“I’m endlessly loyal,” my wife said, staring straight into my eyes. But she wasn’t talking about our marriage — she was pledging her allegiance to a piece of software.
“I’ll never quit Microsoft Office,” she told me. “It does too much for me to leave it.” For a moment I wondered if her husband had engendered the same reverence, but then I remembered things at Microsoft aren’t all wine and roses. In fact, the conversation with my wife was sparked by a debate over switching from Office to Google Docs for our home business.
Apparently, we aren’t the only ones considering other options. Industry analysts say Google Apps has already beaten Office as the top choice for smaller businesses and is in a “dead heat among companies with more than 1,000 employees.”
Let’s say you’ve built the next big thing. You’re ready to take on the world and make billions. Your product is amazing and you’re convinced you’ve bested the competition. As a point of fact, you know you offer the very best solution in your market. But here’s the rub. If your competition has established stronger customer habits than you have, you’re in trouble.
The cold truth is that the better product does not necessarily win. However, there’s hope. The right strategy can crowbar the competition’s users’ habits, giving you a chance to win them over.
To understand how to change customer habits, we first need to understand what habits are and how they take hold. Simply put, habits are behaviors done with little or no conscious thought. Research shows almost half of what we do, day in and day out, is driven by these impulsive behaviors.
“You teach best what you most need to learn.” – Richard Bach
This confession doesn’t come easily, because, ironically, I am the author of a book titled Hooked: How to Build Habit-Forming Products. It is a guidebook for designing technology people can’t put down. There’s just one problem–I can’t put my technology down.
I ritually check email when I wake up in the morning. If I’m out to lunch, I’ll sneak a peek on my way to the restroom. I even look at my email when stopped at a red light. Most troubling, I catch myself emailing instead of being fully present with the people I love most. My daughter recently caught me scrolling on my iPhone and asked, “Daddy, why are you on your phone so much?” I didn’t have a good answer.
Have you noticed all the startups raising massive sums of money recently? Perhaps you’ve scratched your head wondering how a company like Buzzfeed, known for its website full of animated gifs, listicles and quizzes, just raised $50 million dollars, valuing the company at a reported $850 million. Snapchat, the messaging app known for helping teenagers sext one another, reportedly received a $10 billion valuation from its investors. Has the world gone mad?
Some industry watchers see the recent boom in seemingly trivial apps and websites as foretelling tech bubble 2.0. However, there’s much more to the story.
Our knee-jerk reaction to classify innovation as either important or frivolous is exactly why many are left aghast when previously dismissed companies reveal shocking valuations in ridiculous investment rounds.
Vitamins and Painkillers
Most people, including many professional investors, tend to put new products into one of two categories: vitamins or painkillers.
Today, there’s an app for just about everything. With all the amazing things our smartphones can do, there is one thing that hasn’t changed since the phone was first developed. No matter how advanced phones become, they are still communication devices — they connect people together.
Though I can’t remember the last time I actually talked to another person live on the phone, I text, email, Tweet, Skype and video message throughout my day. The “job-to-be-done” hasn’t changed — the phone still helps us communicate with people we care about — rather, the interface has evolved to provide options for sending the right message in the right format at the right time.
Clearly, we’re a social species and these tech solutions help us re-create the tribal connection we seek. However, there are other more hidden reasons why messaging services keep us checking, pecking, and duckface posing.
Slack isn’t just another office collaboration app. The company has been called, “the fastest-growing workplace software ever.” Recent press reports claim that “users send more than 25 million messages each week,” and that the company is, “adding $1 million to its annual billing projections every six weeks.” Smelling an opportunity, investors just plowed $120 million into the company, giving it a $1.12 billion valuation.
“Our subscription revenue is growing about 8 percent monthly, before we add new sales,” says Slack’s business analytics lead Josh Pritchard. “This is, as far as I know, unheard for an enterprise SaaS company less than seven months after launch.”
Perhaps even more surprising, Slack’s user retention stands at an astonishing 93 percent. How does Slack get its users hooked?
On the surface, no single factor seems to set Slack apart from a plethora of other collaboration tools. However, a closer look using the model described in the book Hooked: How to Build Habit-Forming Product, reveals the user psychology behind the company’s success.
“Hi Nir,” the email began. “I have been reading your work and find it incredibly interesting.” Naturally, this is the kind of message a blogger loves to receive. However, this email was special for another reason. It was from a prominent New York publishing agent who represents several authors I read and admire. “I don’t know if you’ve already started down this road or whether writing a book interests you, but I’d be delighted to have a conversation with you if you are interested.”
Was she kidding? Heck yeah I was interested!
We scheduled a time to talk. She told me she is fond of my work and thought it could reach a larger audience if it was promoted by a major publisher. That email and the subsequent call would lead to the release of my book, Hooked: How to Build Habit-Forming Products, which just debuted on the Wall Street Journal bestseller list this week.
On May 1, 1981, American Airlines launched its frequent flyer program AAdvantage. Since then, a flood of loyalty programs have attempted to bring customers back through rewards.
Today, you can become a card-carrying member of just about anything: hotels, supermarkets, drugstores and pizza chains. If you’re in a store, chances are someone will ask, “Would you like to join our rewards program?”
Marketing professors, store managers and executives are still not sure how effective these initiatives are. One puzzle is the link between participation and loyalty. It’s not that strong. Millions of Americans are enrolled in at least one loyalty program, but just a fraction of them are dedicated customers. Typically, loyalty programs work only to the extent that they reward customers who are already loyal.
More than a year and a half ago, with the dedicated help of Ryan Hoover, I started working on my book, Hooked: How to Build Habit-Forming Products.
Hooked compiled 2 years of writing and research (and many more years of professional experience) into a guide to help people like you design engaging products that have a positive impact on users’ lives.
Today, I’m thrilled to announce that Hooked is available in a new professionally published edition. The book looks and feels much better than the previous self-published edition and as a special offer to my readers I’ve created special bonus content to help you build more impactful products and better personal habits.
- A 10-part video interview with me on designing for user engagement.
- The Hooked workbook — a step-by-step companion to the book.
This week I chat with Ryan Holiday, an author, hacker, and self-described “media manipulator.” Ryan’s new book “The Obstacle is the Way” takes an interesting look at how challenges shape and improve our lives.
We discuss the personal habits Ryan integrated into his working life to reveal how he accomplished so much in so little time. Enjoy!