Review
A must read. If you build any kind of products, you need to read this book.
tl;dr
Customers are less price-sensitive about products around which they have formed habits. They increase the dependency by storing value in the product. Two factors for habits: frequency and utility. The more users invest time and effort into a service, the more they value it. Identify habitual users, codify the steps they took (“Habit Path”) and modify the product to fit the new insights.
Summary
The Habit Zone
- fostering consumer habits is an effective way to increase Customer Lifetime Value
- as customers form routines around a product, they become less price-sensitive
- new products need to offer dramatic improvements to shake users out of old routines
- users also increase their dependency on habit-forming products by storing value in them
- two factors: frequency (how often) and utility (how useful/rewarding)
- habit zone:
- a habit is when not doing an action causes a bit of pain
- pain = itch which causes discomfort until satisfied
Trigger
- triggers cue the user to take action and are the first step in the Hook Model
- types of triggers
- external triggers: paid (marketing), earned (free media), relationship (referrals), owned (piece in user’s environment)
- internal triggers: emotions, positive and negative
- in the case of internal triggers, the information about what to do next is encoded as a learned association in the user’s memory (takes day or weeks of frequent usage)
- identify particular frustration or pain-point in emotional terms
- write user narratives: stories from the user’s side
Action
- to initiate action, doing must be easier than thinking
- Fogg behavior model Behavior = Motivation x Ability x Trigger
- motivation is energy for action
- core motivators: seeking pleasure/avoiding pain, seeking hope/avoiding fear, seeking social acceptance/avoiding rejection
“Take a human desire, preferable one that has been around for a really long time… Identify that desire and use modern technology to take out steps.” – Evan Williams
- remove steps until you reach the simplest possible process
- six elements of simplicity: time, money, physical effort (labor), brain cycles (mental effort), social deviance, non-routine (disruption)
- greatest return on investment is generally from increasing a product’s easy-of-use
- scarcity study showed that a product can decrease in perceived value if it starts off as as scarce and becomes abundant
- perception can form a personal reality based on how a product is framed, even when there is little relationship with objective quality (the framing effect)
- people often anchor to one piece of information when making a decision (the anchoring effect)
- when people believe they’re nearing a goal, it increases motivation (the endowed progress effect)
Variable Reward
- what draws us to act is not the sensation we receive from the reward itself, but the need to alleviate the craving for that reward
- to hold our attention, products must have an ongoing degree of novelty (variability)
- three types of rewards: Tribe (social), Hunt (resources, information), Self (mastery, competence)
- maintaining a sense of user autonomy is a requirement for repeat engagement (“but you are free to accept or refuse”)
- variable rewards must satisfy users’ needs, while leaving them wanting to re-engage with the product
Investment
- the more users invest time and effort into a service, the more they value it (IKEA effect)
- little investments can lead to big changes in future behaviors
- three tendencies influence our future actions: effort investment, being consistent with past behaviors, avoiding cognitive dissonance
- investments are about the anticipation of longer-term rewards, not immediate gratification
- asking users to do a bit of work (invest) comes after users have received variable rewards
- leverage user’s understanding that the service will get better with use (and personal investment)
5 fundamental questions:
- 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 it? (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 tha value to improve the product with use? (Investment)
Manipulation Matrix
- Facilitator (useful to users, uses the product)
- Dealer (not useful to users, doesn’t use the product)
- Entertainer (not useful to users, uses the product)
- Peddler (useful to users, doesn’t use the product)
- “humblebrag” – a reward in portraying oneself in a positive light; people are willing to forgo money to disclose about the self
Habit Testing
Step 1 – Identify habitual users (min 5%)
Step 2 – Codify steps the users took to understand what hooked them (find the “Habit Path”)
Step 3 – Modify the product to fit the new insights.
Discovering Habit-Forming Opportunities
- “scratch your own itch”
- look into the future and new interfaces