Timeline
4 months | Jan 2021 - Apr 2021
My Role
Team Project
Market and Policy Research | Competitive Brand Analysis | Stakeholder Research | User Research | Online and Onsite Service Analysis | Insights Generation | Concept Generation and Evaluation | UX Design | UI Design
Client
LUGO Duty-free, a Chinese cross border e-commerce start-up
Platform
Context & Problem
How to achieve sustainable customer growth is a crucial and knotty issue for Lugo DF, a small-sized Cross-border e-commerce(CBE)* start-up in China.
*Cross-border e-commerce(CBE) is a business activity of selling products or services to an international audience, using an online or ecommerce store or platform.
Due to governmental supportive policies and household consumption upgrades, the Chinese CBE market has rapidly expanded since 2013. Many small and medium-sized start-ups sprung up, especially in special economic zones, such as Hainan Province. However, as the dominant enterprises occupied most of the market share with their absolute advantages, small-sized CBE start-ups struggled with survival.
About Lugo Duty-free
Lugo, founded in 2020, is a CBE startup that mainly sells genuine and zero-tariff beauty products. Compared to other typical CBE startups that only operate the online business, Lugo has a physical shop in Haikou, the capital of Hainan Province. The purpose of the physical shop is to enhance the shopping experience and strengthen customer trust.
Solutions
The design combines the AARRR model with service design thinking, analysing consumer experience from consumer exposure to the brand to customer referral and identifying problems in the enterprise's internal execution and external brand identity delivery.
We developed service improvement solutions for customers in online and physical shops and internal execution guidelines for employees. In particular, we proposed an operational plan and implemented two specific MVPs to test how Lugo could operate its private domain to promote consumer retention and extend the consumer lifecycle.
Impacts
The conversion rate for online and physical stores increased around 13% and xx%, respectively, after implementing the operation activity MVP for a month. Both conversion rates continue to show growth even after operational activities have stop.
Online View/order and order/payment conversion rates showed an increasing trend after UX and UI iteration.
Research Plan
Key Research Insights
#INSIGHT 1.
Lugo lacks in communicating brand value and personality in both public and private domains.
* Private domain refers to a private channel where brands have complete control over how and when they want to communicate with their audience.
* Public domain refers to an open platform, e.g. advertisings on Google.
According to the user interviews, we found that besides needs and affordability, authentication of products is one of the fundamental factors influencing the purchase of Lugo's potential customers due to the counterfeit issues in the Chinese imported product market.
Although 'Authentic products and quality service' is Lugo's brand value, 'authentic products' have not become the highlight of brand exposure activities to new customers due to their lack of value communication.
Furthermore, the retention rates are also crucial for a small start-up with limited investment. Therefore, in addition to brand value communication in the public domain, it is important to strengthen Lugo customers' perception of the brand value and reinforce trust with customers in the private domain.
#INSIGHT 2.
Lugo is weak in customer operation in the private domain. Only a few customers repurchase.
Building customer loyalty and facilitating re-purchase is less costly than acquiring new customers in the competitive Chinese CBE market for small start-ups.
Based on AARRR Pirate Metrics framework, we mapped out different roles and their motives of Lugo's customers in the Consumer Life Cycle and analysed the potential ways to optimise Lugo's performance in each phase.
#INSIGHT 3.
There are three points that customers are likely to drop off in the whole shopping journey.
We used a journey map to analyse how stakeholders, both in front and backstage, influence customer shopping experience.
Customer ‘drop-off’ triggers
Due to the lack of a clear information structure and page layout of the Lugo APP, it is difficult for users to find the preferable product and promotion information quickly.
Lugo does not have clear job roles and codes of conduct for employees, especially in sales and customer service. Customers are more likely to receive service below standard without accepted customer service response principles and templates.
Lugo is short in offline marketing. Specifically, Lugo implemented only basic and out-of-date offline marketing methods, which are unattractive to their target market, young and middle-aged women.
Concept Generation
& Evaluation
Based on 3 insights, we brainstormed the initial design concepts and organised them into 5 design directions. We specified every direction and evaluated design concepts by Sweet Spot for Innovation. Ultimately, we decided to propose 5 final design ideas that are feasible and viable for Lugo‘s current operation and meet customers‘ needs for the Lugo team.
Concept Development
Following the Customer Decision Journey(awareness, interest, consideration, purchase and loyalty), 5 operation methods were proposed. The strategy is presented as a blueprint, clearly telling Lugo team how to implement it at each stage. Click to check the full strategy blueprint.
I will explain 3 in detail here.
1.Private Domain Operation Strategy
#Attract new customers to join the Lugo WeChat group by offering vouchers after their first purchase.
Unlike the typical private domain operation process for mass market customers in China, the operation method for Lugo in the ‘Guiding customers into the private domain’ stage focuses on customers who have made their first purchase in Lugo.
The method aims to attract more valuable customers than browsers or ‘gift-oriented’ customers to their private channel. It can help Lugo increase the re-purchase conversion rate with targeted operation methods in the following stages.
#Generate customer tags and set up a database.
According to research on the Chinese market, personalized product recommendation is desirable for customers when shopping for beauty and cosmetics products. This method aims to help Lugo understand customer preferences systematically, which would significantly improve Lugo's product selection and provide more customer-preferred recommendations and services.
Furthermore, with the customer preference database, Lugo is more likely to create valuable content in the next operation stage to cultivate customers' interest in Lugo's products and encourage purchases.
The basic categories of customer tags should be Demographic attributes, channels of cosmetic product purchase, channels of receiving cosmetic product information, Skin type, frequently purchased products, and customer types. The types of customers could be wandering, discount, need-based and expert customers.
#Subscription box service
Based on the interview and analysis of Lugo's target customer, the customer's common needs could be summarised as
1. Have product/brand preferences but do not know which specific products to buy;
2. Want to send presents but do not know how to choose and do not want to spend too much time selecting gifts;
3. Regularly purchase several products of specific brands with favourable prices;
4. Try new products with comparatively low cost.
The subscription box service is designed to tailor to the needs of Lugo's customers. It aims to provide more personalized purchasing options to meet customers' potential needs in different situations, thereby increasing customer loyalty to Lugo.
Subscription Box options
2.Redesign of Lugo Online Store
In the App walkthrough phase, I evaluated Lugo's existing app's information structure and user flow. Problems with the homepage, which is the most complicated, were mainly analysed. The homepage design determines whether the information is clearly present and can stimulate purchase. We clarified the standards for evaluating different problem categories and prioritised all the problems.
Click the image to see the Lugo's App evaluation in detail.
3.Scene-oriented Marketing
Collaborating with other business partners and embodying Lugo in different product usage scenes is an effective way to increase customer exposure. This is because customers who buy in partners' service are likelier to trust the brands they endorse. Moreover, when consumers enjoy satisfactory services, the brand that appears in the entire service would also remain in the consumer's episodic memory. The next time consumers see the brand, good memories will be evoked, making them more likely to purchase.
The possible collaboration business partners could be beauty salons, spas, wedding or photo studios, and hotels.
