UX ROI: User Experience Return on Investment
Calculating and even trying to understand what all adds up to the UX ROI is difficult task. When we are faced with clients and investors – ROI is something they often ask for. How to even start thinking about return on investment in the field of user experience? Here I’m talking about UX ROI discussion tool and other metrics.
Is ROI dead?
It might be – if you ask Eric Reiss, CEO of the FatDUX Group. Not necessarily so if you ask me. But this post is not about Eric or me – it’s about trying to set a stage and to try and identify where arguments and elements for ROI in the UX might be found.
But before I even continue, I’d like to explain why I’m dealing with this topic here at UXPassion.com. Several days ago I had a sales meeting and presentation with some really nice and professional potential customers who really do understand the value and the investment in the UX. When I was preparing for that meeting with my colleagues and partners we have developed really nice looking ROI discussion tool for this particular client. It’s pretty simple tool but we are investing lot of our resources into making it even better.
It is built on the extensive experience one of our team members, Darko Čengija, who already has with this kinds of tools and we took this joint effort to build a ROI Discussion Tool for our current and future clients. ROI discussion tool is cold, precise, correct and strict tool taking into account number of different values, numbers, financial metrics and spits out values like ROI itself, payback time and so on…
But defining return on investment from UX itself is hard to define in such strict environment and with those metrics.
UX investment – business benefits
First step might be identifying some business benefits for company thinking about investing in UX. Many articles have been written, many presentations given on this topic and some summary might look somewhat like this:
- Increased productivity
- Reduced costs and
- Increased sales
Let me go through each of those elements…
Increased productivity
Yeah, this one (as pretty much the rest) sounds like marketing blabber but in fact, there are some really serious considerations here and that is why big boys like Microsoft, Apple, Google, BMW or Amazon are investing heavily in the user experience and service design.
If you go and design an efficient user interface that allows and empowers your users to solve tasks faster and in better manner – you are making tremendous impact on workforce productivity. Furthermore, well designed and optimized user interface leads to reduced number of opportunities for users to make mistakes and results in fewer errors. Guess what – that means better productivity again. If you user interface and overall user experience leads to more intuitive, faster-to-grasp user interface – your users will be able to use it faster and get used to it faster.
Also, if you create great UX it will always lead to better user satisfaction, joy and happiness – and it’s a well know fact that happier users are – better and more motivated and productive workers.
Reduced costs
In the current economic downturn this is perhaps the most important single element. Training, development and deployment costs are the ones that can be severely trimmed down by proper investment in the user experience. Better documentation and easy to use and learn user interface automatically translates into less training investments for the end users. Also, when your users are feeling comfortable with their application / solution – you will receive less support calls and will have more time for other things. Though, as UX pros, we are in constant struggle and learning cycle searching for adequate methodologies for developing, proper investment in the UX during the early stages of product planning and throughout the development cycle significantly reduces time and money costs associated with later design changes.
Since I’m specialist for Microsoft’s UX platform (Expression Studio,WPF; Silverlight…) I can say that from this particular perspective – separation between code logic and user interface (presentation layer) significantly adds to the reduced costs (from my personal perspective) and adds to the better communication and collaboration between designers, developers and managers on specific project.
Increased sales
Strongest single point under this element is certainly market differentiation and ability to gain competitive edge by providing your users with superior experience (or look and feel if you want to put it that way). Currently on of the major clients my team is working with has reached to us exactly stating this as a reason for buying our services: “We want to differentiate ourselves and our flagship product since we are in really highly competitive international market!” They have recognized UX as proper tool and serious investment in order to achieve market differentiation. What can I say – one great and smart client!
Elements of UX ROI
With all this being said – let’s see what might be the elements that should be investigated and taken into account when considering ROI for user experience. Roughly, they can be divided into two groups of measurement (I’m adopting this division from number of online and offline resources, most notably from the MITX (Massachusetts Innovation and Technology eXchange) from their UX ROI event recap.
Two groups of measurement are: Hard and soft and here are the constituent elements for each…
Hard
- Conversion / Acquisition
- Lead generations
- Retention
- (Targeted) traffic
- Viral referrals (not only videos)
- Channel migration
- Employee productivity (as described several paragraphs above)
- Cost savings (also, described several paragraphs above)
Soft
- Engagement
- Customer satisfaction
- Loyalty to brand / Building champions
- Utilization and product / service adoption
- Awareness
- Ethics
Though, we can call them „soft“– they have very tangible and often very direct consequences to your business.
Numbers at the end…
Guys at Infragistics have some interesting numbers and reasoning. They are saying well known facts about UX being a key technology enabler and market differentiator but also they are stating that UX adds to the value of a product in a bit more concrete way. They go further citing the studies across industries showing that every dollar invested in UX brings between 2 and 100 dollars in return.
Cited from:
- 1. Gilb, T. (1988). Principles of Software Engineering Management. Addison Wesley: Reading, Ma.
- 2. Pressman, R.S. (1992). Software Engineering: A Practitioner’s Approach. McGraw-Hill: New York, NY.
One more report from SDS Consulting (Strategic Data Consulting) is also offering some interesting numbers. In their report named „Special report: UX Business Impacts and ROI“ form their IT Leadership Series they have concluded that key UX investment areas and results are decrease in the development costs, increase in revenue and decreased time to market.
Based on survey conducted on 735 internet companies, they, on average, invest 11,5% of their product development budgets in UX (I’m still hoping to see something like that in Croatia and South and Central Europe in general).
They are also giving the following results…
The User Interface (UI) of software is:
- 47‐66% of a project’s total code
- 40% of the development effort
- 80% of the unforeseen fixes required (the other 20% are bugs)
Interesting case is made by citing real-world example that McAfee UI redesign saved them 90% support costs.
For more info, check out their complete report.
Your takes
You have something to add? It would be much appreciated especially if it comes from your real-life experience… Post your comments and engage into communication with our UXPassion.com community…
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94 Responses to “ UX ROI: User Experience Return on Investment ”
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I would just like to say what differentiates two forementioned groups of elements (hard and soft): except from being harder to calculate or estimate, elements from “soft” group are also harder to believe in, from the buyers point of view.
When a buyer doesn’t believe in, let’s say, increased customer satisfaction, it might be because he/she doesn’t feel ready to accept changes brought by enhanced user experience of their products or services. This feeling could be even on some unconscious level.
And because the actual realization of “soft” elements depends more on buyers readiness (than realization of “hard” elements), you can never know what ROI to expect from soft elements. Customer education (trainings, consulting) helps here.
Hey Darko,
Thanks for interesting comment. You are making a good point here. Also, having two types of measurements (hard and soft) leads to the fact that, as you point it out, “softer” elements have more challenges associated with them when dealing with ROI itself. I mean – talking about and even calculating customer retention or new leads generation is certainly a bit gore tangible than, let’s say, ethics or customer satisfaction. This is something I will be thinking of more and maybe do a follow-up post.
Anyhow, I can agree with you saying that the actual realization and awareness of the “soft” elements can be enhanced by customer education – however – there you are faced with another challenge – convincing the customers that they do need an education. We have all met with the “I-know-it-all-and-I-don’t-need-you” type of customers…
Great article, thanks!