How Habit Loops impact Tech Adoption

Habit formation for B2B tech adoption
Image credits: @tomertu

I’ve seen a lot of startups developing products with emerging technologies struggling with tech adoption and user activation. A pattern of questions always comes up: How can we show the economic value? How can urgency be created to convince users of the technology?

I’ve been working with tech such as AR, VR, Blockchain, or AI for more than 10 years. Over the years I have learned that value is especially important for managers, that urgency can only be controlled to a limited extent, and that there is no adoption without changing the habits of the users.

Let’s have a look at:

💎 What role the economic value plays and where the limits are

⏳ How urgency impacts decisions and how natural urgency works

🤸🏼‍♂️ Why habit formation makes the difference and how you use it

Value and Urgency

In the B2B and tech start-up world, it is widespread that 💎 value is the decisive factor in decision-making on the customer side. There is nothing to be contradicted with this because, in the end, an investment decision is ultimately about how much time can be saved, where costs can be saved, and how sales are increased. But what if, as with new technologies, you hardly have any numbers to show the value or the users do not use new tools despite their 💎 economic values? In a talk at the Augmented World Expo (article about tech markets and urgency), I explained why urgency supports value-based decision making with the example of AR and VR–the full effect of Covid was not clear at that time.

The second element that comes into play is ⏳ urgency. From private purchase decisions, we know how little rational we make our decisions. When booking a flight or hotel, we let ourselves be misled by “only 2 seats left at this price”. This form of ⏳ manufactured urgency and fear of missing out (FOMO) is undoubtedly an effective tool. We are irrationally predictable and this is what the B2C world, in particular, relies on upon. B2B buyers can also be influenced by this, but not to the same extent–especially when it comes to larger investments. The ⏳ natural urgency, on the other hand, has a beneficial influence on the purchase decision.

Users stick to their habits

The corona crisis has shown that natural ⏳ urgency can increase adoption and acceptance and thus also place value in a different context. While many companies were no longer able to travel and therefore could not train their employees on-site or send experts to repair machines in factories, the value of remote work as a solution to the crisis became apparent.

What we underestimate is that a large number of decisions are ultimately made or at least influenced by the user and not by the manager. The influence from the consumer market and product-led approaches focus on the user to make it easier for the manager to make an informed decision. 💎 Value and urgency have significantly less effect on the user side.

Habits triggered by natural urgency

If we turn back the time by 12 months, going to the supermarket or the mall was the usual way of shopping for many of us. Today we not only buy online on Amazon, but also make meetings completely virtual, buy all the items of daily life online and instead of going out to eat, we order boxes with healthy ingredients for cooking home.

What happened? Exactly, we have adjusted our 🤸🏼‍♂️ habits and learned new ones. What was hard to imagine has become a reality in just a few months. What I am describing happened not only in private but also at work. Virtual workshops with Miro instead of a physical whiteboard, learning to operate devices with remote support instead of the usually printed instructions, events in virtual reality instead of in the convention center.

Habit formation is the secret sauce

During the pandemic, we formed new 🤸🏼‍♂️ habits and changed existing ones. This is what it needs to establish new technologies and drive user adoption in a bottom-up approach. If you can convince users by changing their habits from the existing alternative to your new tool, adoption is about to happen.

Examples showing habit formation and change:

🚙 Uber: before we called a cab, now we order Uber

🚴 Peloton: spinning at the gym, now we have the bike at home

✍🏻 Miro: drawing on a whiteboard, now we use a virtual board

☎️ Zoom: before we met in person, now we do a Zoom call

It can be assumed that none of these tools would have achieved this enormous growth without the combination of value, urgency and, in particular, the change in our habits.

Until users establish a 🤸🏼‍♂️ habit with your product, they are still thinking of alternatives and other ways to solve their problems. Your product isn’t their go-to solution to their problem and they are still at risk of churning from your product and solution. The Reforge team shows in detail how product and growth loops work in B2C and B2B.

