Maximizing User Retention with UX Audit: A Guide to Making the Best Decisions
13.04.2023 | 5 min read
In today's fast-paced and constantly evolving market, retaining users has become more challenging than ever before. The competition is fierce, and users have more options to choose from than ever before. However, with the right strategies, it is possible to improve user retention and create a loyal customer base. In this article, we will explore some effective strategies to help businesses make the best decisions to retain their users in a changing market.
Customer retention – what’s that?
When creating a digital product, the initial question should be: "How will we know if we've succeeded?" Once we've launched the product, we shift our focus to monitoring the actual state of the business. This involves tracking a variety of metrics that provide insights into whether we're moving in the right direction. We conduct user research, measure customer satisfaction using NPS, and track key performance indicators such as return on investment (ROI) or customer lifetime value (CLV).
However, one of the most important indicators of a product's value that we should pay attention to is user-related data. Finally, a high level of user interest reflects the solution's high value, whereas a lack of users indicates that the product's value is lower than expected.
High demand is a clear indication that we have met the market and user expectations. User behavior also reveals a lot about the path we should take to meet their actual expectations and goals and gain a competitive advantage. User losses or low engagement, especially among previously active users, are direct warning signs that prompt us to take action to improve the functional fit or, if necessary, pivot.
Many businesses focus on attracting new customers to increase sales and monitor their performance. But they often forget that keeping existing customers is crucial for long-term success. Customer retention measures a company's ability to keep current customers and encourage them to use its products or services again. It's more profitable and cost-effective than getting new customers and leads to a higher customer lifetime value.
Why it’s important to pay attention to User retention metrics?
Imagine a situation in which a certain percentage of new users begin using your product each month. Your sales team is putting all of their efforts and resources into maintaining or increasing this number month after month, but revenues are not only stagnant but sometimes actually decreasing. Regardless of how hard you work to acquire new customers, every significant increase results in only a temporary improvement, followed by a downturn.
Consider a different scenario in which, instead of simply increasing efforts to acquire new customers to solve the problem, you take a step back and decide to see what happens after you acquire a customer as well. This is the moment when we’re talking about focusing on current users, which can bring you a lot of value:
- Understanding the audience after purchase allows us to get a complete picture of their behavior rather than focusing on a small part of it. We don't know if our product makes sense in the market and achieves its goals if we only track data related to the first stage of the product, i.e., customer acquisition. We can have catchy marketing, but our product is unrelated to our promises.
- It’s also cheaper. According to research by Harvard Business Review, acquiring a new customer can be up to 25 times more expensive than retaining an existing one.
- Better customer retention can increase revenue. Customers who are satisfied with a company's products or services are more likely to make repeat purchases and recommend the company to others. They may also be willing to pay more for the company's products or services if they believe they are of high quality and value.
- Customer retention also has an impact on how a product is perceived and can improve a company's reputation. When customers are satisfied with a company's products or services, they are more likely to speak positively about the company to others. This can lead to positive word-of-mouth marketing and a stronger brand reputation.
- Measuring customer retention also allows for the validation of changes made throughout the entire product. This includes changes to marketing, and communication, adding new features or even conducting pivots!
Reasons for low retention rates or high churn rates – why it's UX-related?
Poor retention rates or high churn rates can be warning signs that something is wrong with your customer experience. However, like any metric, we should not always approach customer retention numbers the same way and should always keep the context in mind. Using the wrong metrics can lead to false conclusions and poor strategic decisions.
As with measuring an e-commerce website's success rate, increasing the number of views does not always imply success if no users make purchases. Similarly, the impact of factors on retention will depend directly on the situation in which the product finds itself – both in terms of the stage in the product lifecycle and other existing issues. Let's take a closer look at the few factors that can affect customer retention rates:
- Product quality – delivering on the promises we give to the client in the sales process
When we sell a product, we make promises about the benefits, functionalities, and values that the product will bring to the customer's life. However, whether or not they stick with our product is determined by how well we delivered on those promises. If we promised an easy-to-use tool but delivered a complicated one, users will be disappointed and may limit their use or switch to a competitor's solution.
- Changes in user needs and market trends
We cannot expect that no matter how much effort we put into creating a product, we will never have to make changes to maintain the same level of interest. With the passage of time, technological or lifestyle changes (as well as changes in the market situation), will cause our users' expectations of the product to change. Even daily, we may need to change the product that previously met their needs perfectly and find a way to keep current customers still interested.
- Stages of the product life cycle
Customer retention will be affected differently depending on where we are in the product cycle. When launching a new product or service, it's crucial to focus on both acquiring and retaining customers to avoid the never-ending cycle of constantly acquiring new ones. Especially neglecting customer retention rates can have a significant impact on our brand's perception – if low customer retention is due to dissatisfaction with the product's promised quality, exposing more people to the product without fixing this issue will only result in more negative reviews and a damaged brand reputation.
