The power of habit
“Champions don’t do extraordinary things. They do ordinary things, but they do them without thinking, too fast for the other team to react"
SO HOW DO WE BUILD HABITS
#1 – Habits have a three step loop: A cue, a routine, and a reward.
#2 – The cue is a trigger, something which forces our brain into autopilot, making it choose which habit it’s going to use.
#3- The routine can be physical, mental or emotional. This is the way our brain recognises the habit over time.
#4- The reward is what our brain uses in order to decide whether or not this action is worth becoming a habit – our brain likes to have something to make everything worthwhile.
In summary : The cue can literally be anything, but the routine can be complex or simple. The reward is usually something that gives us a very pleasant physical sensation, forcing our brain to recognise the good feeling
Let’s try and understand this from a business perspective.
WHY SIGNALS AND CRAVINGS ARE IMPORTANT WHEN FORMING HABITS
#1- A neurological craving is when our brain craves the reward of an established habit. Advertisers and product designers understand this. They tap into this insight to craft products based on customer behaviour and then derive messaging that can resonate to this habit
#2 – Advertisers often add something into their products to give us proof that it is working; this strengthens the reward and habit association. The craving pushes the habit to form, but you also need a signal that it’s working, something to give you proof. For instance, toothpaste is often marketed with a tingly feeling. Toothpaste doesn’t need this tingly feeling to clean your teeth effectively, but it is added in because it makes your brain think it’s working
#3 – The same goes for shampoo; it doesn’t need to foam to work, but when we see the foam we assume the shampoo is really cleaning our hair well. These things are added in as signals to help push the habit for us to keep using them and buying them
#4- Put simply, advertising is linked to psychology, pushing us toward temptation and purchasing. Our brain then starts to crave the reward associated with the habit, causing a neurological craving
#5 – Creating cohorts of similar user behaviour (Habits) and capturing data signals on intended next best actions can help us build predictive algorithms around purchasing habits. This insight can be used to manipulate buyer behaviour or drive cross-sell and up-sell of products especially those of the unplanned kind. Examples would be
• Cross-sell on a thank-you landing page
• Product aisles aligning the queue leading to the till
• Age old window shopping
• Shop design to make people go past interesting SKU’s ( eg – airport duty free)
So how do we use this learning when it comes to strategy and planning? Let’s look at it through a marketing lens
HOW TO BUILD A PLAN TO DELIVER CUSTOMER VALUE BASED ON THEIR HABITS?
#1- Use data to identify repeatable routines that form the habit of a customer cohort, e.g. the cue, routine and reward. Cohorts work better than segments to understand marketing and sales behaviour
#2 – A/B test, growth-hack or experiment with the types of rewards. Loyalty, savings, add-on’s, service support, product attributes based on customer feedback and so on
#3 – Finalise on those rewards that make customers back and do repeat purchases – this is hard because at every reward instance, the customer has to feel that s/he has derived an incremental value for each purchase.
#4 – This is where semantic constraints are important. Because while the relationship between cause and action may remain the same the semantics might change based on situation, time and context, which means actions can change. Building your product and messaging around these behavioural constraints is key
#5 – Use data, customer survey’s, NPS scores, media and PR and to understand the different cue’s customers gravitate to. The more cue’s you have , the more diversified customer journeys you can craft, the more personalised experiences you can offer
#6- Test. Iterate.Fail. Execute
#7- Understand the drivers that make customers gravitate towards a habit. These drivers are often based on life situation, context, demographics, culture and so on. Deliver value that help solve for those drivers. Without value, customers will stop buying after a point of time if it is only cross -sell and up-sell.
#8 — Customers don’t enjoy being taken advantage of and they are not stupid. So, use data to understand their problems and create habitual cues around value based solutions that actually solve for their problems. The best organisations understand this and that is why they have stood the test of time. Don’t make it about a push sell or a quick sell.
HOW TO UNDERSTAND HABITS TO IMPROVE ON INTER-PERSONAL RELATIONSHIPS ?
#1- Observe daily patterns in behaviour to understand important habits that are key to people’s character. This will be visible based on emotional cues like anger, happiness, mistrust, jealousy, hunger, fear, ambition and so on.
#2- Listen, understand and assimilate a little bit of their life-story if you can. Past experiences are the key to people’s present day habits along with their upbringing and culture.
#3- Make adjustments for these habits as far as possible, so that they feel comfortable to be themselves in your presence. Sure, some habits may disgust you. Discuss those openly if they are not a deal breaker. Sometimes habits can be deal-breakers as well (though that can be a very myopic way of looking at things)
#4- Try and support their habits which do not cause harm to self or others. Emulate some if they are really good. Encourage them proactively to pursue the ones that they are really passionate about. Be a cheerleader.
#5- Understand the triggers that lead to their negative habits and try not to activate those triggers. However, this is not completely in your hand and so when a negative outburst happens, be there for them without judgement and shame. Don’t condone. But don’t overtly criticise as well. They know their weaknesses and dont need reminding at that moment. They just need to feel that you are on their side.
About Me:
In my day job I drive growth at Google. Ex @ Adobe, SAP, LinkedIn and IBM
In this newsletter I write occasional essays on investment, self improvement, market trends, venture capital and growth. Follow me on twitter @hackrlife
If you are interested in books and historical letters check out the Quotatist.