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Improve Customer Retention with Data-driven UX Design Strategy

January 21, 2023 ・5 min read

As digital channels become the major sales drives for both B2B and B2C companies, business is actively investing in ways they can improve customer retention. But as they bring more money into the marketing activities, if the conversion and retention funnel is not effective, they will end up hurting the business without bringing any tangible improvement.

After years of working on different digital experiences, UXlicious have concluded a few key takeaways which guarantee improvement in conversion and retention with an appropriate UX strategy. In this article, we want to share them with you through cases studies we have done in the past so you can see how your company can do things differently:

Optimizing Onboarding for Increased Customer Retention: A Personalized Approach

In most cases, your potential customers come to your digital interface (mobile application, website, tablet) through a trigger. They may be attracted by a Google or Facebook advertisement, follow the recommendation from their friends and families, see a banner or billboard about your product on the street, or receive a voucher in their email or mailbox.

Anyhow, these customers have a basic assumption that your product or service will bring certain benefits to them and that it will meet their needs. In order to retain these customers and increase customer retention, it’s important to consider the user experience (UX) of your digital interface, especially when it comes to onboarding, which convinces them they are at the right place will land you a very happy new customer and one that has a high potential to become a loyal customer in the long term.

To best meet customer expectations and improve customer retention through UX design, we often implement a personalised onboarding flow with a relevant message and targeted offers/pricing. To ensure our design can be implemented, we need to know what data points can be obtained during onboarding from various third parties:

  • Personal details: birthday, gender, nationality, employment status, income, marital status etc.;
  • Digital behavior: user/device location, mobile usage, etc
  • Social footprint: likes, follows, posts, groups, comments, friends, etc

Besides, we can also ask direct questions from the customers. But we risk customers drop-off due to the long onboarding process. So if it is absolutely necessary to collect a certain data point, we need to make sure we explain the reasons to customers clearly.

To better illustrate how we develop a data-driven user experience model through our UX design process, we often break the flow done into three key phases: the laboratory phase, the initial set up phase, and the automation phase.

Laboratory Phase

Optimizing user experience (UX) for customer retention is crucial for any business looking to increase its retention rate and boost revenue. From the start of the UX research phase, we know that even though the product is not yet available on the market, we have already collected valuable data points, and we can use them to improve the wireframe design as well as the product sales funnel optimization.

In UXlicious, we use a simple formula to start the UX retention model building:

“If a user [data point A = A1], and [data point B = B1] …, then s/he is [user persona X]”.

Working with the client business and product team, we consolidate a list of the hypothesis, and we use user interviews, surveys, and usability tests to verify these hypotheses.

The reason we focus on personal details, digital behavior, and social footprint is that these data are well-proven to be associated with purchase behavior, and they are also easily collectible from either third parties or straightforward onboarding questions. There are also other data points we can easily collect from qualitative research methods, such as the behavior of using competitor solutions, opinions, and feelings, but these data points are difficult to collect via the qualitative method and are also prone to bias.

For example, the company wants to help tenants and sub-tenants who have a limited budget to find their perfect apartment+roommates.  We conducted nearly 60 interviews with the tenants to validate the relationship between employment status, budget, lease terms, and preferred locations related to their preferred roommate types.

Through several rounds of validation, we were able to identify 4 variables that are likely to become an ideal Flateasy tenant/sub-tenant: nationality; employment status; work location; and income. Namely, a non-Hong Kong professional who works on Hong Kong island and earns between HK$20,000 to HK$50,000 is most likely going to choose to live with one or several tenants.

With this insight, we designed an onboarding process that focuses on the benefit of sharing an apartment for non-local professionals: save living costs, stay near the workplace and meet like-minded people. At the same time, our clients also use this data in crafting their consumer proposition message, so it is relevant for the right audience. 

Case Study: Flateasy: smart matching to find our best roommate


Initial Set Up Phase

We continued to work with the Flateasy team throughout the product launch process, and we looked at optimising the experience or a tenant to find the ideal sub-tenant. For Flateasy, we looked at 60 days of retention ( we understood from the user interview that it takes around 60 days for a tenant to find a match, so we use this as the initial measurement).

We continued to expand our model, while we know nationality; employment status; work location; and income correlate with conversion, tenants and sub-tenants need different triggers to stay active on the platform. Looking through the onboarding flow, we concluded that two factors are directly related to retention: the number of potential tenants/sub-tenant a fist time user reach out to after they complete the sign-up and the total number of connection (at least one message exchange) a new user established within the first 7 days since they completed the sign-up.

We then optimised the design to incorporate the need to optimise for the two factors, developing a comprehensive product communication experience that focus on getting users to reach out to more recommended matches and to come back to check and replay messages on a daily basis. With the new design, we were able to improve the retention rate by 5.7%.

Automation Phase

Now that we have verified our model, the engineering team can build it into the system using our UX and retention strategies. We set up an A/B test plan to continue to introduce small iterations with different question sequences and messages. Because we were able to establish a sustainable experience design in the “Model Set Up” phase, using modulated onboarding flow and standardized questions, we are able to make UX tweaks with minimum technical effort.

Working with Flateasy’s data analytics team, we regularly extract data and perform cohort analysis, comparing how the different user experiences impact the retention rate.. We test different versions of the call-to-action (CTA) buttons and sequences of the lifestyle test (room usage > living style > roommate preference) and fine-tune the flow. In 6 months’ time, the 60 days retention rate further improved from 34.7% to 40.2%.

