How to Build Habit-Forming Products

habit-forming products

DigitalTrends reported that 80 to 90% of apps are downloaded one time and never used again. That’s an eye-opening stat for anyone attempting to develop useful apps. So, what distinguishes those apps that are used from those that are “one and done”? Nir Eyal has some answers. He is the author of “hooked: How to Build Habit-Forming Products“. Hooked provides an approach for designing apps that help people (users) do things that they want to do but don’t have an effective way of accomplishing.

The root cause of poor adoption is the inability of innovators to develop solutions that break the old habits of their potential customers. John Gourville, from Harvard, writes that “Many innovations fail because consumers irrationally overvalue the old while companies irrationally overvalue the new.” He claims that new products need to be nine times better than existing solutions to break old habits and actually get used.

habit-forming productsCase in point is the QWERTY keyboard. That’s the keyboard layout we all use every day. It was developed in the 1870s for typewriters. Commonly-used characters were spaced apart from each other to reduce the amount of typebar jams. Better keyboards have been designed along the way that would allow us to type faster. Yet I sit here typing on a 140 year old keyboard layout because old habits are indeed hard to break.

The key to break old habits and get a new product adopted, according to Eyal, is to accomplish two things: 1. high frequency of use and 2. high perceived value by users. Developing a product that achieves both puts it in the Habit Zone. If your users don’t use a system enough, it simply will not break their old habits. If they try to use it a lot but don’t perceive it to have enough value, they will stop.

One area to look at to determine a sticky product is the venture capital industry. When a business owner seeks external funding from savvy investors, the common question is Are you developing a vitamin or a painkiller? I would have thought a vitamin. Vitamin’s are used every day. Venture capitalists who study successful markets don’t see it this way. They favor products that solve a pain point for potential customers. Pain killers solve a real need, not a perceived or emotional one, and their market can often be quantified.

Eyal has developed a 4-element model to maximize the chance of a product being adopted.First, the product needs to have a trigger. That is, whether external or internal,the trigger needs to signal to the user that they have a need that the product can satisfy. The ultimate goal of a habit-forming product is to solve the user’s pain by creating an association so that the user identifies the company’s product or service as the source  of relief.

Next, in response to the trigger, the next step for users to get hooked is that the product should compel the user to take an action. In order to compel users to take an action the most important thing is to make it as simple as possible to complete. Designers often want to add as many features as possible. Lots of features can work against user adoption. Stripping away all but the most important features is often the key to habit-forming products. Think about the simplicity of Twitter. The other key for continued product use is to show the user that they are making progress toward the goal. A great example is LinkedIn’s status bar which shows you how near your profile is to  being 100% complete.

habit-forming productsThe third part of the “hooked” model is the reward system. Users will stick with a product when they believe they are making progress toward the pain point that originally motivated them to start it. The reward can take all kinds of forms. For example, Facebook users getting more ‘likes’ satisfies a strong emotional need to be accepted. The key is make the reward a variable one. If the reward is very simplistic and repetitive, users will stop responding  to it. Designing a progressive reward system is important to gaining product acceptance. Reaching the next video game level is a great example of a variable reward system.

The last element of the model is investment. This is where the more time or effort an individual puts into something, the higher value they place on it. They are more committed. This is called the “IKEA effect” and we’ve written about this previously. Highly adopted products often include a “stored value” element. This is common with social media platforms. For example, once you have developed a large group of followers on Twitter, this is stored value you won’t have in another product. You’d have to start from scratch even if it is a better tool.

This book is an interesting and quick read and provides lots of great examples of these concepts in action. Whereas the hooked model is intended for new applications, I have started to use these concepts in enhancing products that have already been developed, with the goal of increasing usage.


What is a Business Advisory Board, and Why Do You Need One?

business advisory board

The Alternative Board offers peer advisory services to entrepreneurs in every step of their career. While many business owners approach TAB with an interest in business mentorship, they don’t always recognize the advantages of an advisory board over other forms of business coaching services. That’s because advisory boards have only recently become available to small business owners, and the external advisory board is a relatively new concept.

While you’ve probably heard of an advisory board, there’s a good chance you may not know the specifics of how it works or why your business could benefit from one. Regardless of if you’ve just started your business or if you’ve been at the helm for a while, an advisory board can help you optimize your business and help you find growth where previously none existed. Interested in how an advisory board can help you? Here is a breakdown of the what, when, where, and why of business advisory.

business advisory boardWhat is a business advisory board?

Traditionally, a business advisory board is made up of a group of individuals who convene regularly to assist a business owner in making executive decisions. As business owners typically only have one area of expertise, it’s advantageous for them to surround themselves with experts in different elements of running a business, from sales executives to marketing geniuses and accountants who have had experience managing the finances of businesses.

While the advisors exist to guide the business owner, they generally don’t have authority on final decisions. Executives from your staff can be beneficial in your advisory board, but other successful entrepreneurs from varying industries can provide a wider range of perspective.

When are business advisory board meetings held?

There is no right or wrong answer to when you lead your advisory board, but it’s important that advisors and members attend regularly. You can hold a weekly meet up or convene every few months. With that said, regularly scheduled meetings provide accountability and can often answer questions you didn’t even know you had. They also allow you to learn from the tribulations of other business owners, even when your company is doing well.

