Tag / retention

“Successful entrepreneurs recommend reading this article about the persuasion techniques companies use to drive engagement.”

Scratch that, how’s this? “Tons of people are tweeting this article. Find out why.”

OK, here’s one more. “This article will only be on the TechCrunch front page for a few hours before fading into the information abyss.”

Perhaps your preference for one of the opening lines above is a matter of taste, but for companies leveraging the explosion of personalized data, it’s very big business.

Marketers are increasingly personalizing their products and services to meet their customers’ changing needs. But customization used in conjunction with powerful persuasion techniques is arming marketers with new weaponry to boost customer engagement and drive profits.

As the web becomes an increasingly crowded place, users are desperate for solutions to sort through the online clutter. The Internet has become a giant hairball of choice-inhibiting noise and the need to make sense of it all has never been more acute.

Just ask high-flying sites like Pinterest, Reddit, and Tumblr. These curated web portals connect millions of people to information they never knew they were looking for. Some have started monetizing this tremendous flow of traffic and though it’s too early to call winners and losers, their strategy of driving user engagement by creating daily habits is clear. These companies are following a plan implemented by web titans like Amazon and Google and are hoping to yield similar results.

Creating user habits leverages two critical factors that should be considered by every company attempting to build high-engagement products.

Step 1: Build an app. Step 2: Get users hooked to it. Step 3: Profit. It sounds simple and, given our umbilical ties to cell phones, social media, and email inboxes, it may even sound plausible. Recently, tech entrepreneurs and investors have started to look to psychology for ways to strike it rich by altering user behavior. Perhaps you’ve read essays on how to create habit-forming technology and figured you’d give it a shot?

Well hold your dogs Pavlov! Though I’m an advocate for understanding user behavior to build high-engagement products, the reality is that successfully creating long-term habits is exceptionally rare. Changing behavior requires not only an understanding of how to persuade users to act — for example, the first time they land on a webpage — but also necessitates getting them to behave differently for long periods of time, ideally for the rest of their lives.

Video from my recent talk at the Designers + Geeks Meetup in San Francisco on August 1st, 2012.

Note: This talk is similar to my “Behavior by Design” talk but has approximately 20% new material.

If you’re reading this over email and the video does not appear, click the link below:

http://www.nirandfar.com/2012/08/designing-user-habits-video.html

The belief that products should always be as easy to use as possible is a sacred cow of the tech world. The rise of design thinking, coinciding with beautiful new products like the iPhone, has led some to conclude that creating slick interfaces is a hallmark of great design. But, like all attempts to create absolute rules about how we should interact with technology, the law that design should always decrease the amount of effort users expend doesn’t always hold true. In fact, putting users to work is critical in creating products people love.

Several studies have shown that expending effort on a task seems to commit us to it. For example, when buying a lottery ticket, players are able to either choose their own numbers or play a set of digits generated randomly. Certainly, choosing either option has no effect on the odds of winning. Traditional thinking would predict that the less effortful path would be the one users prefer.

Let’s admit it, we in the consumer web industry are in the manipulation business. We build products meant to persuade people to do what we want them to do. We call these people “users” and even if we don’t say it aloud, we secretly wish every one of them would become fiendishly addicted.

Users take our technologies with them to bed. When they wake up, they check for notifications, tweets, and updates before saying “good morning” to their loved ones. Ian Bogost, the famed game creator and professor, calls the wave of habit-forming technologies the “cigarette of this century” and warns of equally addictive and potentially destructive side-effects.

When Is Manipulation Wrong?

Manipulation is a designed experience crafted to change behavior — we all know what it feels like. We’re uncomfortable when we sense someone is trying to make us do something we wouldn’t do otherwise, like when at a car dealership or a timeshare presentation.  

Right now, someone is tinkering with a billion dollar secret — they just don’t know it yet. “What people aren’t telling you,” Peter Thiel taught his class at Stanford, “can very often give you great insight as to where you should be directing your attention.”

Secrets people can’t or don’t want to divulge are a common thread behind Thiel’s most lucrative investments such as Facebook and LinkedIn, as well as several other breakout companies of the past decade. The kinds of truths Thiel discusses — the kinds that create billion dollar businesses in just a few years — are not held exclusively by those with deep corporate pockets. In fact, the person most likely to build the next great tech business will likely be a scrappy entrepreneur with a big dream, a sharp mind, and a valuable secret.

If you’re like me, you’ve had enough of the Facebook IPO story. For tech entrepreneurs struggling to build stuff, the cacophony of recent press is just more noise. That’s why when my friend Andrew Chen posted an insightful analysis of Facebook user data, I was happy to get back to learning from what the company did right instead of debating what its bankers did wrong.

Chen calculated Facebook’s historical ratio of daily active users (DAU) to monthly active users (MAU) and the stats are startling. Since March 2009, when the earliest data is available, approximately 50% of Facebook users logged in daily.

As other technology companies struggle to maintain DAU to MAU ratios of 5% or less, Facebook’s numbers appear stratospherically high in comparison. But what is equally surprising is the consistency of that ratio over time. Despite periodic user revolts in reaction to changes in the site, the ratio remained strangely stable. In fact, the number has risen over the past year and is now hovering at 58% as of March of this year.

Today Facebook will sell shares in one of the biggest tech IPOs in history. New investors will gobble up the stock to get a piece of the global phenomenon famously started in Mark Zuckerberg’s dorm room in 2004. But while owning the stock will have quantifiable value when it trades on the open market, few buyers will be able to say truthfully that they understood the value of the company just a few years ago.

Ask yourself candidly, what did you think of Facebook the first time you landed on its homepage? Were you blown away? Could you see how it would fill a gaping need in the lives of nearly a billion people? If you’re honest with yourself, and you’re not Peter Thiel, your answer is probably, “No, not really.”

Note: I’m proud to have co-authored this post with Jason Hreha, the founder of Dopamine, a user-experience and behavior design firm. He blogs at persuasive.ly

Yin asked not to be identified by her real name. A young addict in her mid-twenties, she lives in Palo Alto and, despite her addiction, attends Stanford University. She has all the composure and polish you’d expect of a student at a prestigious school, yet she succombs to her habit throughout the day. She can’t help it; she’s compulsively hooked.

Yin is an Instagram addict. The photo sharing social network, recently purchased by Facebook for $1 billion, captured the minds of Yin and 40 million others like her. The acquisition demonstrates the increasing importance–and immense value created by–habit-forming technologies. Of course, the Instagram purchase price was driven by a host of factors including a rumored bidding war for the company. But at its core, Instagram is the latest example of an enterprising team, conversant in psychology as much as technology, that unleashed an addictive product on users who made it part of their daily routines.