User experience (UX) has come into focus in numerous businesses as a concept that balances profits and customer’s interests in equal measure. On one hand, it promotes deeper interaction between brands and customers who drive their revenues, while on the other it streamlines the entire experience of it, creating a win-win situation for all parties involved. At the same time, user experience managers and designers sometimes have a hard time convincing their superiors that investing in this field can have a significant impact on return on investment (ROI) rates. As the numbers describing savings and revenues speak a universal language when it comes to business goals, you should spare several minutes to get acquainted with the following methods of measuring influence of UX on your ROI and put them at the center of your future business plans.
Quality UX Shortens Development Time
Let’s start by saying that UX has its real value expressed in whatever currency you use and is not an abstract, intangible value to be dismissed in the early budgeting phase. One of the mistakes you can make is to treat it as a sort of a “luxury” item in funding allocation plans, instead of as their indispensable component.
Take, for example, the fact that an increasing portion of UX nowadays is delivered online, with users interacting with e-commerce platforms whose development takes a lot of programming and designing efforts. In her video on the ROI of User Experience, behavioral scientist Dr. Susan Weinschenk, claims that focus on user-centered design (UX, in other words) means we can effectively reduce 50 percent of the programmer’s time usually dedicated to reworking. That was avoidable from the start. According to the Institute of Electrical and Electronics Engineers, 25 percent of software programming failures are related to UX mismanagement. This means that implementation of best UX practices can significantly reduce software development time that is devoted to correcting avoidable errors, thus ensuring significant and easily calculable cost cuttings.
Similarly, an integral segment of user experience is its impact on customer support resources you invest in it. Whatever you happen to sell or offer to your users, you are bound to deal with their inquiries or complaints sooner or later, which necessitates examining the role of UX design in reducing the numbers of these as much as possible, while protecting customer retention and loyalty.
One of the essential metrics in relation to these is the support cost per user or SCPU. Take, for example, the number of helpdesk calls which are related to the problems users encounter in relation with the UX you offer. Calculating cost savings in relation to these means that you have to take into account the total of support costs and divide it by the numbers of users according to the following: Total Support Costs/Total Users = SCPU.
So, providing better support documentation and designing slicker and more functional user interface is translated into offering better UX, meaning less pressure on your support resources.
Measuring Conversion Rates
In addition to focusing on preventing losses, your UX efforts can also be transformed into actionable data through the use of metrics which show the amount of money you can actually make. One of the metrics closely related to the conversion funnel is surely the conversion rate.
In case of an e-commerce site, for example, these metrics measure the number of sales compared to the number of visits, or the number of newly registered users of a paid service on the site that offers them. Or, in case you run a blog, this involves checking the number of users that subscribe to your newsletter after they had visited your website. The formula used for this is simple: subscriptions / potential subscriptions x 100 = Conversion Rate (in percentage).
If, say, 1500 visitors land on your blog and you end up with 150 subscribers within a set time period, this means that every tenth visitor was “converted”. Resulting conversion rate in percentage would be 10 percent.
A/B testing is the best way to come up with direct and easily observable results. For example, you can test two versions of a UX component, such as a landing page layout, and pick the one which offers better conversion rates. Bear in mind that every UX element counts, as a mere change of wording of a CTA button can help you achieve desired results.
Stuck in the Funnel: Drop Off Rates
Another equally important measure of the UX’s impact on your ROI are metrics related to drop-off rates. Imagine, once again, that you are an owner of an e-commerce site who is visited by 100 users that interact with its shopping cart. Yet, 30 percent of them do not complete their purchases and abandon shopping carts prematurely. This means that you are losing 30 sales a day due to the existence of potential issues with your UX design. Depending on the value of the sold item, this can amount to hundreds of dollars lost on a daily basis. Even if you consider that the visitors can add stuff to their carts for the purpose of saving them for subsequent evaluation, you cannot afford to lose any of them and the measure of those lost is called the drop off rate.
Calculating this rate in relation to UX entails the use of Google Analytics. You’ll need to come up with a clear picture of your conversion funnel before you get to grinding out numbers. First, your conversion funnel will have to be divided into various events or segments, such as visits, cart additions and checkouts. Thus, you will be able to learn which of these segments causes potential buyers to drop off. The formula used in this case is the number of users divided by the number of unique users in each of the funnel’s segments: Number of users / Number of unique users in each segment x 100 = Drop off rate (%). Yes, it is that simple.
User experience is an intuitively measurable variable in calculating return on investment, and it should be treated as such instead of being relegated to the status of second rate budgetary consideration or a “luxury” item. The scope of related metrics and statistical data is wide, ranging from savings made by reduced software development time or support costs, to identifying the impact of the UX on key performance indicators such as conversion or drop off rates. Designing a modern ROI model without putting UX at the forefront means wasting an opportunity to improve your business fortunes by as little as a change of perception and a calculator.