Hooked By Nir Eyal – Book Summary

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Introduction

Hooked by Nir Eyal is a book that describes the Hook Model which focuses on the business aspects of life. The Hook Model comprises of steps which can aid an entrepreneur to keep building and improving products. The rhythm of innovation can be maintained using the model. The author Nir Eyal an MBA degree holder from Stanford Graduate School of Business.

His books feature a concept called “behavioral design”. He describes it as being an intersection of technology, business, and psychology. Behavioral design is described using neuroscience, experiences, and economics. Eyal is a firm believer that the work we do influences our behavior. Behavioral design is a way to ensure high productivity and improved behavior.

Lessons

1. Habit-forming

Gadgets are a big part of our daily lives. Some check their phones first thing in the morning. This act is not done consciously, nor does it take effort. Such an act is a habit. We are habitual to being near our phones. These habits have been ingrained in our minds by the phone company. Via their advertisements and promotions, we cannot imagine our life without our phones. In fact, this is the secret of their success.

By making the customers feel that they cannot survive without the product, the companies have a constant flow of cash. We also have added access to high-speed internet, a vast online presence, and the ability to process faster.

2. How companies form habits

 The companies which get us addicted to their products use the same methods to do so.

  1. By increasing the Customer Lifetime Value. It is a measure of how long a customer prefers the products of a company before shifting to a competitor. The frequency of the customer using the product increases the Customer Lifetime Value.
  2. By manipulating the price. Companies would want to extract the highest amount they can from a customer. As a customer becomes dependent on the product, they become flexible with the expense. So, when a company has established dependency on the product, the customers will be willing to pay more for it.
  3. By having a marketing strategy. Companies which produce habit-forming gadgets rely on word of mouth marketing. The addicted customers (called “hooked”) tend to market the products without expense to the company.
  4. By defeating their competitors. A study revealed that customers would change their regular brand if the competitor is nine times better. So, companies also on focus on this aspect and try to overtake their competitors.

3. The Hook Model

Eyal’s Hook Model focuses on how companies can ensure that the customers can be hooked onto their products. The outcome of this model is that the customers look at the products as a habit. It is a four-phase method.

  1. Trigger – imposes on the customers to take a step towards buying.
  2. Action – enables the customers to buy the product.
  3. Variable Reward – solves a problem for the customers.
  4. Investment – keeps the customers devoted to the products.

4. Trigger

A trigger forms the basis for the formation of a habit. Without a trigger, a customer may take a step towards buying a product. Triggers are of two types – external and internal.

1. External trigger – the triggers for purchasing the products are placed in the vicinity of the customers. They are placed where they are easily visible to the customer.

The trigger can include paid advertisements, billboards, and other forms of media. These are expensive but pay off in the long term.

Other forms of external triggers are viral videos or building a relationship with the users. Word of mouth also behaves like an external trigger.

2. Internal triggerthe customers are inherently drawn to the products. This is done by associating a feeling or emotion with the product. Hence, when a customer experiences the feeling, they will relate it to the product. These feelings can be negative or positive.

After a while, the customer will be drawn to the product. They act like solutions for their feelings. For example, if a company launches a product that keeps boredom at bay, a customer will purchase it to not be bored anymore.

Thus, the customer would not need to be triggered by external cues any longer.

5. Action

A model called the Fogg Behaviour Model assesses how behavior is influenced. The formula is B=MAT, where B refers to behavior, M refers to motivation, A refers to the ability, and T refers to the trigger.

All three components are crucial for the behavior to change. When the three align, the customer can take the step of buying the product. Thus, it is in the hands of the company to ensure the three pillars of behavior change are in place.

The customer must first be motivated to buy the product. The company must present with a ‘why’ the product is required. If the answer is good enough, the customer will be motivated to buy it. Next, the customer must be able to buy it. The product and its cost must be acceptable to the customer. If there are any obstacles in the path, the customer will repel the product. The easier it is to buy the product, the more the customer will be willing to have it. When combined with all the triggers, the customer should be compelled to take the step.

