Hooked: How to Build Habit-Forming Products

by Nir Eyal

Through consecutive Hook cycles, successful products reach their ultimate goal of unprompted user engagement, bringing users back repeatedly, without depending on costly advertising or aggressive messaging.

The Hooked Model

REMEMBER & SHARE Habits are defined as “behaviors done with little or no conscious thought.” The convergence of access, data, and speed is making the world a more habit-forming place. Businesses that create customer habits gain a significant competitive advantage. The Hooked Model describes an experience designed to connect the user’s problem to a company’s product frequently enough to form a habit. The Hooked Model has four phases: trigger, action, variable reward, and investment. 1 The Habit Zone When I run, I zone out.

Habits form when the brain takes a shortcut and stops actively deliberating over what to do next.3 The brain quickly learns to codify behaviors that provide a solution to whatever situation it encounters.

Habit-forming products change user behavior and create unprompted user engagement. The aim is to influence customers to use your product on their own, again and again, without relying on overt calls to action such as ads or promotions. Once a habit is formed, the user is automatically triggered to use the product during routine events such as wanting to kill time while waiting in line.

MBAs are taught that a business is worth the sum of its future profits. This benchmark is how investors calculate the fair price of a company’s shares.

customer lifetime value (CLTV): the amount of money made from a customer before that person switches to a competitor, stops using the product, or dies.

Some products have a very high CLTV. For example, credit card customers tend to stay loyal for a very long

Warren Buffett once said, “You can determine the strength of a business over time by the amount of agony they go through in raising prices.”4 Buffett and his partner, Charlie Munger, realized that as customers form routines around a product, they come to depend upon it and become less sensitive to price. The duo have pointed to consumer psychology as the rationale behind their famed investments in companies like See’s Candies and Coca-Cola.5 Buffett and Munger understand that habits give companies greater flexibility to increase prices.

Once the compulsion to play is in place and the desire to progress in the game increases, converting users into paying customers is much easier. The real money lies in selling virtual items, extra lives, and special powers. As of December 2013, more than 500 million people have downloaded Candy Crush Saga, a game played mostly on mobile devices. The game’s “freemium” model converts some of those users into paying customers, netting the game’s maker nearly $1 million per day.6

Hooked users become brand evangelists—megaphones for your company, bringing in new users at little or no cost.

Facebook’s success was, in part, a result of what I call the more is more principle—more frequent usage drives more viral growth. As David Skok, tech entrepreneur turned venture capitalist, points out, “The most important factor to increasing growth is … Viral Cycle Time.”7 Viral Cycle Time is the amount of time it takes a user to invite another user, and it can have a massive impact. “For example, after 20 days with a cycle time of two days, you will have 20,470 users,” Skok writes. “But if you halved that cycle time to one day, you would have over 20 million users! It is logical that it would be better to have more cycles occur, but it is less obvious just how much better.”

Many entrepreneurs fall into the trap of building products that are only marginally better than existing solutions, hoping their innovation will be good enough to woo customers away from existing products. But when it comes to shaking consumers’ old habits, these naive entrepreneurs often find that better products don’t always win—especially if a large number of users have already adopted a competing product.

A classic paper by John Gourville, a professor of marketing at Harvard Business School, stipulates that “many innovations fail because consumers irrationally overvalue the old while companies irrationally overvalue the new.”

Gourville claims that for new entrants to stand a chance, they can’t just be better, they must be nine times better. Why such a high bar?

the technology I am using to write this book is inferior to existing alternatives in many ways. I’m referring to the QWERTY keyboard which was first developed in the 1870s for the now-ancient typewriter. QWERTY was designed with commonly used characters spaced far apart. This layout prevented typists from jamming the metal type bars of early machines.9 This physical limitation is an anachronism in the digital age, yet QWERTY keyboards remain the standard despite the invention of far better layouts. Professor August Dvorak’s keyboard design, for example, placed vowels in the center row, increasing typing speed and accuracy. Though patented in 1932, the Dvorak Simplified Keyboard was written off. QWERTY survives due to the high costs of changing user behavior.

Switching to a new e-mail service, social network, or photo-sharing app becomes more difficult the more people use them. The nontransferable value created and stored inside these services discourages users from leaving.

