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ROI in UX Design

ROI-in-UX-Design

UX is still in its nascent stages in India. And UX designers have to evangelise their work to organisations or potential clients who want to know if their investment will yield a real result like saving expenses, time, or both. UX designers have to advocate the value of their design in terms of ROI (Return of Investment). ROI in UX design can help the stakeholder measure the impact of the design and the value it adds to their users’ lives more conveniently.

ROI in UX design is used broadly to describe the effect of an investment in a design-related area such as user research or usability. But unlike in the finance sector, ROI cannot be calculated as clearly because the investment and the benefit are not measured in the same unit, and the effect is not direct. The value of UX design in any such project, the stakeholders invest either in capital or time; however, the benefit is usually the shrinkage in user error or enhanced user efficiency or improved user satisfaction, which might indirectly lead to potential profit.

ROI in UX design has specific focal points, like:

  • ROI in UX Design is about validating that the design improves customer experience, forming a positive impact on the organisation’s goals.
  • ROI in UX Design will estimate the value of the potential profitability of the product. However, it does not mean it can reflect the exact amount of money by the end of the year.
  • The calculations of ROI in UX Design can be as detailed and comprehensive. However, it is recommended to work on these calculations as is necessary to get the point across.

While calculating the ROI of design efforts is difficult, some organisations have attempted to do so by analysing the net effect that focuses on design leading to its overall profitability.

Measuring UX and ROI

McKinsey & Company conducted a worldwide study measuring revenues and stakeholder returns associated with good design culture in organisations. The study reflected that some of the best design performers increase revenues and stakeholder returns twofold compared to their counterparts in the industry. The value of UX design to measure design actions and gathering vast amounts of financial data also presented a significant correlation between twelve design actions to monetary gain. Meaning it shows the value of UX design in business. They then grouped the design actions into four more major categories or themes:

Analytical leadership

They are treating design performance, just like revenues or costs.

User experience

They are clearing the gaps between digital, physical and service design.

Cross-functional talent

They are bringing human-centred design to the forefront, like design thinking.

Continuous iteration

Continuously listen, test and iterate with the users to minimise risk development.

These themes mentioned above may not be surprising to folks who understand the value of UX design. Still, it might surprise senior-level executives or others who are isolated from design works. These understanding levels in an organisation significantly impact the quality of design work for information flow, resources etc.

The Design Maturity Model by InVision also reflects quite a similar sentiment.

Even with perseverance, the proven difficulty of defining ROI in UX Design is a bit complicated. With that thought, ROI in UX Design needed to be categorised into Internal ROI and External ROI measures, like:

Internal ROI

  • Improved user productivity
  • Reduced user errors
  • Reduced training costs
  • Savings earned from changing the design at the earliest.
  • Moderated user support

External ROI

  • Improved sales
  • Reduced customer support costs
  • Reduced cost of giving training

I am going to mention a few fun facts about the ROI of UX (infographic)

The below mentioned UX ROI examples come from prominent firms such as McKinsey, Adaptive Path, IDEO and others.

UX ROI examples – B2B

Bank of America

Bank of America identified and invested in its UX design project to improve its online enrollment application. The design team identified the percentage of customers finishing the task as the chief metric. Another beneficial metric that flourishes the design strategy is prototyping and testing various design solutions with the principal metric. The principal metric doubled and exceeded the ROI benchmark the same week the latest registration form went live. This was a triumph for Bank of America that sponsored this endeavour.

HubSpot

HubSpot, in its latest iteration, the organisation decided to redesign the UX of its website, starting with user feedback. The organisation tested its visual treatment and new methods for growth. As part of the technique, the organisation several experiments to iterate various feedback pieces, making their website human-centred. This led to doubling theirconversion rate. After their iteration, the organisation received several million visitors in a month impacted their revenue heavily.

Selecting the Right ROI

To calculate the primary profits and losses, let’s now understand the three primary metrics for ROI in UX Design.

SUM (Single Usability Metric)

While selecting the right ROI of UX, an effective way of identifying issues to figure out is the Single Usability Metric (SUM). SUM is a usability metric that measures usability – effectiveness, efficiency, error counts, satisfaction through task completion rates etc.

Reduced Errors = Reduced Conversion Drop Offs

The SUM calculator can covert basic usability metrics into a SUM score. The automated algorithm can calculate the maximum task time, which analyses UX errors to optimise conversion.

Conversion Rate

The conversion rate is the quotient of total visitors who’ve taken desired actions. There are two types of conversions, namely, micro and macro. The same metric is used to calculate both.

Conversion% = (No. of Purchases/Total Visitors) x 100

As an illustration of macro conversion, suppose if 1000 users visit a website, and 20 of them made a purchase, then the conversion rate percentage will be 2%. However, micro conversions are actions that quicken macro conversions. It can include blog subscriptions, blog posts, and e-books reviews.

Drop Off Rate

Drop off rate is a crucial metric to calculate the value of UX design and its impact. If the visitors on a website are not completing a task or if regular visitors of a blog are not converting into subscribers, the organisation/individual is missing potential conversions. This issue of incomplete tasks indicates a problem in UX design. The formula to calculate the drop off rate is:

Drop off rate% = (Number of users / Number of unique users in each segment) x 100

The drop off rate calculation can identify the actions prompting the drop. Once the drop-off rate is calculated, an analysis can be conducted to make the necessary iterations to optimise the UX.

Conclusion

Calculating the ROI in UX Design is a useful thing to do. One must understand that UX is not just about design; instead, it is a holistic approach. The organisation has a vision and an idea that can delight users and provide tangible results.

ROI in UX Design can help one understand the potential payoffs and the potential risks. As a businessman/woman, one might focus on improving the UX of the product (website or app). And as a UX designer, knowledge of ROI in UX design can make one more distinguishable as one would speak the same language used in the organisation’s higher echelons.

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