Unlocking the Secrets: How Goodreads Keeps Its Users Engaged

by: Mahatma KPosted on:

Say you love watching movies and are searching for your next pick. Where do you typically search ?

Well, You might say I don’t have to go anywhere the OTT platforms recommend me what to see next based on my viewing history. 

Alright! Not every OTT has a solid recommendation engine, what do you do in that case? Well, You ask your friends, and family, watch film news, ask other movie lovers in your network, or look up the reviews on a professional platform like IMDb. 

To put things in perspective, we’re trying to solve the problem of finding the next movie to watch, also known as the “discoverability problem” in business terms.

Now, let’s apply the same Discoverability problem to supposedly boring things called – Books 🙂

Here comes a company that solved the same problem, not merely right but much more in a way that this company almost sent jitters down the spine of Amazon, back in those days when Amazon was looking to grow into an A-Z marketplace. 

Welcome to “Goodreads“

In this case study, I attempted to put together my learnings about this company and its product strategy. Along the way, we will take a closer look at the user engagement strategy of Goodreads and how it attempts to keep engaging the users at scale.

Goodreads is the largest website for book readers and recommendations in the world. The product was acquired by Amazon in 2013 for a reported $150 million. The website has an active user base of approximately 130 million users and provides information on 3.5 billion books. With its powerful recommendation engine that understands the reader’s taste and suggests appropriate books, it is the go-to place for anyone who loves reading.

Crunchbase profile page

Let’s explore the different user personas that Goodreads caters to and take a deeper look at its offerings.

Goodreads offerings can be divided into 3 categories.

  1. Discover
  2. Track
  3. Socialize

Broad Offerings:

Personas:

  1. Readers
  2. Authors
  3. Publishers
  4. Advertisers

Business Model / Revenue Streams of Goodreads:

Below are the major revenue streams that generate cash flow for the company.

  1. Advertisements for Publishers
  2. Author Giveaway program
  3. Affiliate links to buy books from Booksellers
  4. Interest-based Advertisements

Now that we understand the high-level details about Goodread’s offering and business model, let’s take a deep dive into its engagement strategy.

User Engagement Strategy:

Acquiring new customers for a product can be a difficult task, but keeping them engaged and retaining them can be even more challenging. To keep users coming back to the product and experiencing the “aha” moment, engagement is crucial. Typically, a user engagement strategy can be broken down into three stages.

  1. Initial Engagement
  2. Tactical Engagement
  3. Strategic Engagement

Stage-1: Initial Engagement

This stage of engagement deals with the first few moments when the user joins or onboards the product. The mantra to win the initial engagement is to wow the user with novelty and nudge/prompt the user to create a sense of discovery. Let’s take a look at what Goodreads does to handle initial engagement.

  1. Seamless sign-up with Amazon Account -The product enables seamless single sign-on (SSO) with an Amazon account, reducing friction and making users feel familiar with the platform.
  2. Discovery Email / Notifications – Once the signup is successful, which obviously will be in 100% of cases due to SSO, the user gets a discovery email. The email talks about the various offerings of the product and how users can exploit each of these. The graphics in the email are compiled to make the product very compelling.

Stage-2: Tactical Engagement

After entering stage 2, the initial excitement and sense of discovery of a new product usually wears off after a couple of days. To keep the user engaged, a fresh dose of dopamine is required, but this time it needs to be a long-lasting one to establish a habit. The key to winning user engagement is by creating habit loops so that the user becomes a habitual user, without requiring active nudging. This is done to create long-term stickiness with the product and encourage unprompted user engagement. Nir Eyal, a habit expert, refers to this process as building habit loops. Let’s take a look at how Goodreads applies this to their platform.

  1. Habit loop – Like any habit-forming product, the product nudges you towards the habit loop with external triggers initially. These eventually become internal triggers making the user habitual to the product. Here is an example.
    1. Trigger – You get notified that your friend has shelved his 2024 to-be-read books.
    2. Action – You engage with this content – Live/Comment or talk to him about this reading plan;
    3. Reward – The platform understands your tastes and suggests more and more such content. You get excited about this.
    4. Investment – You update your profile with your preferences for future recommendations. The trigger comes again, and the loop continues.
  2. Rewards/ Social status – The product rewards the active users/reviewers through a feature – MEET PEOPLE. This feature lists down the top readers / top reviewers / top authors every week, month & year and creates a sense of pride and engages people to use the product more.  

3. Annual Book Awards – The Goodreads Choice Awards is a popular voting channel that announces the top books across various genres. Although it is not a physical reward, it is a powerful social reward that encourages authors and their followers to engage in friendly competition and can help to form good reading habits.

Stage 3: Strategic Engagement

For users who are already familiar with a product, the next step is to continually improve it by adding new features that bring incremental value. The key to success at this stage is to consistently reinforce the user’s perception that the product is adding value. Let’s examine what Goodreads does in this phase.

  1. After acquiring the product, Amazon seems to have neglected it. There haven’t been any significant feature upgrades and the user interface remains largely unchanged.
  2. It seems that despite having a huge user base, Goodreads does not prioritize long-term engagement. The fact that it is owned by a strong parent company and benefits from the network effect gives it a significant advantage over competitors. Unless a new competitor arises and takes away a substantial portion of Goodreads’ user base (very unlikely), it is likely to maintain its position as a strong competitor in the market.