Hooked

Habit-Forming Products

You carry out habitual behaviors with “little or no thought,” but when your use of a product or service – like a smartphone or Twitter – becomes a habit, the company behind it scores a meaningful win. Marketers try to engineer the customer experience so that it becomes ingrained because a product’s success requires loyal, habitual users. Smartphones, tablets and game consoles give consumers around-the-clock access and connectivity. Marketers have two tools – that constant entrée and detailed personal information gleaned through data mining – for propelling the buyer behavior that most benefits them: Forming a habit.

The Habit Advantage

Investors calculate a company’s “customer life-time value” (CLTV) to determine its overall value. CLTV is the amount of money a business expects to make from a single customer during his or her lifetime. The more habit-forming a product is, the higher its CLTV. As consumers incorporate a product into their daily lives, they become less resistant to increases in its price. Loyal users tell their friends about products they routinely enjoy and recommend them via social networks. Word-of-mouth advertising ...