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Building Repeat Business: How Two Companies Hooked Customers On Products They Rarely Use

Discussion in 'BlackHat Lounge' started by The Scarlet Pimp, Sep 28, 2016.

  1. The Scarlet Pimp

    The Scarlet Pimp Senior Member

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    if you sell seasonal or rarely used items, this shows how to keep a year-round marketplace.

    Building Repeat Business: How Two Companies Hooked Customers On Products They Rarely Use

    Larry Page, CEO of Alphabet (the company formerly known as Google), has
    a quirky way of deciding which companies he likes. It's called "The
    Toothbrush Test."

    According to the New York Times, when Page looks at a potential company
    to acquire, he wants to know if the product is, like a toothbrush,
    "something you will use once or twice a day."

    Page clearly understands habits. As I wrote in my book, "Hooked: How to
    Build Habit-Forming Products," frequently used products form sticky
    customer habits. But what if your product doesn't pass Page's Toothbrush
    Test?

    Perhaps you'd like people to use your product or service frequently,
    but it just doesn't make sense to do so.

    "I know home buying and selling can't be a habit," one woman spoke up.
    "That's fine. But what if I make a habit of doing something else related
    to home buying and selling?" I was intrigued.

    Soon, other agents chimed in and built upon each other’s ideas, coming
    up with all sorts of ways to keep potential customers engaged. Their
    ideas helped me realize that even infrequently used products and
    services can keep customers hooked.

    There are at least two ways to build a habit around an infrequently used
    product: content and community.

    However, let me be clear: Not every business needs to be habit-forming.
    There are lots of ways to bring customers back, and many companies
    succeed without relying on customers' habits.

    They buy advertising, spend money on search engine optimization, or open
    a storefront to capture customers' attention as they walk by.

    But traditional methods of keeping customers engaged force businesses to
    rent space on someone else's website, search engine, or street corner.
    By contrast, owning a customer's habit is an asset that pays you.

    Content

    So, how do infrequently used products bolt on a habit-forming
    experience? The first way is by making a habit of consuming great
    content.

    "Every time someone in my neighborhood has personal finance questions, I
    want them to come to me," one real estate agent told me after my talk.
    Her plan was to create a site and app full of articles, videos, and
    financial calculators to form a content habit with potential home buyers
    and sellers. "What if I write new articles or post the ones I find
    online about topics I know people have on their minds?" she asked.

    I nodded in agreement as she described building a site that would teach
    people to come to her for information that would help them make
    financial decisions. If she could build potential customers' habit of
    consulting her site, she could increase the odds of people transacting
    with her when the time came to buy or sell their homes.

    She had stumbled upon a tactic used by Y Combinator, a company the New
    York Times called "Silicon Valley's Start-Up Machine." Y Combinator is
    in the business of finding promising young tech companies and helping
    them become the next AirBnB or Dropbox (both Y Combinator companies).

    Though Y Combinator has sealed its reputation at the top of its
    industry, it was once a newcomer competing for attention with
    traditional venture capital funds and angel investors. Even today, Y
    Combinator's success depends on finding the best founders, which means
    staying top of mind. But founders don't apply to Y Combinator frequently
    enough for it to be a habit.

    How does the startup accelerator stay connected to the tech community?
    The answer is content. Hacker News, a content aggregation site owned by
    Y Combinator, was visited 18.6 million times in July 2016. Hacker News
    went online in 2007, less than two years after Y Combinator's founding,
    and has been a fixture of Silicon Valley tech and culture ever since.
    Though it's not Y Combinator's core business, it has successfully drawn
    attention to the accelerator by forming a content-consumption habit.

    The constantly changing list of articles has all the elements of a
    habit-forming product I describe in my book. Users check the site daily
    between coding sessions or during breaks to find the latest industry
    news and happenings. As they browse, they accrue a reputation score for
    their contributions to the site.

    Though Hacker News is an "autonomous unit,"according to the company,
    it's clear the site is still an arm of Y Combinator. The top left corner
    of Hacker News features the Y Combinator logo as the home button, and a
    link at the bottom of the page invites visitors to "Apply to YC." But
    the hooks in Hacker News go even deeper.

    As TechCrunch reported, "Hacker News has a strong affiliation with Y
    Combinator. ... Founders usually all create a Hacker News account when
    they apply, and that user name is the founder's identity at Y
    Combinator." Recently, Y Combinator doubled down on its content
    strategy. In November, the accelerator launched The Macro, a content
    site featuring original writing by members of the Y Combinator team.

