- Habits are one of the ways the brain leans complex behaviours
- Habits form when the brain takes a shortcut and stops actively deliberating over what to do next
- The brain automatically choose the action - routine
Customer LifeTime Value (CLTV): The amount of money made from a customer before that person switches to a competitor, stops using the product, or dies
e.g., Credit card have a very high CLTV. Credit card customers tend to stay loyal.
Customers form routines around a product, they come to depend upon it and become less sensitive to price
e.g., The free-to-play video games are originally free. Once the players got the desire to progress, they pay for virtual items, extra lives, and special powers (Freemium model)
- Smile graph
- y-axis: percentage of sign-ups
- x-axis: time spent on the service
- As usage increased over time, so did customers' willingness to pay
- 1st month: 0.5% of users paid
- 32nd month: 11% of users paid
- 42nd month: 26% of users paid
- Loyal users tell their friends (Word of mouth)
- = Hooked users become brand evangelists
- They bring in new users at little or no cost
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more is more principle
- More frequent usage drives more viral growth
- Viral Cycle Time
- The amount of time it takes a user to invite another user
- The most important factor
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Having a greater proportion of users daily returning decreases Viral Cycle Time -> Increases users
- Daily users initiate loops more often
- More daily active users means more people to respond and react to each invitation
Many innovations fail because consumers irrationally overvalue the old while companies irrationally overvalue the new.
- Old habits die hard, new products need to offer dramatic improvements to shake users out of old routines
- Even if the benefit of using the new product are clear and substantial, it may fail (QWERTY keyboard)
- People rarely change their habits for long
- 2/3 of alcoholics who complete a rehabilitation program will get back their old habit within a year's time
- Nearly everyone who loses weight on a diet gains back the pounds within two years
- The enemy of forming new habits is past behaviours
For new behaviours to really take hold, they must occur often
The more the product is used, the better the algorithm gets, and the more it is used (Habit-driven behaviour)
- Users use google
- It improves search results based on past behaviours
- It gets more accurate
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Plotting two factors
- frequency
- how often the behaviour occurs
- perceived utility
- how useful and rewarding the behaviour is in the user's mind over alternative solutions
- frequency
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Infrequent behaviours never become habits
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Some habits can be formed in weeks while others can take more than five months
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Importance to the person matters
Why are some products used daily?
Are you building a vitamin or painkiller?
It has to be a painkiller
Prove the idea is important enough to merit the time and money needed to build it.
Painkillers solve an obvious need, relieving a specific pain, and after have quantifiable markets.
Vitamins, by contrast, do not necessarily solve an obvious pain point. Instead they appeal to users' emotional rather than functional needs.
You may think Twitter, Facebook or Instagram are vitamins because they've already become part of your everyday life.
Habit-forming technologies are both vitamin and painkiller. These services seem at first to be offering nice-to-have vitamins, but once the habit is established, they provide an ongoing pain remedy.
- Seeking pleasure
- Avoiding pain
A habit is a behaviour that can have a positive influence on a person's life
Let's increase your odds of building the right product faster!
- 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 behaviour do you want to make into a habit?