How to build addictive products with the Hook Model

  • Post by Rachel
  • Jul 31, 2020
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Hooked’ by Nir Eyal is a must read if you want to build a long lasting brand, organically grow customer engagement and achieve long term success for your product or business.

Published in 2014, Hooked is still relevant today - whether you’re a startup founder, product manager, entrepreneur or UX designer. The author, Nir Eyal, takes us behind the scenes and explores the big question - how do successful companies create products that people can’t put down?

We all know products (apps, websites, platforms, physical products) that keep us coming back for more. We use them daily, turn to them intuitively and instinctively, recommend them to friends and continue to use them over and over again. Whether it’s Twitter, UberEats, Headspace, Instagram, Tinder, YouTube or your iPhone, there’s a common thread that runs through all addictive, habitual products, and - it turns out - it’s all closely tied into user psychology and behavioural design.

COVID-19 changed the way we internet

According to the World Economic Forum (WEF), The COVID-19 pandemic has accelerated 10 key technology trends, including online shopping, digital payments, telehealth and robotics. These technologies can help reduce the spread of the coronavirus while helping businesses stay open. The WEF concludes that technology can help make society more resilient in the face of pandemic and other threats.

During the COVID-19 pandemic, technologies are playing a crucial role in keeping our society functional in a time of lockdowns and quarantines. And these technologies may have a long-lasting impact beyond COVID-19.”

- World Economic Forum

The current global pandemic has highlighted the vital importance of digital products in our lives. No matter where you are in the world, we’ve all come to heavily depend on Zoom, Spotify, Netflix and many more apps and platforms which are getting us through these challenging times. Technology is helping us work, learn, relax, communicate, seek medical advice and stay informed and entertained.

The New York Times reports that the virus changed the way we internet - Americans have been spending more of their lives online. Since February 2020, daily website traffic has increased by 27% on Facebook, 16% on Netflix and 15% on YouTube. Use of video chat apps has been soaring with average daily traffic on leading apps increasing by a whopping 75%. We’ve become more reliant on services that allow us to work and learn from home. School assignments are being handed out on Google Classroom. Meetings are happening on Zoom, Google Hangouts and Microsoft Teams. News sites are seeing huge jumps in traffic.

In the midst of the worst global crisis the world has seen in decades, it seems technology is playing a crucial role in everyone’s lives. Ironically, this crisis has boosted innovation in unprecedented ways and has become an extraordinary catalyst for change. As Accenture points out in a recent report on post-virus technology trends, “the need for innovation is greater than ever, driven by new challenges that are more disruptive than most have ever faced. The question for enterprises is: How fast can you act?”.

There’s no doubt that COVID-19 has transformed the role and importance of digital experiences in people’s lives. So, if you’re building or managing a digital product right now and want to thrive in this new world, you’ll need to consider your personalisation strategies and devise more agile engagement strategies, so that you can quickly understand what people’s new wants and needs are. The more your users or customers have agency over their digital experience and can steer it to match their new needs, the faster you’ll be able to adapt, add value and survive.

The trouble with Instagram

In a world of infinite choice and endless distraction, attention has become the most valuable commodity. Being able to capture people’s time, interest and, ultimately, recurring business is a massive challenge.

For direct-to-consumer (DTC) brands in particular, which were born online and massively reliant on social media marketing, rising customer acquisition costs, especially on Facebook and Google, is one of the biggest issues they face today.

Early DTC brands (like Lively, Warby Parker and Dollar Shave Club) found huge success through social media campaigns and influencer collaborations and managed to organically build a large following on social networks through viral growth and smart use of content. The story is very different today. Facebook ads’ cost per click (CPC) increased by 21% year over year since Q2 2018. Instagram, which used to be the darling of DTC brands’ marketing, has actually been in steady decline since 2019. And brands have been warned that their engagement on the platform would soon be zero.

A number of factors have caused social platforms to decline as an effective marketing channel - first, the huge number of ads and explosion of influencers have pushed people away - users are tired of/immune to commercial content in their feed - there’s too much noise out there. Secondly, Instagram has changed its algorithm in 2016 and again in 2019 so organic, chronological posts are no longer guaranteed to be seen by people (instead you’re shown what the IG algorithm deems you might be interested in, i.e. ads). Thirdly, Instagram isn’t as popular as it used to be (IG engagement rate has been gradually dropping year on year).

