Hooked: How to Build Habit-Forming Products

by Nir Eyal

Not only does Amazon make money from the ads it runs from competing businesses, it also utilizes other companies’ marketing dollars to form a habit in the shopper’s mind. Amazon seeks to become the solution to a frequently occurring pain point—the customer’s desire to find the items they want. By addressing shoppers’ price concerns, Amazon earns loyalty even if it doesn’t make the sale and comes across as trustworthy in the process. The tactic is backed by a 2003 study, which demonstrated that 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. Although shopping on Amazon may not occur as frequently as searching on Google, the company solidifies its place as the default solution to customers’ purchasing needs with each successful transaction. In fact, people are so comfortable comparison shopping on Amazon that they frequently use the company’s mobile app to check prices when standing in the aisles of real stores—often making a purchase from inside a competing retailer.