Nir Eyal – The Business of Social Games and Casino

How to hook your competitor’s customers

I have written frequently about the importance of knowing your competitors (competitive intelligence) and I also love Nir Eyal’s Hooked model to build products that retain; I just came across a slideshow by Nir that brings both of these concepts together. Nir’s presentation, “4 Ways to Win Your Competitor’s Customer Habits” (presentation below), shows the four ways companies build better hooks than their competitors.

As a quick recap, the Hook Model describes an experience designed to connect the user’s problem to a solution frequently enough to form a habit. Eyal defines habits as behaviors done with little or no conscious thought. 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. It has four phases: trigger, action, variable reward, and investment.

Eyal identified four ways to win customer habits. If your product becomes the one the customer is hooked on, then you will enjoy their continued business.

Faster HOOKS

The first technique is faster hooks. The faster the user passes through the model, the greater the product’s or game’s habit forming potential. Nir Eyal uses the example of Netflix, which won over people’s viewing habits from Blockbuster by delivering movies what were waiting for users rather than forcing them to get in a car, pick the movie, pay and drive home.

To achieve faster HOOKS, first understand the must-have reason people are using your product or game. Next, lay out the steps the customer must take to get the job done. Finally, once the series of tasks from intention to outcome is understood, simply start removing steps until you reach the simplest possible process. Continue reading “How to hook your competitor’s customers”

Lifetime Value Part 23: Triggers, the key to both retention and virality

One theme that comes up repeatedly in what I read, and thus write, is the importance of Triggers. In my February analysis of Jonah Berger’s book Contagious, I discussed how triggers are one of the five core elements to creating a product with word of mouth. Then in June, I discussed Nir Eyal’s bestseller, Hooked, in which the author builds a model on creating a habit-forming product; triggers represent one of four phases of the model. Given the importance of word of mouth (virality) and habit (retention) as two of the three core components of customer lifetime value (LTV), this highlights the crucial role that triggers provide in success.

The role of triggers in virality and retention

Triggers are reminders for people to talk about our product, game or ideas. In Berger’s book, triggers are the foundation of word of mouth and contagiousness. For example, you may regularly show images of your game with coffee, so that people will think about and start discussing your product when they go to Starbucks.

The first step of Eyal’s Hook Model of retention is triggers. Triggers cue the user to take action. There are two types of triggers: external and internal. Habit-forming products start by alerting users with external triggers like an email, a website link or the app icon on a phone. An external trigger communicates the next action the user should take. Online, an external trigger may take the form of a prominent button, such as the Play Now button on many games. When users start to automatically cue their next behavior, the new habit becomes part of their everyday routine. Continue reading “Lifetime Value Part 23: Triggers, the key to both retention and virality”

Why starting companies is habit forming

Earlier this year, I wrote about Nir Eyal’s great book, Hooked, and how it can help you create a product with great retention (e.g, something habit forming). What is particularly interesting is that one of the most habit-forming endeavors is entrepreneurship and building companies. The four principles of the Hook Model—Triggers, Actions, Variable Rewards and Investment—also show why entrepreneurship is so addictive.

Triggers

First, there must be a trigger. Triggers prompt you to take an action. In the case of starting a business, the trigger is seeing an opportunity. It could be waiting for a taxi that never arrives (probably the trigger for Travis Kalanick to start Uber) or going to a restaurant based on a critics review and getting a bad meal (possibly the trigger for Jeremy Stoppelman with Yelp). It is consistent at retail, you cannot find a good wine so you think about starting a wine store.

Actions

The next step in the Hook model is the action phase. The trigger, driven by internal or external cues, tells the user of what to do next. There are three ingredients required to initiate any and all behaviors:

The user must have sufficient motivation.
The user must have the ability to complete the desired action.
A trigger must be present to activate the behavior.

Continue reading “Why starting companies is habit forming”

Summer reading list

I came across some great books this year, many of which I summarized in this blog, and thought it would be helpful to list the books I have found most valuable professionally over the years. I will focus, though, on the recent ones that have had a strong impact.