But this systemic issue is more than just about cost and reach. Another problem is that the metrics provided by social/ad platforms when you advertise with them are just not that useful - if you run a Facebook or Google campaign you’ll get very generic data (e.g. number of clicks per ad, ad views, general demographics of users who “saw” the ad (like age groups and geographic location) or number of likes.

The trouble is these metrics are quite superficial - they don’t really tell you much about the target audience at a more granular level, like what their interests are, what led them to click on your ad or have they proceeded to your website to browse or purchase. So, there’s very little follow-up action you can take or meaningful insights you can draw from this data to improve reach or increase engagement with your target market. The advertising model has clearly had its day. Time to look for other ways to reach and connect with your customers.

Why the ‘first to mind’ solution always wins

Enter the Hook model. Hooked shows us how some of the world’s greatest and most successful companies have managed to create products that connect with people and help improve their worlds on many different fronts.

The Hook Model explains the rationale behind the design of many successful habit-forming products and services we use daily. According to Nir Eyal, the Hook model is intended to be a practical tool made for entrepreneurs and innovators who aim to use habits for good.

“The convergence of access, data, and speed is making the world a more habit-forming place. As companies combine their increased connectivity to consumers, with the ability to collect, mine, and process customer data at faster speeds, we are faced with a future where everything becomes potentially more habit forming.” - Hooked by Nir Eyal

But first, a few key concepts that underpin the Hook model and explain why it works:

  • “Companies increasingly find that their economic value is a function of the strength of the habits they create. In order to win the loyalty of their users and create a product that’s regularly used, companies must learn not only what compels users to click but also what makes them tick”.
  • “Habit-forming companies link their services to the users’ daily routines and emotions…The first-to-mind solution wins.”
  • ““The Hook Model describes an experience designed to connect the user’s problem to a company’s product frequently enough to form a habit”.
  • Habits are defined as behaviours done with little or no conscious thought.”
  • “Today, small start-up teams can profoundly change behaviour by guiding users through a series of experiences called hooks. The more often users run through these hooks, the more likely they are to form habits.”
  • “This book teaches innovators how to build products to help people do the things they already want to do but, for lack of a well designed solution, don’t do. Hooked seeks to unleash the tremendous new powers innovators and entrepreneurs have to influence the everyday lives of billions of people.”
  • “When harnessed correctly, technology can enhance lives through healthful behaviors that improve our relationships, make us smarter, and increase productivity.”

The 4 steps of the Hook Model

1/ Trigger

  • Triggers are the important spark that starts the engine. They come in two types: external and internal.
  • Habit-forming products start by alerting users with external triggers like an e-mail, a Website link, the app icon on a phone or notifications.
  • By cycling through successive hooks, users begin to form associations with internal triggers, which attach to existing behaviours and emotions (e.g. uncertainty, fear, anxiety, boredom).
  • When users start to automatically cue their next behaviour, the new habit becomes part of their everyday routine.
  • Explore both external and internal triggers, in order to determine which triggers are most effective for your specific product.

2/ Action

  • This is the behaviour done following the trigger, in anticipation of a reward (eg. clicking on an icon, opening a notification, clicking on an image, opening an email).
  • Companies use two basic levers of human behaviour to increase the likelihood of an action occurring: the ease of performing an action and the psychological motivation to do it.

3/ Variable Reward

  • The hook should create a craving, a desire that keeps users coming back for more. This is created through variability and unpredictability of rewards - one of the most powerful tools companies implement to hook users.
  • Introducing variability creates a focused state, which suppresses the areas of the brain associated with judgment and reason while activating the parts associated with wanting and desire. Variable rewards anticipation doesn’t just impact the initial on-boarding but also influences retention.

