COLORADO SPRINGS, COLO.—A credit union can become an impossible-to-break habit for members, and Nir Eyal told a crowd of more than 600 credit union executives at CO-OP’s THiNK conference Wednesday exactly how to make that happen.

Habit-formed members are huge for credit unions because they’re more profitable, give credit unions greater flexibility in terms of pricing structure, ward off competitive threats and supercharge growth by reducing the time it takes for members to tell others about a credit union, the author of Hooked: How to Build Habit-Forming Products said.

The key to making members form habits, he said, is creating a hook: A four-part experience designed to connect a member’s problem to the credit union’s solution with enough frequency to form a habit. Provide the four parts to a member, he said, members won’t be able to resist coming back.

Here’s how Eyal said credit unions can get members to do things with little or no conscious thought; that is, form a habit:

  1. Identify and/or create a trigger. A trigger tells members what to do next. They can be external calls to action, such as buttons on a home page that say “click here” or “buy now,” or they can be internal – usually negative emotions such as uncertainty, boredom, fear, tension or feelings of inferiority. Decide what you want members to do and then understand what will tell them to do it, Eyal said. “Do you know your customer’s internal trigger?” he asked the audience. “The lesson here is to figure out what is the user’s deeper itch.”
  2. Create the action. This is a simple, easy task the member must to in order to get some kind of reward or need met. On Pinterest, for example, it’s scrolling down; on Google it’s typing in the search box. “You have to ask yourself: what’s the simplest behavior done in anticipation of rewards?” he said.
  3. Offer a reward. This isn’t necessarily points or prizes; it is simply about giving a member what he or she came for. “Their itch is scratched,” Eyal said. Things that are the most habit-forming, he said, offer rewards centered around either social rewards such as competitive wins or helping others, information rewards (this is why we can’t stop scrolling through Facebook, he said) or what he called “rewards of the self” — things that simply feel good in and of themselves, such as game play.
  4. Let them invest. “The investment phase is something the user does to increase the likelihood of them coming back again,” Eyal explained. That could be, say, providing more financial information to the credit union in return for a full retirement-planning analysis, or bringing over accounts from other financial institutions. Both fuel the member’s need to come back and the feeling that the product or service is now more useful or worth more. That in turn sets them up to respond to the trigger again.

Once members are hooked, Eyal said, credit unions can get them to behave how they want when the trigger is present. “Online, offline — doesn’t matter,” he said. “I can’t think of a better community than the credit union community to do this.”

“It’s difficult for a competitor to come in and take your customer away if they’ve formed a habit,” he added. “The cold hard truth: it’s not always the best product that wins. Often it’s the product that can form the stickier habit that wins.”

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