Summary of Hooked 1

SUMMARY of HOOKED: How to Build Habit-Forming Products !

Abstract .............................................................................................................. 2!Trigger ............................................................................................................ 2!Action ............................................................................................................. 2!Variable Reward .............................................................................................. 2!Investment ...................................................................................................... 2!

The How and Why of Habits ............................................................................... 3!Competitive Advantages of Habit Forming Products ....................................... 3!

Trigger ................................................................................................................ 4!External triggers .............................................................................................. 4!Internal Triggers .............................................................................................. 4!Building for Triggers ........................................................................................ 5!

Action ................................................................................................................. 5!BJ Foggs six elements of simplicity ............................................................. 6!

Variable Reward ................................................................................................. 7!Understanding Variability ................................................................................. 7!The 3 Types of Reward: Tribe, Hunt, Self ........................................................ 7!

Investment .......................................................................................................... 9!Changing attitudes .......................................................................................... 9!

Sidenotes Interesting Stuff ............................................................................. 10!Key Take-Aways ............................................................................................... 11!Application and Questions to Ask ..................................................................... 13 Sketchnotes, Mindmap ..................................................................................... 15

Summary by Markus Strasser

Summary of Hooked 2

Hooked How to Build Habit-Forming Products

Abstract

Habits are automatic behaviors triggered by situational cues. Habits form when the product of frequency and perceived utility is high. Habit Design helps if people already want to do something, but, for lack of a solution, dont do. If a solution doesnt solve the problem, design will not make it sustainable. The proposed Hook model has 4 main stages of habit-forming products: TRIGGER Situational clues (external triggers) should be intended and create successive hooks so that the user forms associations with internal cues (triggers). For example: people associate Facebook with their need for social connection. ACTION Action is done in anticipation of reward. If the action is performed depends on a) the ease of the action b) the psychological motivation. VARIABLE REWARD Predictable feedback loops dont create desire or craving. Dopamine surges when we expect a reward. Introducing variability multiplies that effect, creating a reward-focused state, which suppresses the areas of the brain associated with judgment and reason while activating parts associated with wanting and desire (e. g. slot machines, lottery)

Pinterests mix of relevant and irrelevant bits rewards usage in variable intervals (also part of its stickyness: collecting, curating, curiosity).

INVESTMENT The user has to put something in (do work) time, data, social capital, money, or effort. This is not artificially, but to IMPROVE the service the next time around: inviting friends, building assets, learning to use new features, stating preferences are all investments to improve their future experiences.

Summary of Hooked 3

The How and Why of Habits Habits enable us to focus our attention on other things, storing automated responses in the basal ganglia (associated with involuntary actions). Habit-forming products (HFB) require ongoing, unprompted user engagement and therefore need to build user habits. A habit is when not doing an action causes pain (or an itch). The action provides a small relief. HFP start as nice to haves and become must-haves. Forming habits can take from weeks to up to 5 months, depending also on how important the habit is and how complex the behavior. COMPETITIVE ADVANTAGES OF HABIT FORMING PRODUCTS 1. Increase Customer Lifetime Value (CLV) 2. Give Pricing Flexibility: Once a compulsion to play is in place and the desire to

PROGRESS increases, converting users into paying customers is much easier. Most free online games get their revenue from selling virtual items, extra lives, and special powers. With app usage increases customer willingness to pay.

a. Evernote: after 1 month, 0.5% paid for Pro Version. After 33months, 11% and after 42months, 26%.

You can determine the strength of a business over time by the amount of agony they go through in raising prices Warren Buffet

3. Supercharging growth: The most important factor to increase growth is Viral Cycle Time (VCT) the time it takes a user to invite another user. After 20 days a VCT of 2 days gives you 20470 users, if you halved VCT it would be 20million users1.

4. Sharpening competitive edge: Many innovations fail because consumers irrationally overvalue the old while companies irrationally overvalue the new John Gourville According to Gourville, new entrants have to be 9 times better to get adapted (old habits die hard). We store non-transferable value in services.

