A common question that product designers often get asked is what is the value of their design. How can we calculate the value that UX design adds to a company? To measure the impact of UX design, designers need to choose the right metrics and understand how to advocate the value of their design in terms of Return of Investment or ROI.
But first, what is ROI?
Return of Investment is a standard financial key performance indicator that helps organizations understand how profitable investment has been. It can help understand and compare multiple areas of investments, and understand which ones to move forward with. These investments can be anything from money spent on product development, people you’ve hired, tools and equipment the company has invested in. Calculating the ROI is important because all of these business decisions need to generate income and be profitable to the company.
What does ROI mean in terms of UX design
In UX design, the ROI can be measured using the metrics that calculate the profitability of an investment in design. Hence deciding the right key performance indicators is extremely essential to calculate the ROI of UX design. Deciding on these indicators depends on the goals of the product or service. Let us demonstrate this using a few examples. If the goal of the company is that their app reduces the number of customer service calls, then the key performance indicators would be reduced call durations, and lesser number of queries made to the customer service team, and a higher number of satisfied customers. If it is an e-commerce website then the key performance indicators will inevitably be the number of conversion rates.
UX design has become an inevitable aspect of ROI because companies are investing large sums of money and resources in user experience design, and thus the profitability of UX is an important measure of how successful the design has been.
Problems in calculating the ROI of UX design
– Lack of standard key performance indicators
It is difficult for organizations to decide what gains and losses to include when it comes to calculating the ROI of UX design. Without standard indicators, it is impossible to compare the ROI of two different design inputs. To combat this, organizations need to clearly define the ROI at the product development stage and standardize this within the organization.
– Inconsistency in values
Since the key performance indicators vary so vastly it can be difficult to calculate their exact values. Another common problem is that some key performance indicators may be difficult to put down in terms of exact values or have values that may be expressed in various different units. To solve this issue, organisations will need to build their own ROI models and do some additional math to find a common denominator that can be expressed in financial terms.
– Profits that are intangible
The return on investment can additionally be hard to calculate because UX design provides some benefits that are intangible in nature and cannot be expressed in numbers. These benefits could be anything from the ability of design to engage, influence and meet users needs, to strongly communicate a brands message, differentiate products, attract customers to a business, and drive profitability. Due to so many benefits from UX design being intangible, companies cannot see the immediate value of adding UX experts to their team. They are unsure whether or not the investment they make in UX in terms of money and resources will immediately be profitable.
However the benefits of UX design are huge, despite being difficult to measure in traditional ROI metrics.
Benefits of UX design testing and prototyping in the product development stage
There are a vast number of benefits of using UX prototypes and testing in the early stages of product development. Firstly prototyping helps designers quickly iterate and make changes in their design without slowing down the next stages of the development process. Secondly it is a lot more cost effective for companies to detect any usability issues in the prototypes themselves and make changes rather than finding out these issues once the product is out in the market and then having to redo the entire project, resulting in huge losses. Next testing is a great way to conduct UX research, which will give your organisation greater insights into your audience and what they want. Once the research data is collated, organisations can use it to create a product that delivers to the actual needs of the organisation’s audience.
And lastly, great UX design will actually help generate a lot more conversions, because a simplified user interface helps in making the product simpler and more intuitive to use for their audience and they are more likely to convert to customers.
So how do you measure the ROI of UX?
It is nearly impossible to calculate the ROI of UX design at the beginning of a project as these calculations are based on assumptions. Once the product is out in the market it is easier to calculate the ROI of UX design. The organisation must first decide the right metrics based on their overall goals, and align the KPIs to the organisational goals.
There are three basic ROI metrics of UX design. Let’s look at them in a little more detail.
- Single Usability Metric
The Single Usability metric is a standardised, commonly accepted usability metric that measures the basic components of user experience or usability – effectiveness, efficiency and rate of customer satisfaction by being able to complete tasks satisfactorily, the number of errors that occur and the time it takes for the user to complete the task.
Once you calculate these metrics, the SUM calculator takes them and converts them to a total score called the SUM score.
- Conversion Rate
This is a standard usability metric. The conversion rate is very simply the number of visitors on your website or app performing the desired action, which could be making a purchase or subscribing to a newsletter.
- Drop Off Rate
This is an extremely important metric to calculate the impact of your design. A higher drop off rate indicates poor UX design. These are the visitors who are leaving the website before completing their purchase or leaving behind incomplete tasks. Identifying the steps which are causing users to drop off can help rectify the issue.
Investing in UX design is crucial for organisations to stay ahead of the advancements in technology and compete in the market with other organisations. However for non-designers and other stakeholders, it can be difficult to see the value of good UX design. So for them to objectively see how UX design can help them achieve their business objectives, measuring its impact in terms of ROI becomes crucial.
By developing their own metrics for calculating the ROI of UX design, organisations can see the value of investing in design more efficiently and effectively.