A Blog by Jonathan Low


Jan 9, 2015

How Digital Firms Create Habit Forming Products

Businesses have always tried to figure out how to get customers hooked. Repeat customers are more profitable because they require fewer marketing incentives and are easy to trade up to more expensive products.

That is why movies target teenaged boys who will go three times to see the same flick or why McDonald's sells ever larger and more cholesterol and fat infused meals like triple bacon cheeseburgers to their most obsessed customers or devoted Apple fan-boys will wait on line for two days to be the first to get the latest iteration of what they already have. And why some consumers tattoo brands like Harley-Davidson, the US Marine Corps or Google on various parts of their bodies. Marketers even attempt to deconstruct the appeal of cults to see if they can build the same devotion to their products.

With tech it's a bit easier: once you get them into your ecosystem, they tend to be yours because it's just too much of a hassle to switch all of your applications, to say nothing of learning the intricacies of a new system. So, it is in their interest to keep you hooked by offering rewards for loyalty, which thanks to the quantitative information available from customer usage, can be moderated to excite and incite. It's really not all that hard.

Questions are being raised about the ethics of this sort of behavior: should enterprises be permitted, let alone encouraged, to promote a form of addiction? There is a debate about that. But given that the primary source of these habits is information, it will be interesting to see what happens when consumers demand a greater say - and share - in the use and sale of their data. We may find that business is far more addicted that their customers. JL

The Economist reports:

It is reckoned that four-fifths of smartphone owners check their devices within 15 minutes of waking up, and that the typical user does so 150 times a day.
CICERO once said that “Nature has planted in our minds an insatiable desire to see the truth.” These days it would be truer to talk of an insatiable desire to check our e-mail and Twitter accounts, and to play a few games of Candy Crush Saga (as a British parliamentarian was recently caught doing during a committee meeting). It is reckoned that four-fifths of smartphone owners check their devices within 15 minutes of waking up, and that the typical user does so 150 times a day.
This time it is not nature but man that has done the planting. Internet entrepreneurs devote a lot of thought to getting people hooked on their products. How else can they survive in a world in which hundreds of new ones are launched every day? And smartphones and tablets have helped greatly: what could be more habit-forming than devices that are always evolving, always there and always buzzing with fresh diversions?
“Hooked”, a new book by Nir Eyal, a technology writer, gives an overview of one of the most interesting battles in modern business: the intense competition to create new digital products that monopolise people’s attention. Peter Drucker, a management guru, once said the aim of a business is to create a customer. For today’s digital firms the aim is to create an uber-user: a tapping, scrolling devotee who keeps coming back for more whenever he has a spare moment. Habit-forming products help companies squeeze more money or information out of their customers. Some video-game makers get players hooked and then charge them for virtual products; often these are just cosmetic changes to how the game looks, but sometimes players can buy boosts to their in-game powers that help them win. Google specialises in useful apps, from Gmail to Google Maps, that gently squeeze data from users, the better to serve them ads.
Such products also offer protection from competition: once you have incorporated Twitter into your daily routine and devoted time to developing a following, you will be reluctant to switch to a rival. Although companies must make their products pretty simple to use, so as to persuade people to take them up, they also need to find mechanisms that encourage them to invest a lot of time in the product. Getting started on Twitter or Facebook is simple; but the more you tweet, the better and more popular your Twitter account becomes, and the more you search for friends and family on Facebook the more useful it is.
How do these companies turn you into a user? The biggest challenge is to get their hook into you in the first place: that is, persuade you to install their app or click on their link rather than choose one of the many alternatives. The best way to do this is through social pressure: create a buzz that gets people talking about your product. But it will become habit-forming only if it satisfies an inner need. People keep visiting Facebook because they are keen to keep in with their pals. They keep checking Twitter and their e-mail because they are worried about being out of the loop if they don’t.
The makers of habit-forming products have clearly read the works of B.F. Skinner, the father of “radical behaviourism”, who found that training subjects by rewarding them in a variable, unpredictable way works best. That is why the number of monsters one has to vanquish in order to reach the next level in a game often varies. Faithful Twitter users are rewarded with more replies to their tweets, and more ego-boosting followers, but not according to any predictable formula. These variable rewards come in three forms. The reward of the tribe: people who use Twitter or Pinterest are rewarded with social validation when their tweets are retweeted or their pictures are pinned. The reward of the hunt: users quickly scroll through their feeds in search of the latest gossip or funny cat pictures. And the reward of self-fulfilment: people are driven to achieve the next level on a video game, or an empty e-mail inbox.
Should the makers of habit-forming products be praised as innovative entrepreneurs? Or shunned as the immoral equivalents of drug pushers? Ian Bogost, a designer of video games, describes them as nothing less than the “cigarette of this century”. Paul Graham, a Silicon Valley investor, worries that humans have not had time to develop societal “antibodies to addictive new things”. Mr Eyal pushes back against such hyperbole. Creating a habit-forming product is in fact very hard. There have been plenty of digital products, such as Farmville, that were crazes for a while but went out of fashion. There is an important distinction between a habit and an addiction: only about 1% of people who regularly play slot machines, one of the most habit-forming technologies ever created, can reasonably be described as addicted. The proportion is surely lower for Twitter and the like. In any case, Mr Eyal notes, unlike smoking and playing slot machines, some apps help inculcate good habits, such as dieting or exercising.
That said, it is hard to read “Hooked” without feeling a bit queasy. Companies are getting at once more sophisticated and more shameless. If any other business were found to be employing people with the title of “behaviour designers”, they would be seen as exploitative and downright creepy. The internet is becoming ever more powerful and pervasive. And every new technological leap makes it easier for behaviour designers to weave digital technology into consumers’ daily habits. As smartphones become loaded with ever more sensors, and with software that can interpret their users’ emotional states (see article), the scope for manipulating minds is growing. The world is also on the cusp of a wearable revolution which will fix Google Glasses to people’s skulls and put smart T-shirts onto their torsos: the irresistible, all-knowing machines will be ever more ubiquitous. And the trouble with insatiable desires is that the struggle to sate them leaves everyone as exhausted as they are unfulfilled.


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