Thinking Fast and Slow
Any reading list I create must start with Thinking, Fast and Slow by Daniel Kahneman. It is by far the most important book I have read. Kahneman provides fantastic insights into decision making, which not only help you understand deeply your customers but also your own decision making processes. Although the book is somewhat dense and not an easy read, it will impact everything you do once you finish it.
Predictably Irrational
The perfect complement to Thinking, Fast and Slow, is Predictably Irrational by Dan Ariely. Ariely also focuses on decision making, from a behavioral economics perspective, but discusses it in a manner more entertaining than any novel I have read. This book has a certain point in my heart as Dan was on the Board of Advisors of my first company (Merscom), and his advice was as good as his book. This is a book you may stay up all night reading that will also help you build a much more successful product.
Hooked
Next on my list is Hooked: How to Build Habit-Forming Products by Nir Eyal, a book I recently blogged about. Hooked is probably the hottest book among tech companies this year and presents a great framework for creating products that customers will keep coming back to.
Contagious
Jonah Berger’s Contagious: Why Things Catch On is probably the book I have quoted most this year. Another book I summarized earlier in the year, Contagious tells you how to generate word of mouth for your product based on real academic research, not urban myths that do not really work. I think I have quoted Contagious in more Quora answers than all other books combined (click here to read my post about Contagious).
Blue Ocean Strategy
I normally hate strategy books because they either focus on trite phrases with no practical value or use anecdotes that may or may not be transferable. Blue Ocean Strategy: How To Create Uncontested Market Space And Make The Competition Irrelevant by W. Chan Kim and Renee Mauborgne, on the other hand, is a book that helps you create a truly effective strategy (click here for my post on Blue Ocean Strategy). Like Contagious, it is based on academic research, and it provides a framework for building a truly great company.
The Innovator’s Dilemma
While The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail (Management of Innovation and Change) by Clayton Christensen may not be directly useful for many of you, it is most applicable to leaders of market leading companies, it provides a very helpful understand of how disruptive technologies emerge. For the game industry (which accounts for many of my readers), it is particularly illuminating and helps explain many of the shifts we have seen (my post on the key learnings from The Innovator’s Dilemma).
The Signal and the Noise
Finally, another thought-provoking book that helps you understand much better how to use analytics, and not misuse them, is The Signal and the Noise: Why So Many Predictions Fail-but Some Don’t by Nate Silver. Nate Silver, best known for being the best prognosticator of the past two elections, destroys many of the fallacies around predictive models and provides a broad infrastructure on how metrics can help (read my post on the lessons I took away from the book).

These books will probably get you through the next month or so. As I come across more great ones, I will definitely share them with everyone.

The secret to creating a hit habit-forming product or game

The hottest book in Silicon Valley currently is Hooked: How to Build Habit-Forming Products by Nir Eyal, and for good reason; it is an incredibly valuable book for building a business. As Eyal points out, amassing millions of users is no longer good enough. Companies’ economic value is a function of the strength of the habits they create. User habits become a competitive advantage. Products that change customer routines, where users become hooked, are less susceptible to attacks from other companies.

Users who continually find value in a product are more likely to tell their friends about it. Frequent usage creates more opportunities to encourage people to invite their friends, broadcast content, and share through word-of-mouth. Hooked users become brand evangelists: Megaphones for your company, bringing in new users at little or no cost.

Habit-forming products change user behavior and create unprompted engagement. The aim is to influence customers to use your product or play your game on their own, repeatedly, without relying on overt calls-to-action such as ads or promotions. Once a habit is formed, the user is automatically triggered to use the product during routine events such as waiting in line at Starbucks. Eyal uses the Hook Model to show how to create a product or game that become habit forming for users, that have a long term competitive advantage and are more likely to generate word of mouth.

The Hook Model

The Hook Model describes an experience designed to connect the user’s problem to a solution frequently enough to form a habit. Eyal defines habits as behaviors done with little or no conscious thought. 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. It has four phases: trigger, action, variable reward, and investment. Continue reading “The secret to creating a hit habit-forming product or game”

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Faster HOOKS

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The role of triggers in virality and retention

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Triggers

Actions

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Thinking Fast and Slow

Predictably Irrational

Hooked

Contagious

Blue Ocean Strategy

The Innovator’s Dilemma

The Signal and the Noise

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The Hook Model

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