Where are business advisory board meetings held?

Locally is best, but you do have other options. You can occasionally schedule your advisory board sessions as retreats or hold sessions online. While no form of communication is more effective than face-to-face, web conferencing can dramatically cut meeting times, allowing you to catch up more regularly. Likewise, it isn’t necessary to have every advisor present at every session. In fact, when facing very specific decisions, it may be beneficial to meet with your designated advisor in that field.

Why do you need a business advisory board?

The answer to this question is more complex, because there are countless different occasions in which an advisory board can be beneficial to a business owner. Not to mention, the reasons you need an advisory board are likely to change throughout the course of your career. While there’s no exact answer to why you need a business advisory board, here are some common obstacles that are better faced with a second set of eyes:

  1. You’re running your business smoothly, but you don’t know where it’s going. business advisory board

    According to The Alternative Board’s 2013 Small Business Pulse survey, 91% of business owners could see higher revenue using a strategic plan. Without a long term strategy, you’re spending more time in your day to day operations than on moving your business forward.

    “The most recent survey results validate our long-held belief, based on over two decades of working with thousands of small and medium sized business owners, that having a strategic plan to guide their business is critical to achieving success,” says TAB Vice President David Scarola. “It’s in the business owner’s best interest to have a good plan that is reviewed regularly.” An advisory board can help you create a plan, allowing you to see where your business is headed in the future.

  2. You know where your business is going, but you don’t know how to get there.

    While it’s easy to recognize what you want to achieve, it’s harder to identify the specific steps you need to get there over the next 6 months, 12 months, 3 years, or beyond. A business advisory board is invaluable in helping you develop a long term strategy. With advisors in a variety of fields on your board, each member is able to share their expert pathway, allowing you to take advantage of their experiences.

    For example, if your goal is to move a certain amount of product in 3 years, your sales and marketing advisors will provide the blueprint for attracting and increasing customers/clients. With that strategy in place, your HR advisor can suggest a growth plan for meeting your new capacity requirements while still increasing profits.

  3. You feel like you’re missing opportunities.

    Do you ever get the feeling that your business could be running more efficiently or there’s more you could be doing for it? Let’s face it, even the absolute best entrepreneurs aren’t experts at everything — in fact, a mark of a good business owner is knowing what skills you need to augment with the talents of others.

    You might be an expert when it comes to finances, but the idea of content marketing makes you want to take a nap. Or perhaps you can close any deal, but you have a hard time identifying the best candidate for the job. With a team of advisors with expertise in areas you lack, you have just the right person to assess your strategy in every department. By breaking down your company’s processes and identifying any questions you may have, they are able to identify gaps and point out room for improvement or growth.

  4. Your business isn’t growing, because your network isn’t.

    A successful business is socially driven. It builds on a growing network of people, from customers to partners and everything in between. Your business network is multiplied with each additional member in your advisory board. They can introduce you to key partners, new customers, and even potential employees.

  5. You’ve made costly mistakes.

    Every business owner makes mistakes. It’s an inevitable fact about entrepreneurship. Fortunately, many of these mistakes are common among entrepreneurs, and by working with more seasoned business owners, you can avoid the ones they’ve already gone through. A board of advisor puts you in a room with a group of professionals, each with their own mistakes to learn from.
    business advisory board

  6. You feel like you’re operating in a bubble.
    Even though business owners are in constant contact with a wide variety of people, business ownership can feel like a lonely endeavor. Oftentimes, business owners have a hard time relating their hardships to family and friends. The only other people they encounter on a regular basis are employees, vendors, and customers – with whom they must maintain a confident demeanor at all times.

    A board of advisors makes it easier to work through challenges by talking them out. You will be surrounded by people who are genuinely interested in your work and have experienced similar struggles first hand.

  7. You’re thinking inside the box.

    What do a marketer, an HR specialist, and a lawyer have in common? The years of experience and industry insight to help you streamline processes and enjoy your personal vision of success. With a group of diverse thinkers, you are able to expand your way of thinking beyond your wheelhouse and discover innovative solutions to  everyday business challenges.

  8. You have great ideas, but you have trouble sticking with them.

    Not only does an advisory board hold you accountable to acting on your ideas and achieving your goals, but it helps you decide whether certain goals are worth pursuing or not. Oftentimes, business owners will have unreasonable expectations for their business, because they don’t fully understand the steps that are needed to achieve those goals. An advisory board can analyze what you want and put it into a realistic perspective.

According to The Alternative Board’s Founder and Executive Chairman Allen Fishman, advisory boards are indispensable, not only to large corporations, but to small business owners as well. “In 1990, I identified what seemed to me to be the greatest need of small-business owners: the need for peer advice from fellow business owners and coaching from experienced professionals who were armed with a process to achieve greater personal and business success,” says Fishman.

To bring the power of advisory boards to small business owners, Fishman opened his first TAB advisory board in 1990. 25 years later, TAB is a global franchise serving over 10 countries and 15,000 business owners worldwide. By providing small business owners with the power of peer advisory, “TAB is making a difference in the lives of thousands of business owners around the world.” If you’re interested in discovering how TAB Board membership can help you achieve your personal vision of success, click here to learn more.