Hooked for Good: How Habit Forming Products Improve Lives

Welcome to Habit Summit. This is the third annual Habit Summit and we are thrilled to have you here. Thank you so much for being here. This is my favorite day of the year. I really love the Habit Summit and it's so wonderful to see all of you here today. A bit of housekeeping, you saw about the WI fi and the hashtag. If you can do me a quick favor, we have a few more people who kind of trickle in. Do you guys mind moving into the center area just so that the aisles people can kind of come in and find a seat? There's some empty seats, so if you can kind of squish to the center here and squish to the center and squish to the center there, that'd be really great to leave the aisles free for folks who trickle in. So welcome to Stanford. Let me tell you about something that happened a few weeks ago. I was walking in the streets of San Francisco, a Chinatown area. And as I was walking along, I saw on the side, the street, kind of the corner of my eye. I saw what I thought was money just sitting there on the street. And lots of people were passing by what I thought was money. And they didn't do anything. They just kind of dismissed it. They were skeptical, I guess, and they just walked on by. I know other people saw it and they didn't do anything about the money. And so I thought, you know what, let me take a look. What is this? And I bent down, I picked it up, and lo and behold, it was in fact a ten dollar bill. And so the point of this story, the reason I tell this story and start off the morning this way, is that I think that sometimes in life there are ten dollar bills just laying around, but that people don't bother to pick up. And in fact, I think many of us in this room today are minting money and we are leaving it around all over the street. Let me prove it to you. Show of hands. How many of you are working on a product that you believe significantly improves the lives of your customers? Okay, Everybody in the room. How many of you believe that the product that you are working on is the best selling solution in your market? Okay. Also, almost everybody in the room. And how many of you believe that a lot more people should use your product than do today? Okay, again, almost everyone in the room. So almost everyone here is making something that is valuable, that is better, and yet vastly underutilized. To me, that's the same as leaving bills everywhere. So why aren't your customers picking up the value that you're creating. Is it because people don't want what you have? Are they somehow not motivated enough to reach down and pick up that ten dollar bill on the ground? Well, perhaps. But maybe there's something else going on. You see, in real life, lots and lots of people don't bother to pick up free money. It's amazing. Check out these statistics. 58% of people eligible do not claim benefits from the Temporary Assistance for needy families program. 54% of those eligible do not access Supplemental Security Income, otherwise known as food stamps. The Earned Income Tax Credit is neglected by an estimated 6.7 million eligible people each year. That's 25% of the population that is due free money. Don't bother to claim it. So what's going on here? And if people don't bother to pick up the free money that they need and deserve, is it any wonder they don't engage with your product as much as they should? You see, this is why I believe so many businesses fail. 21,000 products are launched each year in the United States. But 80% of them fail. Only 3% of consumer packaged goods succeed at launch. Less than 1% of apps in the Apple App Store will ever be financially successful. 92% of startups fail within three years. And even those lucky enough to raise venture capital, 75% of those won't return that capital to their investors. Why are all these companies failing? Is it just because they're not making something people want that they're not motivated to buy? Well, of course some degree of business failure is inevitable. But I think that there is a deeper truth here. And that is that while certainly a lot of bad products die for good reasons, far too many good products die for bad reasons. And this kills me. I mean, this really, really bothers me because we have this opportunity that we're missing. We're missing out not only on the financial loss, not to mention all the jobs that could be created from these companies, but we're missing opportunities to help people in improve their lives, to help people do things they want to do, but for lack of good product design, don't do consider those benefits programs, the free money that's not getting to the people who need it most. Think about your customers and users, the people who could benefit from using your product. But don't these missed opportunities really bug me and I think it's time we do something about it. Does this bother anybody else? Does it bother you? Good, because that's why we're here today. We're here to learn how to help people Our customers, our users, improve their lives. And the only way to do that is to understand the minds of the people that we serve, to understand how to help them do the things they want to do, to learn from each other. Other professionals and practitioners in the field that are building products to change behavior for the greater good, to uncover opportunities that we didn't know existed, and finally, to better understand ourselves so that we can improve our personal productivity and satisfaction with the work we do. We can learn all this by no longer thinking of ourselves as building products, but instead building behaviors. Because when we build products, we think that people know what they want and that they act consistently. But when we build behaviors, we know that's not true. That preferences change based on context. When we build products, we think that we should motivate people through awareness. If people just had the right information, they do the right thing. But if we build behaviors, we know that's not always true. That motivation isn't enough, that intention is not enough to drive behavior. When we build products, we think, well, when people fail to act, it's because they don't value what's being offered. But when we build behaviors, we know that's not true. That inaction is often the result of barriers, not a lack of intent. When we build products, we try and figure out what the user is doing wrong and how to get them to do it correctly. But when we build behaviors, we understand that we have to fix the experience itself. When