Form or change a habit

Habits make our life easier without wasting energy on useless decisions. We learn habits over the years through repetition. Certain cues trigger behavioral responses that are automated by our brain over time. But habits are slow to develop and change.

Ninety-nine hundredths or, possibly, nine hundred and ninety-nine thousandths of our activity is purely automatic and habitual, from our rising in the morning to our lying down each night.

William James

🤸🏼‍♂️Habits are a person’s behavior running on auto-pilot: the brain is likely not used to scrutinizing why a bad habit is carried out. We all know smokers who have spent years trying to get rid of their habit. When shopping we got used to certain brands. Why buy a different brand, why suddenly change a work process that has worked for years?

An example from my practice: at REFLEKT we are developing new work tools that replace the classic manual by using visual manuals displayed directly onto the products. Many people complain that instructions are too complicated or that they cannot even find them. Even though the value was obvious, it took a long time for workers to start adapting their habits. The reward wasn’t big enough to change the routine because it somehow worked.

Habit Loops

More than 30 years ago, MIT researchers discovered the 🔁 habit loop, a key neurological loop that controls our habits:

Habit Loop with Cue, Routine and Reward for Habit Formation

Routine and rewards are two essential ingredients of 🔁 habit loops. In particular, the rewards are very powerful and ensure that we form or change habits. If the reward is convincing there is a high likelihood that users change their habits. For example, the reward with Uber is to get transport from A to B, which is easier, faster, and cheaper than the alternative–a taxi or a rental car.

Miro is another example with the difference that the current paradigm shift to remote work had a major influence here. The reward is a whiteboard in the home office without having to replace the TV on the wall. Urgency, habit, and value play together which is currently leading to a change in the world of work and offering new opportunities for startups.

Here is a simple framework described by Charles Duhigg how to build a 🔁 habit loop:

When x (Cue), I will y (Routine),

because z (Reward).

If we think about the behavior of our users (and buyers) and consider which reward has an influence on the habit (change), we realize that there is no such thing as the “one and only” reward. The focus is on analyzing the routine and experimenting with rewards.

👉🏼 Cue is the initial trigger: I want a coffee

🔗 Routine is how you automatically respond to the Cue: I go to Starbucks and buy a Caramel Latte

☕️ Rewards satisfy your craving: A hot, wonderful tasting coffee with a caramel flavor (you know what I mean right 😀)

What would have to happen for me to change my routine and go to Coffee Bean and Tea Leaf instead of Starbucks?

The Coffee Bean and Tea Leaf must offer rewards that would let me change my habit. Maybe it’s the “Lightened Beverages”, the assortment with tea and ice cream, or my favorite biscuits. It can be a recommendation, to order via an app or a better rewards program that moves me to switch. The more the routine is memorized and learned, the more difficult it is to change the habit.

A good and current example is WhatsApp. The announcement of changed terms of use annoyed many users and made them think about leaving WhatsApp as their messenger. In the short term, Signal and Telegram were on everyone’s lips, but how many have actually changed? After Whatsapp extended the deadline, the issue was settled for the time being.

Obviously, the rewards were not enough. I asked my friends and the arguments are that Signal and Telegram have not explained what they do better. Above all, the WhatsApp chat history cannot be taken to the other tools. The tools missed to clearly show the reward even though the functionality is available.

Connect Habit, Urgency and Value

Technology adoption happens when the 💎 value is evident, ⏳ urgency supports implementation, and habits adapt based on a reward. With a sales-led model, value and urgency influence the purchase decision. The formation or change of 🤸🏼‍♂️habits happens directly with the users and supports self-serve and product-led models.

And now, do the exercise yourself what it takes so that you can change a habit and put yourself in the position of your users. Have fun!

Follow me on LinkedIn or Twitter where I share my thoughts around how to build and market tech products.

Dirk Schart is CMO and President of the Augmented Reality startup RE’FLEKT. His focus is on B2B enterprise software and SaaS models with early-stage technologies like AR, AI, IoT—from market engineering to thought leadership and go-to-market. Dirk is a startup mentor at the German Accelerator in the Silicon Valley and author of two books about Augmented Reality.