Nir Eyal explains how products form user habits via a "hook" (a behavior performed with little or no conscious thought) and describes four ways to capture an existing competitor's customer habit: 1) Faster hooks (remove steps to speed users through the hook), 2) Better rewards (make the outcome dramatically more rewarding — he asserts a product must be ~nine times better to displace an existing habit), 3) Increase frequency (engage users more often), and 4) Easier to start (lower friction to begin using the product). Each tactic is illustrated with real-world examples (Netflix/Blockbuster; Snapchat/Facebook; Amazon/Walmart; Google Docs/Microsoft Office).
Questions this video answers
A habit is just a behavior done with little or no conscious thought.
Faster hooks; Better rewards; Increase frequency; Easier to start.
About nine times better.
Chapters
Hi, my name is Nir Eyal, and in this episode, you will learn the psychology behind capturing your competition's habits. So first, let's talk about what a habit is and how it takes hold. So what is a habit? A habit is just a behavior done with little or no conscious thought. It's about half of what you do every single day. Now, it turns out many of the products that you use every day, day in and day out, are used purely out of habit. And at the core of these products to form these habits is what I call a hook. Do you ever check your phone without really knowing why? Have you ever opened Facebook or Twitter just to check one thing and notice that you're still scrolling and scrolling 30 minutes later? Have you ever found yourself unable to stop playing a game like Candy Crush or Angry Birds? Yeah, me neither. So at the core of all of these products and services is what I call the hook. And these hooks all form habits with the user. So once a product has a habit formed, it's terrific. There's a lot of competitive advantages to having a customer habit. The problem, of course, is what if somebody else already owns that habit? How do you capture the competition's existing habits? I'm going to show you the four ways to do just that. The first way to capture your competition's habits is faster hooks. As Dennis Hopley explains, first, you need to understand the reason people use the product or service. Then you lay out the steps to get the job done. And finally, we simply have to remove steps to reach the simplest possible step process. In other words, you remove steps to increase the speed to go through the hook. That's a faster hook. You see, when it comes to the products and services that we use, the products that can cycle users faster through that hook is the one that has the chance of forming this new consumer habit. A good example of faster hooks is Netflix versus Blockbuster. Back in the day, Blockbuster used to own the rental market for movies. But then Netflix came out and made it incredibly easy to to go ahead and rent that film. So now you no longer need to go to the rental store to go get your movie. You could just rent a movie because it was on your counter, cause it had been ordered through the mail. And of course, as Netflix has evolved and now our movies are on demand, it's way easier than going outside your home and actually having to go get the movie. You can just pop one up on your screen. So by increasing the speed that it takes for a user to go through the hook, this is how Netflix captured this old existing habit that Blockbuster used to have. The second way that you can capture a competition's habit is by creating better rewards. So if you can create a product or service that is not only better, but dramatically better, the statistics show us that it has to be nine times better for your product to capture an existing customer habit. So how do you make the reward more rewarding? Well, you have to give something to the consumer, something to the user that's way better than what the competition might provide. So here's a great example. Imagine you've just received two messages, okay? One on Snapchat and one on Facebook. Which one do you open first? Are you gonna open the message from Aunt Matilda on Facebook, or are you gonna open the one on Snapchat that just came from that person you were flirting with last night? Now my money's on Snapchat. Because the thing that makes Snapchat so special and makes the reward more rewarding is that you know that that message is gonna disappear. So you open the message because you know people will disclose more in them, right? They'll take funny pictures, sometimes sexy or flirty pictures. And so you're much more likely to open that message, and. And the reward is more rewarding. Now, the third way to capture your competition's customer's habit is to increase frequency. So if your product or service can engage a customer more frequently, more often than your competition, that is a way for you to capture that habit. Great example. Here is Amazon. Consider how frequently we can go shopping now that we can access Amazon from our apps on our phones. Compare that to going to Walmart. Well, just the fact that I have this easy access to Amazon on my phone means that I can engage with that company much more frequently than I could one of their competitors. And therefore, Amazon was able to steal that habit away. So let's review. Number one, faster hooks. Number two, better rewards. Number three, we can increase the frequency with which a customer engages with our product. But there's still one more way to to capture the competition's habits. The final way that you can capture your competition's habits is by making the product easier to start using. Great example here. Think about how Microsoft Office lost the enterprise software war to Google Docs. Today, Google Docs is the most used enterprise software in the world, and that's a title that Microsoft Office used to hold. Well, what happened? So people who had never used Microsoft Office before could immediately start using Google Docs, which, without paying a dime and without installing any software, that made it much easier to start using the product in the first place and start passing through the product's hook. So that's it. That's how to capture your competition's habits. These four fundamental ways. Faster hooks, better rewards, greater frequency, and easy in. Thank you very much. Thanks for watching and see you next time.
