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I should send Nir Eyal a bottle of Champagne. His book Hooked has been the most instrumental book of my professional life. After reading Hooked while we were just starting to build the FeedbackPanda prototype, we switched gears and implemented Eyal’s recommendations. Just days later, we saw the effects of a self-supporting growth engine built on collaboration and building healthy habits. It was marvelous. It drove user growth and adoption ever since, ending in us selling the business in under two years. All thanks to the Hook model.
But first things first. Hooked is all about habits and habit-forming products. In podcast interviews, Eyal talks about how Hooked is an attempt to democratize the knowledge that was an industry secret until then: products that encourage building habits are incredibly sticky. Heavily abused by some industries to make people addicted to their products, Eyal wanted to remove the stigma and show how habit-forming products can be used for good. If you take a look at all the education-focused products that successfully employ the Hook model, I would argue that he has been quite successful.
So why do we respond so well to habit-forming products? It seems to be the nature of the human mind to look for shortcuts, for opportunities to save time. Whenever something time-saving is found to be repeatable, our mind starts forming a habit; a brain automation. Established habits are hard to change once they are internalized. So it’s an automatic process that has a hard-to-change outcome.
That does sound like a good retention mechanism. In business terms, this will generate long-term revenue and is hard to compete with. It attracts long-term customers that will try to spread their habits, thus doing the marketing for you. And as they are habitual customers, they won’t be as sensitive to price changes as sporadic customers.
So how is this accomplished? Your customers have to go through the Hook cycle repeatedly. Over and over again.
The Hook cycle works like this. It starts with a Trigger that makes you take an Action, resulting in a Reward that causes you to Invest in the product, thus triggering another instance of the Hook cycle.
Need an example? Imagine you get a notification from Facebook on your phone. That’s the trigger. Is it someone commenting on a post? Is it a direct message? You want to know what it is, so you click on the notification. That’s the Action. The application opens up. The message screen loads. Your anticipation builds. Who sent you a message? Finally, it shows who it is from: an old friend who you haven’t talked to in years. That is the Reward. You read their message and eagerly start typing your response. You hit “Send”. That is your Investment. Your message triggers a notification on your friend’s phone. Another round of the Hook cycle follows.
The power of the Hook cycle is obvious: it makes us invest in products in expectation of rewards. The book is full of wonderful insight into each phase of the cycle.
I want to point out the Investment phase because understanding this has been the most illuminating moment of my professional life. Facebook, in the example above, wants you to write as many messages that trigger other people to write their responses then, as every iteration of the cycle keeps people engaged in their advertising platform. Every piece of user-generated content, even if it is just a single like, has the potential to get hundreds of people to re-engage with their product.
Once I understood this mighty potential, I looked for ways to build this into our product. How could we get our users to invest something into the product that would trigger other people to invest in the platform themselves? We found the answer in a collaborative feature we called the FeedbackPandaCloud. Our customers would share their student feedback templates among each other, and whenever a teacher would share their own work, it would immediately become usable by all other customers. This led to a self-driving network effect that resulted in hundreds of thousands of templates being shared, imported, and collaborated on. This collaborative effort became the core value proposition of the product: come and find what you need, share what you create so that others can find what they need.
The successful implementation of the Hook model into our SaaS allowed us to have constant growth, almost entirely hands-off marketing as word-of-mouth took over most of that, and a self-selling product.
If reading Hooked could work this miracle for our SaaS, imagine what it could do for yours.
You can find more books on bootstrapping and detailed reviews on the Bookstrapper’s Bookshelf.