Not all businesses thrive on repeat customers. Service-based companies may work with the same clients several times, but most of their business likely comes from referrals and advertising. Even some product-based companies and retailers can get by on word of mouth and a loyal customer base. But other businesses, particularly those in the tech field, need to actively work to create customer habits that keep people coming back.
"Many business models simply could not survive without forming habits," said Nir Eyal, author of the forthcoming "Hooked: How to Build Habit-Forming Products" (Portfolio Hardcover, 2014). "Think of some of the biggest success stories of the past decade. Companies like Facebook, Twitter, Amazon, Instagram and Whatsapp could not survive without forming strong user habits."
For business models that require habits, Eyal said that the product needs a "hook," an experience that will connect the user's need to your solution. Over time and with enough frequency, this experience causes customers to form associations with your product that spark unprompted engagement, and thus, a habit. [Launching Your First Product? Listen to Your Customers]
"Hooks are in all sorts of products we use with little or no conscious thought," Eyal told Business News Daily. "Use of the product is typically associated with an emotional pain point, an existing routine or situation. For example, what product do people use when they're feeling lonely and seek connection? Facebook, of course. What do we do when we feel uncertain? We Google. What about when we're bored? Many people [check] YouTube, Pinterest, sports scores or stock prices."
In his book, Eyal outlines a four-step process to form customer habits around your product:
Trigger: Habit-forming products start by alerting users with external triggers like an email, a website link or an app icon on a mobile device.
Action: With the right design and user experience, the product makes performing an action easy, and thus provides the psychological motivation to do so.
Reward: The mental or emotional reward that results from using the product increases the neurotransmitter dopamine surge in the brain and creates a craving.
Investment: When a user invests time, data, effort, social capital or money into the product, it increases the odds of that customer returning to the product or service.
"Many products fail to create a user habit because the designer or entrepreneur doesn't realize that there is a formula for [it]," Eyal said. "Through successive cycles of these [steps], user habits are formed."
It's important to note that not all products will be able to successfully create a user habit, Eyal said. One of the prerequisites for a hook to be effective is frequent product use, and if your product doesn't naturally encourage engagement more than once per week, your chances of forming a habit are very low. However, if your product does have "hook" potential, Eyal noted that a strong, passionate, involved leadership team will increase a company's chances of reaching that potential.
"When [entrepreneurs] work on something that they believe materially improves people's lives and that they themselves use, they are what I call 'facilitators,'" he said. "Facilitators work for a higher purpose — benefitting others — and they closely understand the user's needs since they are users themselves. Incidentally, they also have the best odds of achieving material success."
Originally published on Business News Daily.