One of the most important ways to measure success is through return on investment. But what does that actually mean? For some, ROI means how much money they make. For others, it might be a company's ability to generate profit and revenue while remaining sustainable in the long-term. And for those with an interest in User Experience design, ROI can be measured by looking at their product's performance against goals set out at the beginning of a project.
This insight will take you through three different types of analysis: financial analysis; business model innovation analysis; and customer-centric service improvement analysis. These are all smart strategies for evaluating UX design as an investment strategy and determining the true return on investment possible from good UX.
We'll explore these three approaches in more detail, but first we want to look at the core problems that UX design solves. It's important to understand why investing in UX is worthwhile in general, before considering the financial implications.
Firstly, industry standards are high, which means consumer expectations are equally high—even if they don't realise it. Most individuals now own a smart phone and we are interacting on a daily basis with heavily analysed designs that are made to aid our experience with all sorts of applications and interfaces. As we intuitively glide from app to app, our brain begins creating a bank of expectations—almost like muscle memory.
A plus symbol adds one, an arrow pointing left means 'back'...and even such awareness of those dark UX patterns that have newsletter signups almost ALWAYS automatically selected.
When we land on a poorly designed site, our brain registers the incongruity. We have come to expect that apps will be easy and intuitive, so when something is not simple there's an immediate drop in trust level: Why hasn't this company invested enough time into getting their UX right? The more likely user response is then 'no thanks' and they'll take their business elsewhere. And while it may seem like expectations are low for websites - which should make things easier—the reality is people now know what they want. From seeing examples of good design every day they've become expert users who can spot the difference between a mediocre experience and a perfect customer journey...down to each pixel!
Secondly, designing intelligently means designing to help the user easily perform their intended functions. We want to ensure that users can get from A to B, whether that's buying a product, filling out a form, monitoring data, or any other purpose that our product is made to fulfil.
Design is a complex process that requires an understanding of what the user really wants, how they want to interact with the product, and where potential pitfalls exist. But if you take these factors into consideration when designing your next project it's almost certain that your team will create something people enjoy using.
Example: We'll use Facebook as our example because we know most readers are familiar with it - but keep in mind this can be any site or app! You might not realise but everything on Facebook from the layout to buttons has been carefully crafted for optimal usability. Facebook is also known to change their interface to a whole new style occasionally, which often causes an outcry! Part of the reason for this is that Facebook wants to remain 'fresh', so they feel the need to keep reinventing the wheel—so as they're not left behind. Secondly, UX trends change and as a major platform, they simply need to stay at the top of their game.
This leads on to our original discussion topic. We know that good UX helps with user retention, aiding user journeys and even with brand positioning to an extent (think Old Vs New), but how do we put a price on it? What is the best way to measure how much value a potential UX redesign can be, or how much the implemented design has influenced the business bottom line?
Case studies are an excellent starting place. We can see some genuine, verified, results that support investing in better UX design. While some may argue 'correlation is not causation', these examples are certainly suggestive that UX was a clear factor:
- AirBnB’s founder, Joe Gebbia attributes their $30 billion growth to their investment in UX
- Hubspot saw a 300% improvement in their conversion rate after a UX project
- Wal-Mart web traffic increased more than 200% after their UX redesign
- Bank of America saw a 45% increase in online banking registration after a UX redesign
In regards to the financial analysis of UX, there are many ways to go about it. The simplest and easiest way is to look at return on investment over a set period of time, say three months for example as that's the average length of UX design projects.
This would work well if you were measuring the ROI in something with finite resources like cash-flow or number of sales. Ensure you have a consistent data set prior to the UX changes, and also be open to the possibility of external variables potentially influencing any financial figures. As an example, you could re-design an amazing high-end eCommerce platform, but launch the changes at the start of a recession...
As always, data can build a powerful picture, but you need to ensure you have as full a picture as possible—and avoid spinning data purely to suit your hypothesis.
At the end of three months, you should be able to see any immediate ROI from your UX changes. It's important to track this alongside other metrics so that you can fully understand how design is impacting on user behavior across all platforms and channels
However, a more accurate measurement would need to take into account longer-term impacts. Much like with PR, you may get a spike of activity around a UX redesign or PR launch, but it's the long term growth and stability you're monitoring to determine whether your actions have been successful.
Next, we'll explain what the business model innovation analysis means in regard to UX.
Business Model Innovation.
The art of enhancing advantage and value creation by making simultaneous—and mutually supportive—changes both to an organization’s value proposition to customers and to its underlying operating model.
The trick to understanding the true ROI of UX design is analyzing it on a business model innovation analysis and seeing how your changes impact across all channels. To properly describe what 'business model innovation analysis' is, we would say that it's looking at the long term growth and stability of your product to determine whether or not UX design has been successful.
For example, if you are a company with an e-commerce site that is struggling with conversion rates then there are three possible routes for improvement: better SEO; more compelling content or navigation options; or clearer calls to action.
It is worth highlighting that the UX Design ROI isn't a single quantifiable metric like conversions, signups, or leads generated - but rather a variety of factors such as customer satisfaction rates which can increase revenue from higher retention rates in return customers (and referrals).
The key takeaway here is that the most important thing when determining Return on Investment is understanding your business model. Success looks like different things to different people, so ensure your team is aligned with your goals. Some businesses may aim to be thought leaders, some might focus purely on brand awareness or simply their market share percentage.
A third consideration for the ROI of UX, is a customer-centric service improvement analysis.
Customer-Centric Service Improvement.
This analysis would be looking at the quality and quantity of support tickets submitted by customers in relation to your product, good UX design may lead to less people needing help because they are more satisfied with their experience or it might mean that you need a higher level of support staff (due to higher volume of users).
User experience design is of course based on, well, the users. Therefore this method of analysis can be particularly meaningful to monitor your UX changes. However, figuring out exactly how it changes your ROI may not seem as immediately obvious. Primarly, support takes time. And time equals cost. By minimising the amount of labour to be spent on support tasks, you can ultimately save money or at the very least, allow team members to increase their output.
Of course, if your new UX increases volume tenfold and support tickets increase... that's not necessarily a bad thing. Consider the ratio of tickets to users to keep the figure balanced.
Ultimately, whether you follow all or some of the three analysis models, you should have some clearly mapped goals for any UX design projects.
Before a pen hits paper, or cursor clicks a canvas, it is invaluable to focus your time towards design thinking exercises. By having a deeper understanding of the end-user, you'll be able to craft more impactful UX designs that clearly aim to solve a particular need or problem.
And, by solving such needs, you'll be creating something that the user wants—massively increasing the likelihood of project success. Investing in quality work today, paves the way for a prosperous future.
To aid your understanding of Design Thinking, we have a range of methodologies we use throughout UX projects. Click the bookmark link listed below to learn What, Why, and How these methods work.
Considered insights are backed by quantifiable data. Throughout our years of thoughtful work, we're proud to have worked with some huge global companies—and we have results to match.
Browse our case studies to learn more.
In particular, we can reference the impact our thinking and UX design had for Heineken:
"The digital ordering solution surpassed $1m in orders in less than 14 days, and was widely appreciated by the outlets included in the pilot test phase, which placed it well to eventually roll out to 30,000 national outlets and also to offer the 26,000 wedding couples that choose Heineken products for their special day a better way to order products."
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