we build products, we constantly look for the best technology. But when we build behaviors, we try and understand how to use the right psychology. So what I'm going to show you today are some examples. People love examples. Examples of what's possible when we understand user psychology. You know, I constantly get asked for examples of who's doing things right to change consumer behavior. So I'm going to show you some of my favorite examples today. But for sake of full disclosure, you should know I actually invested in some of the companies I'm going to show you because I love what they're doing. I'm going to show you not the typical examples, right? Not the Facebook and Twitter and Instagram examples that you might have seen in my book. And I'm not even going to describe the enterprise examples. That was the topic of my keynote last year when I spoke at the Habit Summit, I showed enterprise examples. This year, I'm going to show you products that change people's behavior for good. These products and services can not only change lives, some of them actually save people's lives. So the framework I'M going to use as a quick refresher here is the hook model that some of you are familiar with. This four step process of a trigger, action, reward and investment that through successive cycles through these hooks, this is how customer preferences are shaped and how our habits are formed. And I don't have time to get into too much of the psychology behind this, but if you're interested, there's a lot more about it in my book. It's available on Amazon, it's 14 bucks. If you don't have 14 bucks, let me know. I can tell you where to pirate the book on the Internet for free. But in any case, check out the book. There's a lot more information there. One of the Models One of the conceptual frameworks you can read in the book that I'm a big fan of is the work of BJ Fogg's behavior model. And what's important about the behavior model that Fogg shows us is, is that motivation is not enough. That in order for a behavior to occur, we need more than motivation, we also need sufficient ability. That's that X axis. If something is easy to do, it's over there on the far right. If something is hard to do, it's on the far left. And when the user has sufficient motivation and ability, they cross that threshold. And when the trigger is present, the behavior will occur. And so what I want us to think about and what I in my consulting practice is that I help companies figure out how to increase ability as much as possible. Not motivation first, but always move ability first. And ability is composed of these six basic elements of time, money, physical effort, cognitive load, social deviance, and non routine. So by reducing those things, by reducing the amount of work that users have to do to get the behavior done, they become much more likely to to do the intended behavior. So let's revisit this problem I talked about earlier, about people not picking up free money, not claiming the benefits they deserve. As one commentator noted about this problem, he said these programs are no brainers for potential beneficiaries. They are generally free, widely available, and impose few transaction costs. In a rational world, such programs would be used by close to 100% of those who are eligible. So why aren't people claiming their money? Well, clearly if someone were to directly walk up to these folks and give them cash, they would take the money, right? There's no problem when it comes to the motivation for taking money. So there's something else, and it concerns their lack of ability to take the desired action. In their case, it's understanding and filling out the paperwork needed to get their benefits. Let me tell you, applying for social services is a paperwork nightmare. You have to do so much work just to know if you're even eligible to receive these benefits. So let me start with an example of a study that looked at how to increase ability to increase the likelihood of people claiming the benefits that they were due. In this study, the researchers looked at the response rates to claiming the earned Income tax Credit, and the study sent a variety of mailers to people who were eligible to receive funds and who had been previously sent information about their eligibility but did not respond. So what did the study find? The study found first and foremost that just receiving another reminder was huge, that simply sending a notification, again, another external trigger, got 22% of people who received the letter to respond. Now remember, these folks had already received a message that told them that they were eligible to claim free money and they had not responded. So the fact that just sending another notification had such an impact is pretty important. But what was interesting in the study is that the mailers that were sent were also different and some mailers did better than others. The mailer that did best proves to us how important simplicity is. Because even though you can't see the text on these images right, these were the images pulled on the study. You can see even though they're a little blurry here, you see can you can see which one is simpler. I mean, compare the simple version on the left to the control condition on the right and you can see that just changing the mailer text to make it more legible, shorter adding breaks making it easier to understand led to a 64% greater likelihood of getting a response. Increasing cognitive fluency, making it easier for people to take the desired behavior by making it easier to understand what they should do, dramatically increased the results. What's interesting is that the changes affected people differently. As the study author wrote, the lowest income workers had roughly twice as large of a response to the mailer simplification as did recipients above median income. In short, simplification matters, and it matters most for the people who have the least. These simple changes, if implemented nationwide, could result in billions of dollars of good reaching people who need these funds. But isn't there so much more that we could do right? Changing fonts and implementing page breaks? This stuff is a joke compared to what's possible today. Let me show you something cool. I'm about to show you a product called Mrelief. This is a company started by two enterprising young women in their 20s. That radically simplifies the process for qualifying for aid. And it's an example of what's possible using the simplicity of an interface that we're all familiar with. Take a look.

