Habit Formation, and How It's Used In Business

Have you ever wondered how the toothpaste industry convinced us all to brush our teeth twice a day? Or how Instagram is so good at getting us to check our feeds multiple times a day? 

Welcome to the fascinating world of habit formation! We’re going to delve into why habits are considered the “Holy Grail” of behavior science. We’ll explore how companies use specific behavior change tools to create habits with their brands that keep you coming back to them again and again and again.

The best part? Once you’ve formed a habit you no longer question why you’re doing it, which means those companies have a happy, loyal customer <cue evil CEO stroking a white cat>.

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Habits, the Holy Grail of Behavior Change

In our last article we learned 5 basic principles of behavior science. That article was explaining how new behaviors are created. This article is about the what i.e. Habits.

We all know what habits are; they’re behaviors we do regularly and unconsciously. Those behaviors that are “ingrained” or “second nature,” like driving a car or tying your shoelaces. But before those behaviors became habits they were actually really hard and took a lot of concentration. Thankfully habits account for the majority of behaviors in our day-to-day lives, meaning most of what we do is automatic and unquestioned.

Companies are obsessed with changing people’s behavior to create new habits. Once a new habit is formed (like getting the same takeaway or going to the gym every day) the company has bagged a reliable customer and ongoing access to their attention (and wallet).

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So how do companies build habits?

Many of the tactics used to build habits are similar to the 3-part model discussed in the previous article. However, there is an additional component where one iteration of the habit links to the next iteration. This drives repeat behavior and makes habits self-reinforcing. If you want to impress your friends, the Hook model calls this “investment” whereas the book Atomic Habits talks about building “craving”. Whatever you call it, it’s very very powerful.

The easiest way to understand this is through example, so let’s look at 3 business stories where companies deliberately created habits to instill loyalty.

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Example 1: Toothpaste

Cleaning our teeth every day is such an ingrained habit, it’s hard to imagine a world where people didn’t get minty-fresh morning and night. But when “Pepsodent” toothpaste was first invented in the early 1900s it tanked. Sure, a daily cream that prevents tooth decay in later decades sounds great on paper, but educating people around preventative maintenance is boring. It’s a classic problem in behavior change; “Future Me might have a mouth full of cavities, but that’s Future Me’s problem not mine.”

Enter advertising guru Claude Hopkins. Claude shifted toothpaste’s message from tooth hygiene to having a beautiful smile. He talked about teeth free from “a dangerous coating that robs teeth of their whiteness” and made readers subconscious about the way their teeth look. In doing so he brought a long-term issue into a short-term benefit; a beautiful smile today.

To set up the craving, Pepsodent added flavoring to generate that sparkling clean feeling you get after brushing. That taste came to represent a clean mouth, and so people began to crave that feeling, not once a month or once a week, but driving the habit to brush twice a day.

Today, toothpaste is sold with everything but education about tooth decay. We are invited to imitate those smiling, attractive people in the advertisements. Dentists recommend products using their social authority. Marketing teams capture our attention with fun packaging or price promotions. And all of them are telling you you too can be beautiful if you just form the habit of daily brushing.

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Example 2: Social Media

Social Media is a masterclass in habit formation. It’s not by accident that many of us have formed the habit of checking social media over breakfast, between meetings, at the gym and in bed before we fall asleep. It’s a manipulative industry that uses behavior science to powerful effect.

Obviously the biggest tool that social media leverages is our desire for connection to others and the fear of social isolation. These are very strong motivators to get people to sign up, but also to regularly check social media to ensure they aren’t “missing out” on social activities, or to benchmark their lives against what their peers are doing.

Once someone is in a social media platform, the use of prompts via notifications embeds the habit of regularly logging in. Investment in one session (like following someone on Twitter) then sets up the next usage when that person tweets and you get notified. Liking that cat-in-a-cardboard-box video on TikTok sets up prompts to watch more cat videos. It quickly becomes an innate and addictive habit.

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Example 3: McDonald’s Monopoly

In 1987 McDonald’s invented a sales promotion based on the board game Monopoly. They already had a pretty habit-forming product (food drives craving, especially when that food is a symphony of fat, salt and sugar). But other chains started competing with similar food offerings, so they wanted to build the habit of buying McDonald’s to the next level.

McDonald’s Monopoly was their solution. Customers were able to collect cards based on Monopoly properties, which could be redeemed for money. There were also “instant win” cards that could be redeemed for food in-store. Simple enough, but here is the underlying behavior science tools they were using:

1. Positive Association: With every visit to McDonald’s, a customer got multiple chances to win on each product. Behavior science shows that the human brain feels a chance to win as roughly equivalent to actually winning (!), so it formed a strong positive association with the restaurant visit
2. Variable Rewards: A customer playing Monopoly might win free chips or an ice-cream, or they might win nothing. Chips or an ice-cream cost McDonald’s practically nothing but the variability of the reward drives a desire to return and “try again” at a future visit. Even better, a customer receives these rewards after their purchase is completed, thus creating an investment which drives their next visit.
3. Goal Gradient Effect: Each visit to a McDonald’s would leave a customer with more partial property sets. This feels like progress and drives behavior to try to complete those sets. Once again this feeling of investment effectively drives the next visit quickly leading to habit formation. The empirically proven “goal gradient effect” is that humans will try harder the closer they get to completing all the steps towards a goal.

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Feeling manipulated? You should be

So the terrifying reality is that we are all pawns in a giant corporate habit-formation game. One solution is to find a cave in the mountains, make your own toothpaste, start a social media platform with your goat and play Monopoly with yourself so you always win.

If that’s not practical for you, then the good news is that these same tools can be used to drive positive habits and push back against the forces of evil. In healthcare patients can be encouraged to look after themselves. In schools children can be helped to develop study habits. And in everyday life developing habits of meditation or exercise can improve mental health.

What’s important is to be aware of the tools of habit formation, so you can use them wisely and be aware of how they are being used on you. If you’re interested in learning more about habit formation, we recommend reading:

• Power of Habit by Charles Duhigg
• Atomic Habits by James Clear
• Hooked: How to Build Habit Forming Products by Nir Eyal and Ryan Hoover

Let us know what you thought of this article, we’d love to hear from you. Or alternatively reach out to Hugo; he’s always keen to nerd off about behavior science.

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About the author

Hugo Rourke has a lifelong passion for behavioral science, whether it’s through post-graduate study at Harvard or in practice at McKinsey. He has brought his experience to the field of healthcare as Co-Founder and COO of Perx Health, a digital health company changing the way health plans engage with their high-risk members.

Perx Health enrolls a higher proportion of members, interacts with them more frequently and keeps them engaged for longer than any other digital health program. They achieve this by tailoring behavioral motivation strategies to the individual, ensuring the completion of 90% of critical daily care tasks like medication adherence, physical therapy and attending appointments. 

Perx Health has already helped over 30,000 patients achieve better health outcomes and partnered with over a dozen healthcare organizations. Email us hello@perxhealth.com to learn more. We're always happy to chat.

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