5. Building a mind monopoly: New behaviors have short half-life time, as our mind reverts back to old ways of thinking. We regress to first learned behavior over time. Behaviors are LIFO last in, first out.

Amazon makes money from ads it runs from competing businesses, but it also utilizes other companies marketing dollars to form a habit in the shoppers mind: It becomes the solution to a frequent pain point finding the product you want. By addressing price concerns, Amazon earns loyalty, even without making the sale. Preferences for retailers increase if they offer competitive price information, increasing Amazons perceived utility.

1 http://www.forentrepreneurs.com/lessons-learnt-viral-marketing/ 2 Depression = experiencing negative emotions more frequently than the general population and seek relief

Summary of Hooked 4

For some businesses habit-forming products are critical success, but not every business requires habitual user engagement

Trigger Habits are not created they are built upon. Technologies start changing behavior by first cueing users with a cal l to action. External triggers are embedded with information that tells the user what to do next. Some graphics are already accepted as part of interface design (buttons, fields). EXTERNAL TRIGGERS

1. Paid triggers: Since paying for re-engagement is unsustainable for most models, companies generally use paid triggers to acquire new users and then leverage other triggers to bring them back.

2. Earned Triggers: Keeping the product in spotlight: difficult and unpredictable 3. Relationship Triggers: One person telling another. Word of Mouth 4. Owned Triggers: Real estate in the users environment: email newsletter,

phone screen estate. As long as the user agrees, the company owns a share in his attention. Paid, earned and relationship triggers drive acquisition, owned triggers drive engagement.

External triggers tell the user what to do next by placing stuff in the environment. Internal triggers do it through learned association. All triggers should propel users through the hook model

INTERNAL TRIGGERS Internal triggers give the brain information about what to do next it is learned association inside the memory. When a product becomes coupled with an emotion, routine or thought, it leverages an internal trigger. Emotions, particularly negative ones (prospect theory), are powerful internal triggers. Boredom, loneliness, frustration, confusion and indecisiveness often instigate a slight pain or irritation and prompt an almost instantaneous and often mindless action to lessen the negative sensation. (Instagram combats the fear of losing a special moment). Our life is filled with tiny stressors and we are usually unaware of our habitual reactions and nagging issues. The desire to be entertained can be a need to satiate boredom. A need to share good news can also be thought of as an attempt to find and maintain social connections. Accordingly, there are several features of Internet usage that correlate with depression2 (very high email usage, high video usage, gaming, chatting). 2 Depression = experiencing negative emotions more frequently than the general population and seek relief by turning to technology to lift their mood.

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BUILDING FOR TRIGGERS Goal: To solve the users pain and being associated as a source of relief We often think the Internet enables you to do new things.but people just want to do the same things theyve always done Ev Williams [Twitter Founder] Talking to users is sometimes ineffective, because their declared preferences are different from their revealed preferences. Some ways to identify preferences: usability studies, empathy maps, customer development, progressive WHYs (Louis CK)

Action

BJ Foggs formula for behavior occurrence: B=MAT Behavior = Motivation, Ability, Trigger All humans are motivated to seek pleasure and avoid pain, to seek hope and avoid fear and finally to seek social acceptance and avoid rejection. In the B=MAT formula it seems that for Technology solutions, increasing ability (ease of use) is more sufficient than motivation. Increasing motivation is expensive, time-consuming and is influenced by many external factors. Denis J. Hauptly on increasing ABILITY to use a product:

1. Understand why people use it 2. Lay out the steps the customer must take to get the job done 3. Once the task from intention to outcome are understood, start removing steps until you reach the simplest possible process

Take a human desire, preferably one that has been around for a long timeIdentify it and use modern technology to take out steps Ev Williams Through technology and creative constraints, the once niche behavior of content publishing became a mainstream habit through Pinterest, Instagram, Twitter and Vine.

