Hooked: How to Create Habit-Forming Products with Nir Eyal - I Love Marketing Episode #290

In this episode you'll discover how to build habit forming products, how to create desire, engagement and more with Nir Eyal. Nir is a best selling author and writes, consult and teaches about the intersection of psychology, technology and business. He's the founder of two tech companies, an active investor in habit forming technologies, and taught at the Stanford Graduate School of Business and the Hasso Plattner Institute of Design at Stanford. Recorded live from the Genius Network Annual event. If you'd like access to the full feature video presentation, the special resources and the show notes for this episode, please visit ilovemarketing.com 290 that's ilovemarketing.com 290 what.

Do you do every day just because it's a habit? Sure, you brush your teeth, maybe floss or just put your teeth in a glass. All three are habits. Your customers and clients have habits too. The question is how do you get them to form the habit of buying from you? You need to hook them. Bestselling author, Stanford Lecturer, business creator, and as MIT Technical Review called him, the prophet of habit forming technology that hooks the user. Even his name is a hook. Just seven letters, two words. Near pronounced near spelled N I R is the reason his website is called near and Far. His title is how you can build habit forming products. The author of this amazing book, please welcome. Welcome Nir Ial.

Thanks so much. Thank you. Appreciate it.

Thank you. Thank you.

So we've all seen how the products we use can have a profound impact on our day to day lives. In particular our personal technologies. Products like our iPhone and Facebook and Twitter and Instagram and Slack. How do these products do it? Well, these products are masters of habit. These behaviors that we do with little or no conscious thought. Turns out about 40% of what you do every day, day in and day out, is done purely out of habit. I'd like to share with you a design pattern that companies use to build consumer habits. These are techniques that I've learned in my years in the advertising and gaming industry and it's based on a class that I teach at the Graduate School of Business at Stanford and at the design school there. This pattern is called the hook. The hook is an experience designed to connect the user's problem with the company's product with enough frequency to form a habit. And it's through successive cycles through these hooks that customer preferences are shaped, that our tastes are formed and and that these habits take hold. Hooks have four basic a trigger, an action, a reward, an investment. So let's start with triggers. A trigger is something that tells us what to do next. It gives us some piece of information. For example, in the case of an external trigger, it's a buy now or click here or play this button. We've all seen these external triggers. We design them, we experience them as consumers every day. But what you might not consider enough, and what turns out to be absolutely critical to forming these long term habits, is creating an association with what's called an internal trigger. Internal triggers are things that tell the user what to do next, but where the information for what to do is stored as a memory or an association inside the user's head. So what we do when we're in a particular place, around certain people, partaking in a certain routine, and most often when we experience certain emotions dictates what we do next with little or no conscious thought. And it turns out the most frequent internal triggers are not just any emotion, but they are specifically negative emotions. So what we do when we're feeling bored or lost or indecisive or fatigued, what we do when we experience these negative emotions tells us what to do next with little or no conscious thought. In fact, there was a great study a few years ago that found that people suffering from depression check email more. I just saw about three people put away their phones. I'm not sure what's going on there. This study found that people who suffer from clinical depression check email more. Why? Well, it turns out that people suffering from clinical depression experience what psychologists call negative valence states. They feel down more frequently than the rest of the population. And what are they doing to boost their mood? To get out of that negative valence state? They're going online, they're checking their devices or more often than the rest of the population. But of course, we all do this to some extent, don't we? We all use our products and services to modulate our mood. Where do we go when we're feeling lonely? Facebook, of course. Where do we go when we're unsure about something? Before we scan our brains to see if we know the answer, we're googling it. And what about when we're feeling bored? You know, between two and four o'clock in the afternoon, you have that big project you don't feel like doing right now. Where do you go? You check YouTube and stock prices and sports scores and Pinterest. All of these solutions triggered based off of this internal trigger of boredom. We don't like that sensation and we look for relief in the products and services we use. So after the internal trigger has prompted us to action that's the next phase of the hook. The action phase of the hook is described as the simplest behavior done in anticipation of a reward. The simplest behavior done in anticipation of reward. It's something as simple as a scroll on Pinterest, it's a search on Google, it's hitting the play button on YouTube. And there's actually a formula to help us predict the likelihood of these singular behaviors comes to us from a researcher at Stanford by the name of BJ Fogg, who tells us that for any given behavior, B, we need three things. Any behavior. We need sufficient motivation, we need sufficient ability. Ability is how easy or difficult something is to do, and a trigger must be present. So Fog plots out these three basic elements. Motivation on the Y axis, ability on the X. If something is hard to do, it's on the far right. If something is easy to do, it's on the far left. And when the user has sufficient motivation and sufficient ability, they cross that red threshold and all they need is a trigger. And the behavior will occur every single time online, offline. Your behavior, your spouse's behavior, your customer or user's behavior always requires these three basic elements. Every click, every action always requires sufficient motivation, ability, and a trigger. So what we see habit forming products doing today is moving customers as far to that right as possible on the ability curve because they understand the easier something is to do, the more likely we are to do it. Next comes the reward phase of the hook. The reward phase of the hook is where the user gets what they came for, where the itch is scratched a little bit. And to understand rewards, we have to start in the brain. And in particular an area of the brain called the nucleus accumbens, which becomes most active in anticipation of a reward. But when we actually get the thing we want, the thing that we think is going to make us happy and finally make us feel good, that's when this part of the brain becomes less active. So the way the brain gets us to act is by creating this itch that we seek to scratch. And there is a way to supercharge this reflex. Anybody want to know how? Is anybody curious about how to manufacture desire?