4/ Investment

  • The investment phase increases the odds that the user will make another pass through the hook cycle in the future. The investment occurs when the user puts something into the product of service such as time, data, effort, social capital, or money.
  • The investment phase isn’t about getting users to open their wallets. Rather, the investment implies an action that improves the service for the next go-around. Inviting friends, stating preferences, building virtual assets, and learning to use new features are all investments users make to improve their experience. These commitments can be leveraged to make the trigger more engaging, the action easier, and the reward more exciting with every pass through the Hook Model. Investments encourage users to cycle through successive hooks.

For a great case study of how Amazon’s Alexa uses the Hooked model to hook you (by Nir Eyal), click on the above link.

What can the Hook model do for your business?

  1. Drive higher engagement - Aim to build a habit-forming product that changes user behaviour and leads to unprompted user engagement. The goal should be to influence customers to use your product on their own, again and again, without relying on overt (and expensive) calls to action, such as ads or promotions.
  2. Generate fast organic growth - Bear in mind that the Hook model may not be suitable for all products, industries or businesses. It’s particularly relevant to businesses that require ongoing, unprompted user engagement and therefore need to build user habits. Digital, direct-to-consumer products or platforms that need to generate fast, organic growth (and have been let down by traditional social media ads and face a customer acquisition challenge), would benefit from the Hook model because it’s practical, actionable and makes perfect sense in a digital context.
  3. Drive higher CLTV & company value - Fostering consumer habits is an effective way to increase the value of your company by driving higher customer lifetime value (CLTV), i.e. the amount of money made from a customer before they switch to a competitor or stop using the product (or dies). This is a crucial metric because it’s at the core of building a sustainable business (i.e. ensuring you have regular returning customers and not just random one-off purchases) and is one of the key performance indicators which investors and VCs look at.
  4. Create price flexibility & easier revenue generation - As customers form habits around your product, they become dependent on it and so become less price sensitive. Habits simply give companies greater flexibility to increase prices and hence help create a more valuable and profitable business. This also means that you can more easily convert free/freemium users into paying users if that’s your model (e.g. check out the Spotify or LinkedIn models).
  5. Achieve viral growth at little to no customer acquisition cost - Users who love your product or brand and continuously find value in it become ‘raving fans’ and brand evangelists. This means they’re more likely to tell their partners, friends, colleagues and relatives about it, voluntarily share posts about your brand on social media and recruit more users, so you’ll benefit from a network effect, boosting your word-of-mouth reach and supercharging your organic growth. Many brands know that there’s nothing more powerful than personal referrals and recommendations because they’re the antithesis of advertising - they come from your trusted network as opposed to a brand’s marketing team or dodgy influencers and that makes a huge difference to user acquisition and retention.
  6. Establish a competitive moat - This is an important one: forming long lasting user habits is a huge competitive advantage. Products that manage to do the impossible by changing customer routines and establishing a loyal fan base that won’t easily switch to other brands, have a powerful moat.

Bear in mind that: a) consumers have an abundance of choice on almost every front; b) users’ old habits are notoriously hard to change; and c) If you’re a young, innovative company that’s trying to disrupt established industries, you are vulnerable to cut throat tactics and attacks from incumbents who can easily copy innovative ideas and have massive marketing budgets and established distribution channels they can leverage to defend their turf.

Given these challenges, your product can’t just be marginally better. It must be at least ten times better than the incumbent’s to even stand a chance. Even then, it can be hard to carve out a sustainable business as incumbents will become aware of your incursion on their market and will eventually catch up, blurring the differentiation or USP you’ve worked so hard to define.

Ultimately, you should think of creating a habit forming product as a strategic imperative from day one and continuously ensure that it’s tightly integrated into the product’s design and your key success metrics.

The big takeaway

If you take a close look at leading, globally successful brands and companies today that have had a profound impact on how we live and work (Amazon, Google, Apple to name a few), you’ll see that they’ve cleverly designed a virtuous cycle of habit-driven behaviour which, in turn, helps make the product and experience better, drives adoption on a global scale and ultimately leads to market domination that’s increasingly difficult (if not impossible) to challenge.

But that’s not to say that young, innovative companies can’t adopt these strategies to their advantage and create new, exciting and disruptive products that reimagine the status quo, make the world a better place, deliver superior customer experiences and benefit us all. ‘Hooked’ is a great first port of call for inspiration and practical guidance on how to get started on this fun journey.

Further reading