Experiments show that lab animals habituated to new behaviors tend to regress to their first learned behaviors over time.10 To borrow a term from accounting, behaviors are LIFO—“last in, first out.” In other words, the habits you’ve most recently acquired are also the ones most likely to go soonest.

the more frequently the new behavior occurred, the stronger the habit became. Like flossing, frequent engagement with a product—especially over a short period of time—increases the likelihood of forming new routines.

In a head-to-head comparison of the efficacy of an incognito search, the products are nearly identical.15 Even if the geniuses at Google have in fact perfected a faster algorithm, the time saved is imperceptible. So why haven’t more Google users switched to Bing? Habits keep users loyal. If a user is familiar with the Google interface, switching to Bing requires cognitive effort. Although many aspects of Bing are similar to Google, even a slight change in pixel placement forces the would-be user to learn a new way of interacting with the site. Adapting to the differences in the Bing interface is what actually slows down regular Google users and makes Bing feel inferior, not the technology itself. Internet searches occur so frequently that Google is able to cement itself as the one and only solution in the habituated user’s mind. Users no longer need to think about whether or not to use Google;

consumers’ preference for an online retailer increases when they are offered competitive price information.18 The technique has also been used by Progressive, the car insurance company, to drive over $15 billion of annual insurance sales, up from just $3.4 billion before the tactic was implemented. By allowing users to comparison shop from within the site, Amazon provides tremendous perceived utility to its customers.

company can begin to determine its product’s habit-forming potential by plotting two factors: frequency (how often the behavior occurs) and perceived utility (how useful and rewarding the behavior is in the user’s mind over alternative solutions).

As represented in figure 1, a behavior that occurs with enough frequency and perceived utility enters the Habit Zone, helping to make it a default behavior. If either of these factors falls short and the behavior lies below the threshold, it is less likely that the desired behavior will become a habit.

Painkillers solve an obvious need, relieving a specific pain, and often have quantifiable markets. Think Tylenol, the brand-name version of acetaminophen, and the product’s promise of reliable relief. It’s the kind of ready-made solution for which people are happy to pay. Vitamins, by contrast, do not necessarily solve an obvious pain point. Instead they appeal to users’ emotional rather than functional needs. When we take our multivitamin each morning, we don’t really know if it is actually making us healthier. In fact, recent evidence shows taking multivitamins may actually be doing more harm than good.22

Efficacy is not why we take vitamins. Taking a vitamin is a “check it off your list” behavior we measure in terms of psychological, rather than physical, relief. We feel satisfied that we are doing something good for our bodies—even if we can’t tell how much good it is actually doing us. Unlike a painkiller, without which we cannot function, missing a few days of vitamin popping, say while on vacation, is no big deal. So perhaps managers and investors know best? Perhaps building painkillers, not vitamins, is always the right strategy. Not so fast.

But like so many innovations, we did not know we needed them until they became part of our everyday lives.

A habit is when not doing an action causes a bit of discomfort. The sensation is similar to an itch, a feeling that manifests within the mind until it is satisfied. The habit-forming products we use are simply there to provide some sort of relief. Using a technology or product to scratch the itch provides faster satisfaction than ignoring it. Once we come to depend on a tool, switching to something else takes work. My answer to the vitamin versus painkiller question: Habit-forming technologies are both. These services seem at first to be offering nice-to-have vitamins, but once the habit is established, they provide an ongoing pain remedy.

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.

Habit-forming products often start as nice-to-haves (vitamins) but once the habit is formed, they become must-haves (painkillers).

DO THIS NOW If you are building a habit-forming product, write down the answers to these questions:

HABITS ARE NOT CREATED, THEY ARE BUILT UPON Habits are like pearls. Oysters create natural pearls by accumulating layer upon layer of a nacre called mother-of-pearl, eventually forming the smooth treasure over several years. But what causes the nacre to begin forming a pearl? The arrival of a tiny irritant, such as a piece of grit or an unwelcome parasite, triggers the oyster’s system to begin blanketing the invader with layers of shimmery coating.

Imagine if YouTube, Slack, or Instagram needed to buy an ad to prompt users to revisit their sites—these companies would soon go broke. Because paying for reengagement is unsustainable for most business models, companies generally use paid triggers to acquire new users and then leverage other triggers to bring them back.

