Tag / retention

enterprise habitSlack 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.

Nir’s Note: Parts of this article are adapted from Hooked: A Guide to Building Habit-Forming Products.

flappy On February 8, 2014, an app called Flappy Bird held the coveted No. 1 spot in the Apple App Store. The app’s 29-year-old creator, Dong Nguyen, reported earning $50,000 a day from the game.

Then, the Vietnamese developer sent a shocking message. In a tweet many dismissed as a publicity stunt, Nguyen wrote, “I am sorry ‘Flappy Bird‘ users, 22 hours from now, I will take ‘Flappy Bird‘ down. I cannot take this anymore.” And as promised, the game disappeared the next day.

This is not the way success typically ends.

Flappy Bird was downloaded over 50 million times and unleashed a digital tsunami of players and pundits dissecting what turned into a global fixation. Players’ only goal in the game was to pilot a pixelated bird through gaps of pipe. Yet the app seemed to have a mysteriously seductive power. In a TechCrunch article titled Confessions Of A Flappy Bird Addict, Josh Constine wrote, “It humiliates me, but I like it. It’s the dominatrix of mobile games.”

image4-notes (2)A few minutes before his helicopter touched down in a covert military base just outside of Kabul, Afghanistan, Tommy Thompson reached for his secret weapon. He was about to meet with top Afghan officials and he needed to ensure he hit his mark. But Thompson’s mission to the war-torn region in 2004 did not involve delivering guns and bombs. As the U.S. Secretary of Health and Human Services, the diplomat was there to win hearts and minds.

To accomplish his directive, assigned to him by the President of the United States, Thompson relied upon information delivered at exactly the right time and place. Minutes before each meeting with dignitaries, he was handed a top-secret intelligence briefing.

The CIA-prepared binder contained the most vital, and at times trivial, information on who the Secretary was going to meet. A quick glance provided the context for the meeting, notes from previous encounters, and often times contained personal information.

Nir’s Note: In this guest post, Ryan Hoover takes a look at Tinder, a red hot dating app. Ryan dives into what makes the app so popular and engaging. Ryan blogs at ryanhoover.me and you can follow him on Twitter at rrhoover.

tinder-screenshot-blurredTinder, a hot new entrant in the world of online dating, is capturing the attention of millions of single hopefuls. The premise is simple. After launching the mobile app and logging in with Facebook, users browse profiles of other men or women. Each potential match is presented as a card. Swipe left if you’re disinterested and right if someone catches your fancy. Once both parties express interest, a match is made and a private chat connects the two potential lovebirds.

The app has become a fixture in the U.S. App Store as one of the top 25 social networking applications, generating 1.5 million daily matches as more than 50 percent of its users login multiple times per day.

Nir’s Note: This guest post is by Ryan Hoover. Ryan blogs at ryanhoover.me and you can follow him on Twitter at @rrhoover.

snapchat-iconWhen Snapchat first launched, critics discounted the photo-messaging app as a fad – a toy for sexting and selfies. Their judgements were reasonable. It’s impossible to predict the success of a product on day one, let alone its ability to change user behavior. But hindsight is beginning to prove critics wrong.

Snapchat boasts 5 million daily active users sending 200 million photos and videos daily. That’s an average of 40 snaps a day per user! But why are users so engaged? After all, what real need is the company solving anyway?

Snapchat popularized a new form of expression, using photos and videos as a communication medium. For many, Snapchat is a daily routine – the go-to app for interacting with friends in a playful way. This habit is not a happy mistake but a conscious effort driven by several subtle design choices.

Nir’s Note: An edited version of this essay appeared in The Atlantic. Below is my original.
Stairway to Heaven

It’s not often an app has the power to keep someone out of a strip club. But according to Bobby Gruenewald, CEO of YouVersion, that’s exactly what his technology did. Gruenewald says a user of his app walked into a business of ill repute when suddenly, out of the heavens, he received a notification on his phone. “God’s trying to tell me something!,” Gruenewald recalled the user saying, “I just walked into a strip club — and man — the Bible just texted me!”

YouVersion recently announced its app hit a monumental milestone — placing it among a rare strata of technology companies. The app, simply called “Bible,” is now on more than 100 million devices and growing. Gruenewald says a new install occurs every 1.3 seconds.

5318665531_b62722f817Imagine walking into a busy mall when someone approaches you with an open hand. “Would you have some coins to take the bus, please?” he asks. But in this case, the person is not a panhandler. The beggar is a PhD.

As part of a French study, researchers wanted to know if they could influence how much money people handed to a total stranger using just a few specially encoded words. They discovered a technique so simple and effective it doubled the amount people gave.

The turn of phrase has been shown to not only increase how much bus fare people give, but was also effective in boosting charitable donations and participation in voluntary surveys. In fact, a recent meta-analysis of 42 studies involving over 22,000 participants concluded that these few words, placed at the end of a request, are a highly-effective way to gain compliance, doubling the likelihood of people saying “yes.”


Cookie jar
Interested in boosting customer desire? A classic study reveals an interesting quirk of human behavior that may hold a clue.

In 1975, researchers Worchel, Lee, and Adewole wanted to know how people would value cookies in two identical glass jars. One jar held ten cookies while the other contained just two stragglers. Which cookies would people value more?

Though the cookies and jars were identical, participants valued the ones in the near-empty jar more highly. Scarcity had somehow affected their perception of value.

There are many theories as to why this was the case. For one, scarcity may signal something about the product. If there are less of an item, the thinking goes, it might be because other people know something you don’t. Namely, the cookies in the almost empty jar are the num-numier choice.

Nir’s Note: This post is a little different from my normal writing. For one, its much shorter. You’ll notice I provide fewer citations and the ideas are less developed than my previous essays. This is intentional and I need your help. I’m considering writing a chapter on this topic in a forthcoming book but wanted to test the ideas with my most loyal readers first. Give it a quick read and tell me what you think. 

122822729_30044f0418Habits are good for business. In fact, many industries could not survive without them. The incentive systems and business models of the companies that make habit-forming products require someone gets hooked. Without consumer habits, these enterprises would go bust.

While most of us think of cigarettes or gambling as habit-forming products, the fact is, a much wider swath of industries rely on consumer’s using their products without thought or deliberation.

1458972393_166f2d7ea7Recently, MessageMe announced it had grown to 1 million users in a little over a week’s time. The revelation captured the attention of envious app makers throughout Silicon Valley, all of whom are searching for the secrets of customer acquisition like it’s the fountain of youth. “Growth hacking” has become the latest buzzword, as investors like Paul Graham profess it’s functionally that matters.

Clearly, everyone wants growth. To someone creating a new technology, nothing feels better than people actually using what you’ve built and telling their friends. Growth feels validating. It tells everyone the company is doing things right. At least that’s what we want to believe.

Good Growth, Bad Growth

Sometimes viral loops drive growth, because the product is truly awesome, while in other cases growth occurs for, well, different reasons. As an example of good growth, it’s hard to top PayPal’s viral success in the late 90s. PayPal knew that once users started sending money to each other, mostly for stuff bought on eBay, they would infect one another. The allure that someone just “sent you money” was a huge incentive to register.