- Low engagement with the solution related to usage mismatch
A product that does not support the user throughout their journey is an easy way to lose a customer. Low usage can be attributed to usability issues that obstruct the user's path, incorrect assumptions about the needs (for example, unnecessary functionalities), and other factors. Simplifying the app rather than adding thousands of new features is sometimes a better approach (and also saves on maintenance costs).
- Speed of our response to emerging user problems and needs
When it comes to customer retention, both providing good support and quickly responding to their feedback are crucial. According to Bain & Company, customers who have experienced problems with a product and had them promptly and effectively resolved, are more likely to recommend the brand than customers who have never had any issues! Therefore, it is worthwhile to take action to fix customers' negative experiences and increase their loyalty to the brand.
- Overall user experience with the entire solution
Even if we didn't promise something, user interface errors can cause significant frustrations and lead users to abandon or switch to a competitor's product. This is especially true in critical situations where users can only perform essential actions or even basic expectations are met. These unmet expectations are automatically noticed by users when they treat them as such an obvious feature in the product.
According to a survey, 63% of participants said they would leave a brand due to poor customer experience, and 49% admitted they had already left a company they were loyal to in the past 12 months for that reason. Additionally, 65% of survey participants in the U.S. are willing to pay a premium price for outstanding customer service.
- The uniqueness of the value offered to the customer
Even the most perfectly matched product will fail if we don't stand out from the crowd. This primarily applies to the distinct value we provide to customers, persuading them to choose our product over competitors.
How to improve it?
When it comes to finding ways to improve customer retention, we may consider things like offering personalized experiences, rewarding loyal customers, or providing excellent customer service. But what does that mean for our solution and what strategy should we take?
Every product is different and requires first identifying the cause affecting our customer retention. There is no magic pill that we can take and solve every problem - like in a pharmacy, we need to first understand the cause to appropriately prescribe a medication for a specific ailment. Here's what you can do in different situations:
- Your customer churn rate is high: A large number of your customers are leaving your business or platform. If you're able to acquire new customers, but they're dropping off shortly after purchasing your solution.
Make sure you're delivering promised value. There are two main situations to consider: users either didn't need the product in the first place, or we failed to meet even basic expectations. In both cases, go deeper and return to the customers.
First, check the solution with a UX audit to see if users encounter critical errors that make it impossible to use. Then, go back to the customer and check feedback about the solution. Conduct focus groups or interviews with former customers to better understand why they left.
- You're facing increased competition: the market is rapidly changing (even overnight) and customers are starting to move away from your product.
Quick market changes require quick decisions - however, it does not mean that they should be made solely based on intuition. First and foremost, verify potential risks from the market situation and how they may impact your solution. If you can involve users in this process, such as in quick focus groups - even better. Make sure your UVP is up to date and what values you should deliver to become competitively relevant again.
Remember to conduct regular customer research to avoid such things, ensuring that your level of knowledge about needs and expectations is the most up-to-date.
- You've recently launched a new product or service and need to acquire as many customers as possible while slowly gaining stability.
First, begin by measuring customer retention and tracking it alongside changes in sales methods, marketing strategies, and product updates. Look for any barriers to using the product by conducting a UX audit. Show appreciation for your initial customers by encouraging them to share feedback about your product, rewarding their loyalty, and making them feel valued for staying with your brand.
- You're experiencing low engagement, and users are not using your product as frequently as you'd like.
While user retention may remain constant, there may be instances where the product is so underutilized or not used at all that it eventually becomes the same as if the user had stopped using it entirely. First and foremost, determine the scope of the problem and the areas it affects. Examine the analytics data to see which areas/functionalities are being overlooked. Also, as part of the audit, use cognitive walkthroughs or usability testing to directly observe user behavior and determine why it is that way.
- You already have a product but want to improve your brand reputation and customer loyalty.
Offer personalization and loyalty support. Engage users with tailored context and content to make them feel connected to the brand and interested. Build a relationship, not just treat them like ordinary customers. Provide high-quality customer service and communication.
What should be your first step?
What could be the first step when you don't know the reason for low retention or high churn rates? First, start with a small step to know where to make a bigger one.
A good starting point is conducting a UX audit of the solution. This action allows for a quick check of the current state of the product in terms of usability and meeting user goals. Combined with additional actions like usability testing or analytics analysis, it enables a better understanding of the product-user relationship and how it can be improved to increase user retention.
Starting with an audit also doesn't immediately commit to high costs - basic actions take a few days, and the gathered insights allow for a better determination of the research (or corrective) actions to be taken in the next steps. Moreover, a UX audit helps to check the basics and identify quick fixes that can be implemented right away.
To summarize, keeping an eye on user retention metrics is critical for the long-term success of any digital product. Focusing on customer retention rather than acquiring new customers can be a more cost-effective strategy, resulting in increased revenue and a positive brand image. However, if you are having difficulty with user retention, it is critical not to act rashly and to avoid relying solely on your assumptions. You have several options, ranging from quick UX audits to extensive research with your target audience.