Mrelief simplifies the qualifying process for social services both online and through your phone. Here's how Mrelief works. For text messaging, simply Text hello to 773-37-7789 to interact with the automated system and choose a program for Medicare cost sharing, text medicare for RTA ride free text ride or for food stamps, text food.

So this simple chat interface will then.

Be taken step by step through simple questions such as education, citizen status, and age to calculate whether you qualify.

Okay, so this simple chat interface that, by the way, I think we're going to see a lot more of the use of this chat interface through assistance as an app and conversational commerce. What this does is reduce the friction, reduce the cognitive load of getting the recipient to participate. Now this one app is implemented in Chicago serving people in need. But this company is actually in the latest Y combinator batch and they're raising money to take the the product nationwide. Let's switch to healthcare. Patient adherence. People not taking the medication that they're prescribed is a $300 billion problem because 75% of adults do not take their medication as prescribed. So this company, hero, tackles that problem by simplifying the key behavior of taking the right medication at the right time. Check this out. So they reduce the time needed to take the pills. They eliminate the physical effort of opening and preparing the pills, and most importantly, they reduce the cognitive load of knowing what to take when. Here's how. How simple is that? They've greatly increased the ability to take the intended behavior. So here's a company in the food space that's taking on the obesity epidemic. Pantry makes healthy food as fast as fast food. Take a look. So pantry stocks locally made, fresh, healthy food inside of a fridge with essentially an iPad attached to it. This decreases the physical effort an office worker needs to expend to get their food. Each item has an RFID chip attached to it. So as soon as the customer removes the food from the fridge, their account is automatically charged. The system also gets smarter the more pantry is used and you can make requests. And the more you use it, the more they'll stock the food you like. Now this further reduces cognitive load associated with answering the question what should I eat today? Until it becomes easier to use pantry rather than the car bladen conventional vending machine. Very simple solution to a very big Problem. One of my favorite apps for doing social good, though not by design, is an app called Glide. Now, the app makers that built Glide wanted to create a messaging service that was incredibly easy for anyone to use. And to do this, they chose to use this video chat interface as the easiest way to send and receive a message. But what they discovered was that Glide was perfect for a market they hadn't even considered.

Hey there, I'm Sarah from the app Glide. Glide is a video messaging app that's perfect for signing. Here's why. Because it's a messaging app, instead of video calling your friends, you send them a video message. Your friends don't have to be available to watch your video, and they can respond right away or whenever they want, just like texting. Glide is free and available for Android and I.

