What is user retention?

User retention is the company’s ability to retain users over a specified period. Typically, a high user retention means that the users are happy to return to the product they’re using.

Applying the best UI/UX design principles can make your application stand out, which’ll keep user retention up.  

The user retention rate is one of the most important KPIs as it’s vital to the growth of a business. Research has shown that the cost of acquiring a new user is far greater than maintaining the relationship with an existing user. 

The study discovered that by retaining 5% of users, profits could increase by more than 25%. Why does this happen? Returning users tend to spend more money over time as they’re more inclined to buy premium products or services since they’ve developed trust with the business. The returning users refer the product to others, giving it organic marketing.

How is user retention measured?

Before measuring user retention, a time frame needs to be defined. The time frame needs to be based on the usage of the product. If the product is used daily, then a shorter time frame should be covered. However, if it's used monthly, then a longer time frame should be covered.

Whatever the case may be, the product usage should be measured at the beginning of the time frame, and at the end. 

The standard equation for calculating the user retention rate is:

Retention Rate = [(UE – UN) / US] * 100 

UE = The total amount of users measured at the end of the defined time frame. 

UN = The total amount of new users acquired during the defined time frame. 

US = The total amount of users measured at the beginning of the defined time frame.

Here’s an example: 

An application had 50 users at the beginning of the month. During the month, the application lost 30 users but gained 70 new users. In the end, it had a total of 90 users. When you apply the retention rate formula, you’ll find that the user retention rate is 40%. 

This can be considered a good user retention rate, but in order to be certain if the number is good or bad, there should be some context added to this number. Context will bring a better evaluation of how the application is doing and if it's in line with the business goals.

What UI/UX design changes can help improve user retention?

Let's say the application you want to improve has been out in the world for a while and has an established UI/UX design. Improving and tweaking certain UI/UX design elements could help you grow your business. As already mentioned, by retaining 5% of users you can increase profits by more than 25%. 

How can you improve user retention with UI/UX design?

1. Smooth onboarding process

Dress to impress because first impressions count the most. This sentence has never been truer. The onboarding process is the first experience a user has with the application. Keeping this user experience positive and smooth will set the tone. 

Implementing modern UX design methods will help maintain the initial excitement. In practical terms, this means focusing on removing unnecessary steps in the process, making it personal, and being hands-on.  

If all of the above is accompanied with a visually pleasing UI design, then that’s the winning combination. 

Rest assured that your users will always default to the user experience they had when onboarding, setting you up for success. 

2. Collect and implement customer feedback as part of your UI/UX design strategy

Knowing what your users think about your application is a gold mine. UX design is centered around the user and the methods it uses are always in line with the user's feedback.  

Implementing UX design strategies that allow for user feedback is a great way to retain existing users since they feel empowered to help improve the application that they’ve invested time in. 

The feedback can be collected through in-app forms, sending emails to ask for feedback, or by talking to the users. 

Whatever feedback you choose to base your UX design strategy on, the most important thing is to close the feedback loop. This means sending a thank you email or rewarding them with a coffee coupon. 

Closing the loop will delight the user and provides them with another positive experience which they can then add to list of reasons why they should stick with your app. 

3. Reward loyal users

Who doesn't like to get rewards? UX design tells us that a happy user is a returning user. Putting strategies in place to reward users for their loyalty will bring a sense of community. Providing an additional discount is one way but implementing UI design changes is another. 

You might consider rewarding loyal users by allowing them access to hidden UI design features or letting them upload more data than they’re used to. This’ll make the user feel special and will likely help retain them.

4. Educate and inspire users

Educating users on the application will bring a positive user experience. Teaching them about all the ins and outs of the application, as well as keeping them up to date with the latest changes, can help retain the user. 

They’ll be more inclined to stay with your application if they feel that they’re being updated, and that the application is being improved. 

Similarly, educating them about the feedback you’re implementing will inspire them to be active in the feedback loop. 

If the user invests time into providing feedback, they’re less likely to drop the application because of a minor negative issue. Instead, they’ll provide feedback on this negative issue and look to help you improve it. This again circles to the point of inclusion and emersion.

What's best for your application?

Knowing the best way to improve your user retention can seem daunting. Every strategy doesn't work for every business. That's why there are companies out there that can help you discover the best way for you to grow your business. Contact us if you'd like to find out more about our UX/UI services.