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BJ FOGGS SIX ELEMENTS OF SIMPLICITY A starting point to decrease task difficulty: 1. Time How long to complete action 2. Money 3. Physical Effort Labor involved in taking action 4. Brain Cycles Level of Mental Effort and Focus required to take an action 5. Social Deviance How accepted the behavior is by others 6. Non-Routine How much the action matches or disrupts existing routines Fogg instructs designers to focus on simplicity as a function of the users scarcest resource at that moment. Identify what the user is missing. What is making accomplishing the desired action difficult? What is missing to proceed to the next step? Twitter created a website plugin for 3rd parties after they saw that 25% of their

tweets included links. Apple made the IPhone Camera app launchable without unlocking the screen

(capturing moments) Platforms using Facebooks Login API save the user time and effort, but the

login API also triggers anxiety (brain cycles) about the trustworthiness of FB.

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Variable Reward Most pleasure is NOT gained when we receive a reward, but rather in the anticipation of it3. The anticipation-state releases dopamine and drives our search for reward. We then act to alleviate the craving (or anxiety), not to get the reward. UNDERSTANDING VARIABILITY Laughter is a release valve when we experience the discomfort and excitement of uncertainty, but without fear of harm When something breaks the cause-effect pattern weve come to expect, we suddenly become aware of it again. Novelty sparks interest. Adding variability increases the frequency of intended actions. THE 3 TYPES OF REWARD: TRIBE, HUNT, SELF TRIBE Social rewards on a variable schedule are powerful. Users anticipate social validation. Sites that leverage tribal rewards benefit from social learning theory (Albert Bandura). Seeing someone being rewarded makes people more likely to alter their behavior, especially when the person is like them or a role model (social contagion). At Stack Overf low users submit answers that can be up-voted. The user gets

points and with that levels, badges, status and privileges. There is also a satisfaction in contributing to a community they care about.

To combat trolls in League of Legends, there is an Honor Points reward system. Other users can award points for sportsmanlike conduct.

HUNT Consuming Animal Protein was a significant milestone to better nutrition and led to bigger brains. Evidence shows that weapons were only invented 500.000 years ago, whereas weve been eating meat for over 2 million years. So the first 75% of our existence we hunted with a technique thats called Persistence Hunting: The hunter would slowly follow his prey until it collapsed from exhaustion. The ability to maintain steady pursuit gave us the capacity to hunt large animals. We are driven by the pursuit itself the need to acquire physical objects, such as food and other supplies that directly or indirectly aid our survival are part of our brains OS. Information translates into money and money into food Information is now indirectly seen as an object of survival. 3 Shown by activity in the nucleus accumbens, which is part of the basal ganglia and has an important role in pleasure, including laughter, reward, reinforcement learning, as well as fear, aggression, impulsivity, addiction and the placebo effect.

Summary of Hooked 8

Pinterest, Twitter, Slot Machines keep people hunting for jackpots4 the action

is easy and some give a glimpse of what is coming (Pinterest, Slot Machines).

SELF We are driven to conquer obstacles, even if just for the satisfaction of doing so. Pursuing a task to completion can influence people to continue all sorts of behavior. Puzzles are a perfect example. Self-determination theory espouses that people desire to gain a sense of competency. Video Games: Leveling up, unlocking special powers, weaponry, uncharted

lands, scores etc. fulfills desires by showing progress, completion and giving feedback. All that can transform a difficult path in an engaging challenge.

Variable Rewards are not a Free Pass For example, if the trigger of social forums to contribute were a variable monetary reward, people could use their time better by earning an hourly wage. Social rewards (Quora) and the variable reinforcement of recognition can be more efficient as long as alternative social rewards are harder to get.

Maintain a Sense of Autonomy Make old routines easier, instead of learning new unfamiliar actions. Users must feel in control. A meta-analysis of 42 studies involving over 22.000 participants concluded that some key words are highly effective to gain compliance: but you are free to accept or refuse We are more likely to be persuaded when our ability to choose is reaffirmed. But you are free disarms the instinctive rejection of being told what to do. Fitocracy (a fitness app) enables people to share encouragement, exchange

advice and receive praise. A recent study found social factors were the most important reasons people used the service and recommended it to others.