So this app is so much easier to use that it's become the default messaging service for the hearing impaired community. Now, I've talked about how to increase a behavior by making it easier to do. Let me show you a situation where you actually can benefit from making a behavior more difficult to do. So this is what Uber's surge pricing flow looks like. So when Uber doesn't have enough drivers on the road and they want to encourage more drivers to start picking up passengers, they implement this surge pricing where the customer is charged a multiple of the fare. The problem was that the Uber app was so easy to use, was so frictionless that people were being charged this multiple of their fare without realizing it, and they started complaining. So what Uber did to fix the problem was that they inserted a bit of thought. They wanted to stop people from using the product mindlessly and insert some cognitive thought. So today when they have surge pricing, you have to intentionally type in the multiple for how much more above the base rate you're going to pay. So this is an example of how you can benefit from making a behavior more difficult when you want the user to pay attention to know what they're doing, as opposed to doing it in a frictionless way. So the next step of the hook after the action phase is the variable reward phase. And I want to show you some examples of how we can use variable rewards for good. We're going to have mercy here from Slack later today, and I think it's worth acknowledging that the value that a product like Slack provides, not just to the enterprise, but for this greater good of connecting people around a shared interest. Groups like female founders are using Slack to communicate through this variable reward of the tribe. People communicating with each other around this shared affinity Members of my tribe can get together and we can communicate, share issues, share information together through this interface. And I think how they've done it is, is really phenomenal and that they've allowed people from all over the world to get together around shared causes and interests. Another product I have a connection with is Product Hunt. Ryan Hoover was here at last year's Habit Summit. Product Hunt, I think, helps solve this problem for the entrepreneur who has a new technology, who has something they'd like to share with the world. It used to be to get that product seen, to have a product launch that got any attention, you used to have to get the attention first of some reporter at TechCrunch to get the word out there. Well, today you can put that product on Product Hunt and it will appear in this feed like mechanic that of course uses this variable reward of the hunt and it's sent through email to people who are product enthusiasts. And that mechanism of scrolling and scrolling, looking for what's the latest, what's the newest interesting technology, utilizes that variable reward in a very interesting way. Let's move on to rewards of the self, the third type of variable reward. This is an interesting product that I think is really changing lives. We know that the more frequently we can give people feedback, the more likely they are to change their behaviors. The more quickly we can run them through the four steps of the hook, the more likely they are to change their habits. And so for diabetics, getting a reading on their blood sugar is a pain. So if you have a diabetic in your family, you've probably noticed all the equipment, all the difficulty, the pain of the finger prick test to constantly measure your blood glucose levels and of course your blood glucose levels determine what you eat, when you eat. If you're going to take insulin, it's a real headache, It's a huge pain. Well, there's this amazing new product that's out, that's from a company called Dexcom that, that anyone can actually insert on your own, right on your abdomen, as you see here. And it uses a needle the size of a human hair, about the size of a human hair, to provide the measurement for your blood glucose level every five minutes. And it goes straight to your smartphone. So the variability, of course you can see that wave, right? There's this variability of what's happening in your blood glucose. It makes the process of monitoring what you eat and all the things involved with being a diabetic much, much easier to regulate because you can see the trends every five minutes. Now. I think this isn't how the company is marketing the product at all. But I actually think that this could be something that goes mainstream. Because if you think about the problem with weight loss is that what we eat today doesn't have an impact on the scale for days, maybe weeks later. Well, we know that there's a connection between blood sugar and fat absorption on the body. So we could see a product like this being something that becomes the future of dieting, where we can see the direct impact of, of what we just ate on our blood sugar levels immediately providing that variable reward in real time. And the last product I'd like to highlight is a product called seven cups that is in the psychotherapy space. Seven cups was started by Glenn Moriarty, who's a psychotherapist himself. And Glenn noticed that far too many people were not getting therapy that they needed people who were suffering. Perhaps a parent of a child with a disability, a soldier suffering from ptsd. These folks were not going to get therapy because of all the things in their way. It's expensive, it's time consuming, there's some social stigma around it, and people just weren't receiving the help they needed. So Glenn built this app. Let me take you through Glenn's hook with seven cups of tea. Seven cups. The internal trigger is feeling down. It's seeking connection. It's when you need someone to talk to. The action phase of the hook is to simply push the button on the app and you're immediately connected to another person for free. Doesn't cost a thing. The variable reward is variable rewards of the tribe. Right? You're communicating with another person in real time. Now the investment. And here's where it gets really interesting. The investment phase of seven Cups hook is that every time you use the product, you are trained to, to become a listener yourself. And it turns out that these folks who become listeners who transition from being listen to, to being listeners get better, dramatically better. In fact, a study that was published, that was just published in the Journal of Mental Health found that users rated listeners on seven cups at equivalent levels as they do mental health professionals. And that when asked to compare seven cups to traditional therapy, users rated seven cups as slightly more beneficial than traditional psychotherapy. So a product like this is having a tremendous impact. I mean, if you read the app store reviews on this app, it's tremendous. I mean, it almost brings you to tears, people saying it's better than pharmaceuticals. It was literally a life saving product. The impact of this product is amazing. 180,000 sessions conducted every single week in 130 countries in 140 languages. This is what gets me excited. This is why I'm so happy that you're here today. Because these opportunities allow us to change people's lives if we see design in a new way. But this requires that we shift the way we view the very jobs we do. We need to see the work we do as a moral responsibility, not just a profit motive. We need to see our work through the lens of the good that we can help people do in their lives. I mean, just consider the good that the products and services I just showed you are doing for the world. We need to stop seeing ourselves as building products or services and start thinking of ourselves as building behaviors. And by understanding the mind of our consumers, we can help them live better lives. Now let's get to work. Thank you very much.