Yes.

Case in point, I'm doing it to you right now. So when I took that long pause and I asked you a question and I just stood there for a second, some of you perked up. What's this guy going to do next? What's going on? And it turns out that the unknown is fascinating. When there's a bit of mystery, a bit of what B.F. skinner called a Variable reward. It causes us to increase focus and, and increase engagement. And in all sorts of products that you find most habit forming, most engaging, the things that capture your attention and cause you to not let go, you will find these three types of variable. Rewards of the tribe, rewards of the hunt, and rewards of the self. Rewards of the tribe are things that feel good, that have this element of variability and come from other people. Best example I can think of online is social media. So when you open up your Facebook app, you're not quite sure what you might find there, what pictures might you see, what are the comments going to say, how many likes does something get? High degree of variability in a product like Facebook. And of course, it all comes from this social reward. Rewards of the hunt are things that have to do with the search for resources or information. Rewards. So when many people think of variable rewards, they think about slot machines. They think about how when you play a casino game, there's this variability about what you might win. And we see the exact same psychology at work online. Consider the feed. Have you noticed how over the past several years everything seems to have this feed mechanic? Why is that? Why does everything online today have a feed? Well, let's take a look at the Twitter timeline as an example. When I open up the Twitter timeline, I look at that app and maybe the first tweet's not that interesting and the second tweet's not that interesting, but maybe the third or fourth is interesting. And what do I have to do to get more of those rewards? What do I have to do? Just scroll and that scrolling and scrolling and scrolling uses the exact same psychology as pulling on a slot machine, searching and searching for that next variable, reward. And finally, the rewards of the self. Rewards of the self are things that feel good, that have this element of variability, but don't come from other people, and aren't about this information or material reward. These are things that feel good in and of themselves. They're intrinsically pleasurable. The search for mastery, consistency, competency and control. Best example I can think of online is gameplay. So when we play Candy Crush or Angry Birds, we're not necessarily winning anything. We're not even playing with other people. But there's something fun about getting to the next level, the next accomplishment, the next achievement. And many times when I show this example, people say to me, yeah, that's great, Nir, but look, I. I don't really play these games. I'm not much of a gamer myself. That doesn't apply to me. But if you're Anything like me. You probably play this game every day. Look familiar? Checking those unread messages, finishing the to DOS on your to do list, or the thing that always gets me is the need to click on that one app notification on my home screen so I can clear it away are all examples of this variable reward of the self. The search for mastery, consistency, competency and control. Which finally brings me to the last step of the hook, the investment phase. The investment phase is something the user does to bring themselves back. It increases the likelihood of the next pass through the hook. One of the ways that investments increase the likelihood of the next pass through the hook is by storing value. Storing value is a very big deal because unlike things in the physical world, these chairs, these tables, your clothing, all of these things depreciate with use. They lose value with wear and tear. But habit forming products should actually do the opposite. They should appreciate in value, they should get better and better with use. And they do this because of this principle of stored value. So the more content I put into Google Drives, the better it becomes. The more data I give to mint.com or Pinterest, the more followers I accrue, the better Twitter might become. And finally, reputation, which is a form of stored value that users can literally take to the bank. Because my reputation on sites like Airbnb or TaskRabbit or eBay dictates what I can charge for my goods and services. And how likely am I to leave one of these platforms after I've accrued all this stored value in the site? Not very likely. All of a sudden the product becomes very habit forming, becomes very sticky, it's hard to leave. And even if a better product or service comes along, because I've never read in any business book or seen any 11th commandment that says the best product wins. There's no rule that says the best product has to win. In fact, it's the product that can capture a monopoly of the mind, that can hold on to the market. Because it's through successive cycles, through these hooks, a trigger, action, reward, investment, that customer preferences are shaped, that tastes are formed, and that our habits take hold. So now that we know how these products hook us, what do we do with this information? Well, to many people these products might seem frivolous and maybe even their tactics a little manipulative. Certainly it's going to be up to all of us to figure out, when do these products and services serve us and when do they hurt us. But the real story here, the real takeaway, is not that a few companies have figured out how to build habit forming technology. The real story here is that far too many products and services are not engaging enough. You see, when you think about the state of the art when it comes to the products we're forced to use at work every day, or the way we interact with government services or or even with the companies we rely upon, these products, they don't suck us in. Not in the way that Facebook or our iPhones might. No, these products just plain old suck. So the key here is how can we take the lessons from these best of breed companies to apply to our own businesses. When Joe invited me here today, he said that there was this very high bar that every talk had to give you all 10x what you paid to be here today. And that's why I wanted to share with you these tactics and techniques. And everybody has a copy of my book hooked and inside your bags which revealed to you these techniques that have built companies that touch hundreds of millions, if not billions of users and make hundreds of millions, if not billions of dollars. And I think that if we're smart, we can apply these very same tactics to all our businesses to help our customers and users live happier, healthier, more productive, more connected lives. I truly think that we can use habits for good. Thank you very much.

Thanks for listening to this episode of I love Marketing. If you'd like to learn more about the Genius Network annual event, visit geniusnetworkevents.com that's geniusnetworkevents dot com if you would like access to the full feature video presentation, the special resources and the show notes for this episode, please visit ilovemarketing.com 290 that's ilovemarketing.com 290.