6. Variable Reward

By offering a reward to the customers for buying the products, the customers will be likely to come back. Rewards can be posed as promises which must be held. The rewards must be novel and preferably, personal. When a reward is regular, the brain stops to acknowledge it. Soon, the customer may switch over to a competitor. So, the rewards must be novel, so the customer continues to pay attention.

7. Types of Rewards

The types of rewards are –

i. Rewards of the tribe

This type of reward stems from our inherent need to belong. Since humans are social animals, we need to live within a group. Harnessing rewards of the tribe can benefit the company. Social media can be used for this since social validation is considered a reward. Apps such as Instagram and Twitter, which measure a person’s success in numbers, is a good way to reward a customer.

ii. Rewards of the hunt

Hunting is a task of biological origin. Ancient humans used to forage for food and shelter. These days, the hunt is for information. New information and technologies can be used to draw customers to the products. Rewards can also be things that are required for survival – such as food. Since customers are expecting a product, a reward will be an extra advantage for them.

iii. Rewards of the self

Rewards of the self include things that are motivating. Marketing strategies can focus on techniques that can make the customer feel good about themselves. If the customers feel good, they will be motivated to remain with the company, thereby increasing the CTL.

8. Investment

For a customer to be drawn to a product, they must see its value. Since time and money are investments for a customer, they must be convinced that the product is worth it. If the behavior of the customer reveals that they do not see the value of the product, they will not invest in it either. Once this behavior is overcome, the customer will contribute to the CTL. The corresponding tendencies of humans are –

  1. We tend to value the things we invest in. Time and money are the biggest forms of investment. Since it takes efforts to purchase a product, we value it.
  2. We behave according to our past behaviors. This translates into customer loyalty. A customer who is accustomed to the products of a brand will continue using it unless there is a much better alternative.
  3. We avoid cognitive dissonance. Cognitive dissonance occurs when customers have two conflicting thoughts. The brain urges them to resolve the conflict by changing behavior. For example, customers planning to buy an expensive smartphone despite knowing it has less space faces cognitive dissonance. Thus, the customer will buy an alternative to avoid dissonance.

These tendencies force our minds to rationalize. The rationalization is the concept by which the mind alters the attitude to conform to a better notion. The future actions of the customer depend upon these tendencies. It also determines whether the customer will change their behavior. The study of these tendencies requires research of the market and the strategies used by the competitors. Only then can a company use these tendencies to attract customers.

9. The importance of storage

Value is not an abstract concept. A customer will value a product only until it has storage value. Storage can be in the form of content, data, reputation, skill, or followers. A public figure would value a social networking app as long as it can connect them to the world via followers. A graphic designer will value software as long as it lets his skill shine. A hotelier will use a booking app until it keeps its reputation up. Lastly, any regular person will value their smartphones as long as it stores their data and brings them content daily. Hence, keeping these in mind, a company must design their product.

10. Be moral

A company can design a habit-forming app by keeping all the factors in mind. However, the company must also focus on the moral implications of their product. A habit can be good, but it can also be damaging to the customers. A company must not try to capitalize on an addiction to the product. That would go against ethics.

No business can continue with the same product forever. With time, improvements must be made. Often, companies that do not wish to change their ways use strategies that can harm their customers. Novelty and improvement must be the focus of the company.

11. Habit testing

Habit testing is like a review of the product. A company must understand how their products are habit-forming and how it changes customer behavior. A review like this can help the company enhance any limitations.

  1. Identify the target customers and the frequency of usage of the product.
  2. Codify the reasons why customers are drawn to the product.
  3. Modify the product to attract more customers.

12. Look for more opportunities

Opportunities usually are present before us. Instead of thinking about a problem which must be solved, think about which problem you want to be resolved. The introduction of newer technology can prove to be a good habit-forming product.

  1. Nascent behavior ­– a new product that solves a regular, everyday product.
  2. Enabling technologies – a product that can drastically change behavior.
  3. New interfaces – a product that can quickly change behavior and revolutionizes the market.

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