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smartcab

You are unconsciously paying more. (Photo credit: Digital Dispatch)

My taxi pulled up to the hotel. I got out my credit card and prepared to pay for the ride. The journey was pleasant enough but little did I know I was about to encounter a bit of psychological trickery designed to get me to pay more for the lift. Chances are you’re paying more, too.

Digital payment systems use subtle tactics to increase tips, and while it’s certainly good for hard-working service workers, it may not be so good for your wallet.

A new report by the tech research firm Software Advice discovered that digital point-of-sale terminals, like the one in my cab, increase the frequency and amount of tips left by customers. What’s the secret behind how these manipulative machines get us to pony up?

Habit Summit

I’m thrilled, giddy even! This year’s Habit Summit promises to be a one-of-a-kind event.

On March 24th at Stanford University, the best in the business will share their knowledge of how to drive customer engagement using the power of habits.

  • You’ll hear Ryan Hoover, the CEO and Founder of Product Hunt, share how he built a company TechCrunch just called the “Best New Startup” of the year.
  • Jake Knapp and Daniel Burka from Google Ventures will share techniques any team can use to design and build great products.
  • James Clear will teach you how to improve your products by improving your personal and work habits.
  • You’ll also meet hundreds of attendees from around the world, all interested in building products that move people.
  • There are many other amazing speakers, check-out HabitSummit.com for more.

HemingwriteFour minutes into pitching the wonders of his invention to an influential reporter, Patrick Paul gets hit with the kind of snarky comment startup entrepreneurs dread.

Paul is the founder of Hemingwrite, a “distraction free writing tool with modern technology like a mechanical keyboard, e-paper screen and cloud backups.”

At first glance, the Hemingwrite could be mistaken for an old-school typewriter inlaid with a Kindle display. Despite its “modern technology,” it looks like a 1980s throwback from Radio Shack. Two gaudy dials sit on either side of chunky black plastic and a huge red button — which could easily be mistaken for an ignition switch — turns it on.

The company website calls this esthetic “retro.”

Despite its looks, the Hemingwrite has struck a nerve.

The company quickly surpassed its $250,000 crowdfunding goal on Kickstarter and sold hundreds of units of a machine that hasn’t even been manufactured yet.

Nir’s Note: This book review is by Sam McNerney. Sam writes about cognitive psychology, business, and philosophy.

The Power of NoticingIn Moneyball, Michael Lewis tells the story of Billy Bean, the general manager of the Oakland Athletics who transformed the A’s using sabermetrics, the data-driven approach to understanding baseball. Bean noticed that instead of using data to predict player performance, baseball professionals relied on faulty intuitions and anecdotes. Commentators debate how effective sabermetrics actually is, but Bean’s original insight—that we can’t learn that much about baseball just by watching—changed the game.

The essential theme of Max Bazerman’s new book The Power of Noticing: What the Best Leaders See is similar. Like Bean, the best leaders don’t make decisions based only on what they can see and what they can recall. Instead, they ask for more information, question the status quo, and are aware of common biases. Becoming a “first class noticer,” as Bazerman phrases it, isn’t necessarily about noticing things-in-the-world but becoming conscious of our systematic mistakes. Here are three suggestions from The Power of Noticing.

Nir’s Note: This post is co-authored with Stuart Luman, a science, technology, and business writer who has worked at Wired Magazine, the Bulletin of the Atomic Scientists, and IBM.

Fomo

“I wish that I could be like the cool kids,” goes the catchy hook for the hit song by Echosmith. The official video has been viewed over 15 million times on YouTube, perhaps tapping into something deeper than mere adolescent angst.

We all want to be like the cool kids.

In 2013, the word “FoMO” was added to the Oxford English Dictionary. The “fear of missing out” refers to the feeling of “anxiety that an exciting or interesting event may currently be happening elsewhere.” Although the terminology has only recently been added to our lexicon, experiencing FoMO is nothing new.

Hooked user“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

editorial portrait of Nir Eyal | Engage MagazineI don’t usually write about personal and revealing matters, but recently I’ve noticed something I don’t like about myself–I check email too often.

This confession doesn’t come easily, because, ironically, I am the author of a book titled Hooked: How to Build Habit-Forming ProductsIt 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.

habits

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.