Too many companies build products betting users will do what they make them do instead of letting them do what the want to do

Beware of Finite Variability Games played to completion (single player) offer finite variability while games played with other people offer infinite variability. TV shows are finite, user-generated content is infinite.

4 We also tend to overestimate small probabilities (Prospect Theory)

Summary of Hooked 9

Example: Email Email uses all three types of rewards. There is a lot of uncertainty about who could send us a mail. There is a social obligation to respond (rewards of the tribe), curiosity about information, opportunities, threads (hunt) and the need to act, complete and control our inbox (self).

Investment

CHANGING ATTITUDES Studies show that frequency (ability) is the leading factor for forming new habits and change in attitude about the habit. Attitude changes increases perceived utility (motivation) and we enter the Habit Zone. Small investments change our perception (Labor leads to love). The more we invest in a product, the more we value it has5. Also, we seek to be consistent in our behavior. We avoid cognitive dissonance. In Aesops fable a hungry fox encounters grapes he desires. After failing to reach them he decides that the grapes must be sour and that therefore he would not want them. Example Beer: Our bodies were designed to reject beer and spicy food, but

seeing so many other people enjoying it (cognitive dissonance), makes us repeat it (consistence) and that changes our perception (rationalization), which then propels repetition.

Effort=Value. Consistent with past=Good. Cognitive dissonance=Bad Unlike the action phase of the hook model, investments are about anticipating long-term rewards, not gaining immediate gratification. But it comes after users received variable rewards, not before (that would be reciprocity). The Investment Phase leverages the users understanding that the app will get better with use same as a good fr iendship. By storing value and aggregating content, the software learns (a garage could not do that). A garage, for example, gets personalized with goods, a software through and with them. Examples for stored value: Reputation: ebay, taskrabbit, yelp, Airbnb, traity etc. Data: iTunes Followers: Twitter Skill: Photoshop learning is investing in a product, especially if the learned is

not fluid. 5 See: IKEA effect and studies done on people selling their own origami frogs

Summary of Hooked 10

Habit-Forming Products leverage the users past behavior to initiate an external trigger in the future. Any.do connects with the calendar, notifies people and urges people to do a

follow-up task. Snapchat messages contain an implicit prompt to respond. A mobile analytics study showed that 26% of mobile apps were downloaded and used only once. Data suggest that people use more apps, but engage with them less frequently. Also having daily checklists (or streak counts) and sharing them, is a reward. Portraying oneself in a positive light is intrinsically rewarding (humblebrag6). People forgo money to disclose about themselves.

Sidenotes Interesting Stuff 79% of smartphone owners check their phones within 15 minutes of wakening

1/3 of them would rather give up sex than lose their cell phones. A 2011 study suggests 34 smartphone uses a day, although industry experts estimate it to be around 150.

Habit forming technologies may be the cigarette of the 21st century. Our moral

compasses have not caught up with technological advances (revolution is faster than evolution) and our systems have not developed antibodies to addictive new things.

Why are zombies suddenly so fascinating? Maybe technologies unstoppable

progress ever more pervasive and persuasive has grabbed us in a fearful malaise at the thought of being involuntarily controlled (Choice architecture).

Experience-taking shows that people who read a story about a character

actually feel what the character is feeling. We experience his or her emotion. The same things that drive us drive them.

Gamification the use of game-like elements in non-gaming environments has

been used with varying success. Points, badges, and leaderboards can prove effective, but only if they scratch the itch. When the companys solution doesnt solve the real problem, gamification doesnt help.