    Y Combinator has profited from the popularity of Hacker News. Despite
    the fact that Hacker News is not the primary way Y Combinator makes
    money, the content consumption habit fills the funnel with potential
    applicants and has become a valuable asset in its own right.
    Community

    Another way infrequently used products form a habit is by building a
    community. Let's say you've got a product people tend to buy just once a
    year — like Christmas ornaments. One might assume interest in such a
    product is nil for 11 months of the year.

    However, for members of Hallmark's Keepsake Ornament Club, engagement
    with (and revenue from) the seasonal product goes strong year 'round.
    The Keepsake Ornament Club (or KOC as members call it) is a surprising
    example of the power of community.

    Though the group is mostly unknown to outsiders, the KOC boasts more
    than 400 local chapters across the country. An industry research report
    claimed the club had 350,000 members in 2001.

    A recent look at the club's official Facebook page showed photos of
    members queuing in long lines for a chance to meet with the artists
    behind some of their favorite ornaments. The people in the photos aren't
    wearing heavy coats to protect them from the December snow; they're
    wearing shorts. The Christmas-themed event took place in the middle of
    August.

    Hallmark has cultivated a thriving community around its seasonal
    products, but the secret of the club's success is about more than the
    ornaments. Local chapters of the KOC are organized by neighborhood
    Hallmark stores as well as the national organization — sort of like a
    Kiwanis Club for collectors. Similar to a civic group, many of the local
    affiliates organize frequent gatherings and social events.

    Linda, an employee of a Hallmark store in Pleasanton, California, who
    preferred I didn't use her last name, told me her store's club has 25
    members and is considered small. (Some clubs have hundreds of devotees.)

    Still, Linda's group meets regularly and members trade ornaments, as
    well as banter, via email. A privilege available exclusively to club
    members, Linda told me, was the chance to package new ornaments as they
    arrive at the store. Some might consider the job manual labor, but to
    club members, it's a treat.

    Collecting is a major draw for KOC members and there's a special
    psychology associated with collectables that is not easily replicated by
    other industries. However, the product facilitates something else club
    members really want — social interaction.

    Likewise, after my talk to the real estate agents, a gentleman told me
    about an idea he had for using community to build a habit for his
    business.

    "What if I start an email list or website for people who live in my
    neighborhood?" he proposed. "Every couple days I'll let people know
    what's going on in their area — local happenings, high school sports,
    things like that."

    "Sure!" I told him. He went on, "Then, if they want to go to games
    together, they'll coordinate through the online group." I loved the idea
    and assured him that if people depended on him as the hub to connect his
    community, his real estate business would be in great shape.
    Monetization is a Result of Engagement

    When it comes to designing products people love, far too many companies
    focus on getting customers to check out instead of getting them to check
    in.

    There's no doubt that a frequently used product like Facebook, Slack, or
    Snapchat has an easier time of changing consumer habits. However, habits
    can still help companies that might make a sale to consumers every few
    months or years.

    Companies looking to build consumer habits should remember that
    monetization is a result of engagement — not necessarily the other way
    around. For a financial services firm, a real estate agent, or a
    seasonal business, buying the product or service might not be a habit —
    but creating related habits around content and community can pay off in
    reputation, satisfaction, and sales.

    Here's the gist:

    * Owning a customer's habit is an asset that pays you.
    * But it is difficult (if not impossible) to turn infrequently used
    products into a customer habit.
    * Rather than trying to make the product into a habit, infrequently
    used products should build habits around the product.
    * Too many companies focus on getting customers to check out instead
    of getting them to check in.
    * Building a content or community habit are two ways to keep people
    engaged.
    * Monetization is a result of engagement — not necessarily the other
    way around.

    https://www.linkedin.com/pulse/how-two-companies-hooked-customers-products-rarely-use-nir-eyal

    http://dealbook.nytimes.com/2014/08/17/in-silicon-valley-mergers-must-meet-the-toothbrush-test/

    http://www.ycombinator.com/

    http://www.nytimes.com/2013/05/05/magazine/y-combinator-silicon-valleys-start-up-machine.html

    https://news.ycombinator.com/
    https://news.ycombinator.com/rss

    https://www.similarweb.com/website/news.ycombinator.com#overview

    http://blog.ycombinator.com/two-hn-announcements

    http://themacro.com

    http://www.acrwebsite.org/search/view-conference-proceedings.aspx?Id=8513