Habit Forming Products (Hooked)

Lecture 2

Forming a Habit - Two Things form a habit:

- 1) Frequency

- 2) Attitude change

- Frequency: people who continue frequently for along time do the same behavior

Forming a Habit (cont.)- Attitude change: people who perceive the behavior differently

continue to do the same habit for along time

- E.g. people who say to themselves i don’t want to floss because it’s dentist job but then he feel weird to go to bed without flossing

- Those are the people who sustain the new behavior

Why habits matter for our business

Why habits matter for our business- 1) creating consumer habit drives higher customer lifetime value

(CLTV):

- If customer uses a product for a long time he adds to the bottom line every month

- They make money of their use so the CLTV become higher

Why habits matter for our business (cont.)- 2) creating consumer habit give companies greater flexibility to

increase prices:

- When user use a product frequently it become a routine

- Company has a flexibility to increase price so company can be profitable

Why habits matter for our business(cont.) - 3) creating consumer habit supercharge growth:

- Habit is very important part of growth

- Every company want to find a way to go viral

- Virality without engagement isn’t good enough

- Growth without engagement is called leaky bucky business:

- Customers come in, customers go out unless we have engagement

Why habits matter for our business(cont.) - 3) Creating consumer habit supercharge growth:

- More important than virality itself is viral cycle time

- Viral cycle time: if we get users to use products more frequently we can lower the time between how long to tell friends about the product

- And as a result the product will be viral

Why habits matter for our business(cont.) - 3) Creating consumer habit supercharge growth:

- Growth is necessary but not sufficient

- Virality can be one tool to grow

- The more the users use the product the faster the chances to supercharge growth

Why habits matter for our business(cont.) - 4) Creating consumer habits increase defensibility

- The more the customer rely on the product it becomes a part of their daily routine

- So it will become very difficult for a competitor to come and take that customer

- The more the customer invest on the product the more it become a daily routine increase the defensibility of the product

Habits

Habits- Habits is good for customers and for the business but it is very hard

to form a habit

- Finding a technology to create a new habit is exceptionally rare

Habit

Habit- “Unprompted user engagement”: The act of a customer interacting

without even thinking about it

- E.g checking email,opening facebook or twitter without thinking why am i doing this particular action

Habit- Plenty of businesses don’t require habit

- Those businesses can use ads, word of mouth or any other way to bring customers into the app

Building products- State of the quo in how new products are built is listen to customer

feedback

- Habit forming product is about learning new way to form hypothesis of what you should build

- The new way of forming hypotheses come from customer psychology, how people think and how they behave

Building products- The new way of forming hypotheses come from customer

psychology, how people think and how they behave

- This is to increase your odds of success

- The difference between success and failure is building the staff user want

Hook

Hook

Hook- Hook is a model to create habits with product users

- Hook is an experience designed to connect user’s problem with your solution with enough frequency to form a habit

- Hook is a model to better build product hypothesis

Sources- How to Build Habit-Forming Products course by Nir Eyal (Lecture 2)