6 Disclosing information about the self is intrinsically rewarding Harvard Meta Analysis

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Key Take-Aways GENERAL The convergence of access, data and speed is making the world a more habit-

forming place. Businesses that create customer habits gain a significant competitive

advantage. Economic value becomes more and more reliant on the habits companies

create. Habit-forming Products link their service to the users daily routines and

emotions and are used before rational thought occurs a first-to-mind solution. Habit-Forming Products often form as nice-to-haves, but after the habit is

formed become must-haves. TRIGGERS Triggers cue the user to take action and are the first step in the Hook Model Triggers have two types: external and internal External triggers tell the user what to do next by placing information within the

users environment Internal triggers tell the user what to do next through associations stored in

memory Negative emotions frequently serve as internal triggers ACTION Behavior = Motivation, Ability, Trigger Ensure a clear trigger is present, then increase ability by making the action

easier, and finally align with the right motivator Every behavior is driven by on of 3 core motivators: seeking pleasure and

avoiding pain, seeking hope and avoiding fear, seeking social acceptance and avoiding rejection.

Ability is influenced by the six factors: time, money, physical effort, brain cycles, social deviance, and non-routineness. Ability depends on users and their context at the moment.

Heuristics are cognitive shortcuts we take to make quick decisions. Product Makers can user many of the hundreds of heuristics to improve their product.

VARIABLE REWARDS Rewards of the TRIBE are social rewards fueled by connectedness with, or

gratification of, other people Rewards of the HUNT are resources linked to survival. Rewards of the SELF are intrinsic rewards of mastery, competence, completion,

and consistency.

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When our autonomy is threatened, we feel constrained by our lack of choices and often rebel against doing a new behavior [reactance]. Maintaining a sense of user autonomy is a requirement for repeat engagement.

Finite Variability becomes predictable with use and loses appeal. Variable rewards must satisfy users needs, while leaving them wanting to re-

engage INVESTMENT Unlike the action phase, which delivers immediate gratification, the Investment

Phase is about anticipation of rewards in the future. Investments in a product create preference because of our tendency to

overvalue our work, be consistent with past behaviors, and avoid cognitive dissonance.

Investment comes after the Variable Reward Phase when users are primed to reciprocate

Investments enable accrual of stored value in the form of content, data, followers, reputation or skill.

Investments increase the likelihood of users passing through the Hook again by loading the next trigger to start the cycle all over again.

The best triggers are those who refer to past investments

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Application and Questions to Ask GENERAL What habits does your business model require? What problem are users turning to your product to solve? How do users currently solve that problem and why does it need a solution? How frequently do you expect users to engage with your product? What user behavior do you want to make into a habit? ESSENTIAL What do users really want? What pain is your product relieving? (Internal Trigger) What brings users to your service (External Trigger)? What is the simplest action that users can take in anticipation of reward, and

how can you simplify your product to make this action easier? Are users fulfilled by the reward, yet left wanting more? What bit of work do users invest in your product? Does it load the next trigger

and store value to improve the product with use? What problem do I wish someone else would solve for me? TRIGGER Who is your products user? What is the user doing right before your intended habit? Which internal trigger your user experience most frequently? Finish the narrative: Every time user [internal trigger]. He [first action of the

intended habit] What might be places and times to send an external trigger? How can you couple an external trigger as closely as possible to when the

users internal trigger fires? Imagine crazy, or currently impossible, ideas for ways to trigger your user

(wearable computers, biometric sensors, carrier pigeons, etc.) ACTION Walk through the path you user would take to use your product or service,

beginning from the time they feel their internal trigger to the point where they receive their expected outcome.

o How many steps does it take before users obtain the reward they came for?

o How does this process compare with the simplicity of alternative products that deliver similar rewards (competitors)?

Which resources are limiting your users ability to perform the action? How would you apply heuristics and biases to improve your product?

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VARIABLE REWARD Are there any moments of delight or surprise in your product? Is there anything users find particularly satisfying about using the product? What outcome (reward) alleviates the users pain? INVESTMENT Review your flow. What bit of work are your users doing to increase their

likelihood of returning? How long does it take for triggers to re-engage your users? How can you

reduce the delay to shorten CYCLE-TIME through the hook? How can you reduce Viral Cycle Time?

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Sketchnotes from M

eetup [Dante Guintu]

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