Hooked - Chapter 1 - The Habit Zone
With Chapter 1, Nir delves deeper into the psychology of habits in what he refers to as "The Habit Zone" and how habits can be beneficial for companies. He also discusses the "Habit Zone", an important measurement guide to creating habits.
Example of Habit
He gives an example of running - he always runs in the morning, and he had to run in the evening one day. He habitually said "Good Morning", and afterwards even shaved his face - all signs that his morning routine of running was a habit and just running on autopilot.
By some estimates - habits guide nearly half of our daily actions.
Habits allow us to focus on other things by storing automatic responses in the basal ganglia, an area of the brain associated with involuntary actions.
For business - habit-forming products change user behavior and create unprompted user engagement (i.e. customers will us your product on their own!)
"You can determine the strength of a business over time by the amount of agony they go through in raising prices" - Warren Buffet - This is to say that if users form routines around a company, they become less sensitive to price increase.
** Example: F2P games - ask user to pay later once they have already formed habits around the game.
Frequent usage creates opportunites to encourage people to invite friends, broadcast, etc.
VCT - Viral Cycle Time - Amount of time it takes user to invite another user - Important factor to increasing growth.
It's hard to get rid of old behaviors - "many innovations fail because consumers irrationally overvalue the old while companies irrationally overvalue the new". - Companies that wish to disrupt old habits need to be 9X more innovative, not just a little innovative, because even products that are better in some aspects will have resistance from users to upgrade if they have to replace a whole new set of habits!!! Example - Bing vs Google. Google is still de facto standard because that's what people know - if anything about it changed it would disrupt.
Behaviors are LIFO - Newer behaviors are first to go, older ones last.
Nir discusses Amazon's model of showing competitors' prices on their site - this actually increases trust in Amazon and makes it more likely for customers to continue to come to Amazon and buy their products. Insurance companies like Progressive do this as well.
The Habit Zone
Determine habit-forming potential by plotting two factors:
1) Frequency - how often behavior occurs
2) Perceived utility - How useful it is.
* Vertical axis - Even behavior that has minimal perceived benefit can become a habit if it occurs frequently enough. (how frequent? specific to each business).
Vitamin vs PainKiller
* Painkiller - solve obvious need, relieving specific pain, and often have quantifiable markets
* Vitamin - do not necessarily solve obvious pain point. Instead they appeal to users' emotional rather than functional needs.
A habit is when not doing an action causes a bit of discomfort
Habit-forming products create associations in users' minds - and that the solution to their pain may be found in your product's use.
Is a habit-forming services a painkiller or vitamin? Both - At first seem at offering nice-to-have vitamins, but once the habit kicks in, they provide an ongoing pain remedy.
NOTE I thought this was interesting: Evidence that shows vitamins may do more harm than good? - https://www.nytimes.com/2013/06/09/opinion/sunday/dont-take-your-vitamins.html
Remember and Share
* For some businesses, forming habits is critical component to success, but not every business requires habitual user engagement.
* When successful, forming strong user habits can have several business benefits including: higher customer lifetime value (CLTV), greater pricing flexibility, supercharged growth, and a sharper competitive edge.
* Habits cannot form outside the Habit Zone, where the behavior occurs with enough frequency and perceived utility.
* Habit-forming products often start as nice-to-haves (vitamins) but once the habit is formed they become must-haves (painkillers).
* Habit-forming products alleviate users' discomfort by relieving a pronounced itch.
* Designing habit-forming products is a form of manipulation. Product builders would benefit from a bit of introspection before attempting to hook users to make sure they are building healthy habits , not unhealthy addictions (more in chapter 8)
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