interaction they have with you. Not only is it frustrating for customers to have to relearn how to do something they used to be able to do without thinking, each time your customer has to think, it opens up an opportunity for them to think about switching to a competitor.
Consider the six factors of simplicity:
- Time: Is the user short on time?
- Money: Is behaviour too expensive?
- Physical Effort: Is the action too labour-intensive?
- Brain Cycles: Is the product too difficult to understand?
- Social Deviance: Is the action perceived as socially inappropriate?
- Non-Routineness: Is the action outside of the user’s regular routine?
Find Ways to Stay Attractive
Research shows that levels of the neurotransmitter dopamine surge when the brain is expecting a reward. Introducing variability multiplies the effect, creating a focused state, which suppresses the areas of the brain associated with judgment and reason while activating the parts associated with wanting and desire. Although classic examples include slot machines and lotteries, variable rewards are prevalent in many other habit-forming products.
If your customers need to use your product or service regularly, then you need to make sure it stays in their environment. For service companies, this means finding ways to stay front-of-mind. For product companies, make products attractive enough to be kept out rather than put away in a closet or drawer.
- Rewards of the tribe: Our brains are adapted to seek rewards that make us feel accepted, attractive, relevant, and included. Tweets, likes, upvotes, re-pins, comments, emails, they all fuel our needs for social validation.
- Rewards of the hunt: Satisfying our basic survival instincts by helping us acquire things we consider important, like cash and information. Working hard for a bonus at work or scrolling through our endless Twitter feed for valuable information are included in this category.
- Rewards of the self: The intrinsic rewards of self can make people continue taking action, even on tasks they don’t appear to enjoy for a more personal form of gratification. Such rewards address our desire for mastery, competence, and completion.
Get Users to Invest
Perhaps the most frequently neglected step in building a habit-forming product is asking for an appropriate investment. It also represents the biggest opportunity companies often miss. The investment occurs when the user puts something into the product or service such as time, data, effort, social capital, or money.
By understanding the psychology of habits, Eyal says that companies can help their customers live better while also improving the business bottom line.
There are mental shortcuts that all of us employ to make investments:
- The scarcity effect — the scarcer a product is, the higher is its perceived value, e.g. the ‘limited stock’ tag on Amazon products ends up increasing sales for those products.
- The framing effect — context can alter the desirability of a product, e.g. the same wine is reported to be tastier if the price is increased.
- The anchoring effect — one aspect of a product is given undue importance over other features, e.g. people end up buying more products of a brand that has a discount sticker on it, even if its quality and the effective cost might be no different than other competing products in the vicinity.
- The endowed progress effect — in case of reward programs, the closer users feel they are to the goal the more motivated they become, e.g. the ‘Improve Your Profile Strength’ step in LinkedIn has a completion bar that starts off all users with part of the bar already filled, strengthening their belief that a full profile is not far away.
Some habit forming brands probably on your phone right now!
Headspace (Mental Health)
MyFitnessPal (Physical Health)
Pokémon Go (Game)
Build a habit forming product today!
The combination of a business to drive shareholder value by increasing customer lifetime value along with the identification of the most loyal customers, means companies spend significant resources competing for a small set of “heavy users.” Habit-forming businesses are therefore highly motivated to hook customers – and keep them using their products for as long as possible.
The habits we form with the products we use every day is not a coincidence—it’s by design. We can use the psychology of habits for good.