410.235.7070 Join Our E-Letter
businessGPS Taking You From Where You Are to Where You Want to Go.

Can You Make it Habit Forming?

Can You Make it Habit Forming?

March 12, 2014

Have you ever driven home from work without focusing on the route you took?  It’s probably because you know the way so well that you don’t need to make any conscious decisions.  The same holds true when you order your coffee. You know how you want it without having to think about it.  So many of your actions are automatic. This is because we develop habits based on heuristics, mental shortcuts we take due to familiarity.  They are well-worn paths in our minds that free us from conscious decision-making, so we are able to function without thinking hard about every single choice. 

Wouldn’t it be amazing if customers choose your jewelry store, your software, or your restaurant based on this principle?  Wouldn’t it be wondrous if they felt as compelled to check in with you as they feel the urge to check their emails?  Consider this: sites like Facebook and Pinterest have sky-high customer retention, because their members come back over and over, like addicts returning for more. Brands like Kleenex are able to sell more since they have become so ingrained in the mind of consumers that people no longer have to think; they simply ask for a Kleenex when they need a tissue. That’s where you want to be.  

How can you get there?

Habit Building

Unfortunately, drug dealers and casino owners are very good at creating habits.  Dealers start by giving the drugs out, often for free at first. It’s appealing to vulnerable people seeking an escape - and soon they are hooked through repetition.  Likewise, casino owners use bells, whistles, instant jackpots, and the lure of big payoffs. These are tempting to people looking for a shortcut to wealth. And of course, once they start, they’re hooked. Some Vegas hotels reportedly even pump oxygen into their casinos to keep habitual players awake and energetic so that they can continue feeding the slots. Drugs and gambling… once someone starts, it’s so difficult to stop.

Those are dark habits. And that’s how they get formed.

However, you can build positive, consumer-friendly habits and improve customer retention by encouraging people to do business with you.  Studies show that habit-forming is based largely on the rule of three. If you get a customer to do business with you three times, it’s far more likely that they will keep coming back. Perhaps that’s why they say “three’s a charm.”

The Road to Habits and Heuristics

Okay, so you want to get your customers hooked on you.  What can you do?

Here are a few counterintuitive ways to help boost customer motivation and increase the likelihood of habit forming.

  • Use a heuristic tool called Representativeness. This is where you look at the trend and go against it at “the right time.” One example of this is the “gambler’s fallacy.” If you’ve lost a game of chance like blackjack five times in a row, you have a better chance of winning the sixth time around, right? So naturally, you increase your bet. (In reality, your chances remain exactly the same.) Here’s how you can use this if you are selling something like financial services as your turnaround pitch. “The stock market has been going down, down, down, so it can’t go any lower… buy now because it’s going to go up!  The time to do it is now!”  Ask yourself how you can take advantage of upward or downward trends in your marketplace to encourage immediate action.
  • Scarcity and availability. In a 1975 study, researchers placed ten cookies in one jar and two cookies in another. Participants in the study chose their cookies from the jar with two, because these were perceived as being more valuable. The cookies were the same; it was the scarcity that made them more appealing.​

People don’t want to lose out. The thought of missing out on something evokes strong feelings and creates a high degree of emotional tension. And that tension motivates action. Based on this logic, the Home Shopping Club has likely made millions of sales, whether porcelain figurines or sterling silver jewelry. As the number of items available dropped and they became scarcer and scarcer, people dialed faster and faster to buy them!  Likewise, Groupon uses the same principle of scarcity: only 25 left and one day to buy… act NOW!  

But keep in mind that you can look foolish if you use scarcity in an inauthentic way. For example, if you say there are only 10 copies of an e-book left, most people will spot this as an obvious lie. There’s no real increase in resources or cost to distribute one e-book or 100,000.

  • Endowed Progress. This is genius; it’s the art of providing people with artificial advancement toward reaching a goal.  An eye-opening study was done with punch cards for purchases.  These are the cards that get marked each time you buy a product (e.g., a sandwich) or a service (e.g., a haircut). After 8 or 10 purchases, you get one free.

Lets see if you can guess the right answer to the following real test. The answer will blow you away. Imagine you want to offer a free car wash after 8 purchases. How much better will you do if you let them start when they’re already 20% of the way toward completion...?

The research showed that if you put ten spaces on the card and punch out the first two before you distribute it, more people would finish than if the card had only eight spaces. It’s all about perception. In fact, the cards with two pre-punched extras were completed an amazing 82% more often than those that offered only the eight spots.  Customers felt as if they had a head start. Did you catch that?  82% MORE COMPLETIONS because of the sense of progress.Ask yourself, how can you apply this to your organization to give people a sense of progress?

  • Minimize the obstacles. Look for the top 6 conscious and subconscious reasons that would stop someone from forming a habit. The most common obstacles are:
    1. Money (price too high)
    2. Time (buying experience takes too long)
    3. Effort (too much physical exertioninvolved)
    4. Social deviance (asking them to do something outside the norm)
    5. Non-routine (product/service/process is too new and perhaps too intimidating)
    6. Brain cycles (too confusing and just too hard to understand; makes their brains work too hard)

If you can figure which one of these inner obstacles is blocking or interfering with your business being habit-forming, you can adjust and eliminate the roadblocks.

An Example from the Daily Deal Industry

The daily deal industry has given millions of entrepreneurs a means of getting people in the door.  For some it’s been a boon, while for others it’s been a disaster.  Philip J. Romano, the owner of Fuddruckers, would make his mark by showing up randomly at the restaurant and paying for dinner for everyone who happened to be there when he showed up. The “unknown anticipation of reward” drew a ton of attention. It made people excited to try Fuddruckers, and it drew them back again and again. Why? He knew about the rule of three, heuristics, and how to form habits.

Let’s go back to the daily deal. The unwise restaurant owners saw customers flock in for the special offer…never to return. The smart entrepreneurs gave a free glass of wine on the second visit with a limited-time offer (sense of urgency) for a discount on appetizers for the third visit. These smarter restaurateurs fared much better when it came to getting customers “hooked.”

Needless to say, all of the above is predicated on you having something worthwhile to sell. People won’t come back if the product or service is awful.

Here’s your homework with a reward if you do it...  

If you are one of the first seven people to answer the questions below, then you can win a prize.

But don’t worry — we’ve answered the first two for you.

  1. What are heuristics?  They are well-worn paths in our minds that free us from conscious decision-making, so we are able to function without thinking hard about every single choice.
  2. What are brain cycles?  The effort it takes to understand an offer.
  3. How can you use scarcity in your business?
  4. How can you entice customers to come back at least two more times?

Send your answers to jongoldman@brandlauncher.com.

Taking you from where you are to where you want to be,