Wholistic Activation UX Design, Unlock the Potential for Retention

To a new customer, getting experiencing the full benefit of a new product/service can be a frustrating process. Not every customer is happy to spend time learning how to use the product/service, and the unfamiliar experience can even create negative feelings and make them feel uncomfortable.

To design the best user experience, we need to look beyond registration, as only when the customer is fully ready to experience the benefit of the product/service shall they be considered an active customer.

Activation is one of Dave McClure’s 5 pirate metrics (AARRR) viewed on the same level of importance as customer acquisition, retention, revenue, and referral. 

Activation refers to the user’s first-time experience with a given product, which is crucial for customer retention. It is about getting the user to experience the real value of the product, as opposed to the hypothetical value proposed on the product management tool’s sales page. It’s not just about getting them to create an account and/or download your app but also ensuring they experience the true value of the product to want to continue using it.

We looked at defining the activation checklist and its relationship with retention with Planto. We conducted a cohort analysis of customers who have linked different numbers of bank accounts and found that the more bank accounts customers link, the more likely they will continue to use the Planto app.

planto retention

In particular, we found the retention rate significantly improved between the 1st and 3rd bank accounts, while the incremental improvement slowed down after the 3rd bank account was linked.

The UXlicious team developed a holistic activation strategy that covers both the core mobile product experience, the incentives, and the communication (push notification, email, SMS, and re-target marketing). Working with the engineering team, we implemented the activation strategy in 5 sprints so we could test the result and fine-tune the design before moving on to the next deliverable. And the new design successfully uplifted the 180 days retention rate.

Case Study: Planto: Fix the fragmented personal finance with Planto

Consistent Layout, Minimize Confusion for Existing Customers

After the initial investment into developing a new customer, we continue to streamline the core experience to keep our customers happy and loyal to the product. Different from the activation strategy that focuses on getting customers to a particular stage. The objective of a perfect core experience is to minimise cognitive effort and make sure customers can use the product/service in an effortless way.

We recently completed a project for the Allianz Global Investment team that asks us to look into how they can improve their brand website experience for Allianz investors.

We looked into 7 key user journeys from exploring Allianz investment products to identifying Allianz investment resell partners. Together with the Allianz business team, we identified a list of competitors which we benchmark with the Allianz website to identify the gaps.

Through a comprehensive UX audit, we identified three main areas of improvement:

  • The inconsistent layout creates confusion, making it difficult for investors to find information
  • Financial jargon frustrates investors, they give up trying to complete the tasks
  • Too much information delays decision making

The main issue for the Allianz website is inconsistent design for the same content (for example, there are 4 different designs for fund summary information), and this creates unnecessary cognitive effort for investors when they are using the website.

We proposed a new design to streamline the layout. And it also helps with future interaction for the engineering team as they have fewer design layouts to manage. We were able to reduce the average time to complete key tasks by 34% (e.g., “find a particular Allianz investment product” task completion time was reduced from 3 minutes 24 seconds to 2 minutes 40 seconds; “find out the dividend percentage of a particular fund product” task completion rate was reduced from 2 minutes 17 seconds to 2 minutes).

Start with UX Audit to Develop a Sustainable Digital Experience

UXlicious suggests starting with a UX audit, which helps to identify current issues and create a plan that focuses on resolving the ones that make the most impactful differences in terms of customer retention UX and UX retention rate. A thorough UX audit can help identify areas for improvement in terms of user experience, usability, and overall design, which can then be addressed through UX retention strategies to improve customer retention and loyalty. 

What is UX Audit

A user experience audit is an expert assessment process used to identify potential usability issues based on established heuristics and/or prior user research. UX audit provides hard data that explains why a product is encountering problems and provides actionable recommendations that will eliminate the issues and improve the user experience.


Key Benefits of a UX Audit

UX audit brings substantial value with limited cost and time, as the actionable next steps are based on empirical data points rather than pure guesses. These may include:

  • Understand how existing customers interact with the product, what works and what does not
  • Compare its own product experience with competitors, identify key gaps
  • Verify UX metrics that form the basis of future tweaks
  • Create a UX design strategy that automates KPI optimisation

It is a best practice to have a UX audit conducted by a specialised design agency because it is difficult for in-house teams to bring in that element of absolute objectivity needed to conduct it successfully. Depending on the scope and scale of the product, a basic audit exercise can cost between $5K to $ 25K to cover a single product and multiple workflows using an informal approach.

For those who are interested to know what areas are covered in a UX audit, UXlicious have prepared a UX checklist for the website and mobile app. Depending on the audit focus, the target audience characteristics, and the industry, the checklist can be modified to make sure the action items are the best suited for the purpose.

Integrate UX Audit with Your Product Development Process

UXlicious work with the product and engineering team side-by-side to make sure the outcome of the UX audit can be quickly transformed into design output. In the engineering of the design sprint, we conduct an audit scope workshop and stakeholder interviews to identify the key issues. We then create Epics and stories to record the task details and make them transparent to the client team, so everyone knows where we are or if there is any deliverables or decision needed from them.

We follow the same sprint process and demo what we have done in the sprint retro. We also create a UX audit proposal with a list of improvement suggestions prioritised by effort and impact so the client can easily pick which ones are most beneficial for the team.

If you want to know more about how the UXlicious UX audit process can help you improve customer retention, feel free to contact us. Our team will walk you through the process and help you personalise the service for your company.

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