Emotions, particularly negative ones, are powerful internal triggers and greatly influence our daily routines. Feelings of boredom, loneliness, frustration, confusion, and indecisiveness often instigate a slight pain or irritation and prompt an almost instantaneous and often mindless action to quell the negative sensation. For instance, Yin often uses Instagram when she fears a special moment will be lost forever.

Users who find a product that alleviates their pain will form strong, positive associations with the product over time. After continued use, bonds begin to form—like the layers of nacre in an oyster—between the product and the user whose need it satisfies. Gradually, these bonds cement into a habit as users turn to your product when experiencing certain internal triggers.

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.

REMEMBER & SHARE Triggers cue the user to take action and are the first step in the Hooked Model. Triggers come in two types—external and internal. External triggers tell the user what to do next by placing information within the user’s environment. Internal triggers tell the user what to do next through associations stored in the user’s memory. Negative emotions frequently serve as internal triggers. To build a habit-forming product, makers need to attach the use of their solution to a frequently felt internal trigger and know how to leverage external triggers to drive the user to action.

Fogg posits that there are three ingredients required to initiate any and all behaviors: (1) the user must have sufficient motivation; (2) the user must have the ability to complete the desired action; and (3) a trigger must be present to activate the behavior. The Fogg Behavior Model is represented in the formula B = MAT, which represents that a given behavior will occur when motivation, ability, and a trigger are present at the same time and in sufficient degrees.

While a trigger cues an action, motivation defines the level of desire to take that action. Dr. Edward Deci, Professor of Psychology at the University of Rochester and a leading researcher on the self-determination theory, defines motivation as “the energy for action.”

Fogg states that all humans are motivated to seek pleasure and avoid pain; to seek hope and avoid fear; and finally, to seek social acceptance and avoid rejection. The two sides of the three Core Motivators can be thought of as levers to increase or decrease the likelihood of someone’s taking a particular action by increasing or decreasing that person’s motivation.

Hauptly deconstructs the process of innovation into its most fundamental steps. First, Hauptly states, understand the reason people use a product or service. Next, lay out the steps the customer must take to get the job done. Finally, once the series of tasks from intention to outcome is understood, simply start removing steps until you reach the simplest possible process. Consequently, any technology or product that significantly reduces the steps to complete a task will enjoy high adoption rates by the people it assists.

“Take a human desire, preferably one that has been around for a really long time … Identify that desire and use modern technology to take out steps.”

ELEMENTS OF SIMPLICITY Fogg describes six “elements of simplicity”—the factors that influence a task’s difficulty.6 These are: Time—how long it takes to complete an action. Money—the fiscal cost of taking an action. Physical effort—the amount of labor involved in taking the action. Brain cycles—the level of mental effort and focus required to take an action. Social deviance—how accepted the behavior is by others. Non-routine—according to Fogg, “How much the action matches or disrupts existing routines.”

The mind takes shortcuts informed by our surroundings to make quick and sometimes erroneous judgments.

REMEMBER & SHARE The second step in the Hooked Model is action. The action is the simplest behavior in anticipation of reward. As described by Dr. B. J. Fogg’s Behavior Model: For any behavior to occur, a trigger must be present at the same time as the user has sufficient ability and motivation to take action. To increase the desired behavior, ensure a clear trigger is present; next, increase ability by making the action easier to do; finally, align with the right motivator. Every behavior is driven by one of three Core Motivators: seeking pleasure and avoiding pain; seeking hope and avoiding fear; seeking social acceptance while avoiding social rejection. Ability is influenced by the six factors of time, money, physical effort, brain cycles, social deviance, and non-routineness. Ability is dependent on users and their context at that moment. Heuristics are cognitive shortcuts we take to make quick decisions. Product designers can utilize many of the hundreds of heuristics to increase the likelihood of their desired action.

Walk through the path your users would take to use your product or service, beginning from the time they feel their internal trigger to the point where they receive their expected outcome. How many steps does it take before users obtain the reward they came for? How does this process compare with the simplicity of some of the examples described in this chapter? How does it compare with competing products and services?

The study revealed that 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.