ROI of UX: How Does Design Bring Profit to Your Business
Learn about the ROI of UX design and the value this discipline brings to your business. Find out more about the metrics for the evaluation of UI/UX design.
UI/UX design is often put under scrutiny, both in startups and well-established companies. Most of the questions are raised about the value of UX design and how can it be beneficial for any business. These questions are not new for professional designers and they tackle these quite frequently – both in team meetings and when in conversation with the general public.
One of the reasons that this question keeps coming up is because the answer is not as simple as for any other discipline. The results of good UX do not appear in a flash. Unlike engineering and marketing, UI/UX design needs more time for a product or service to show its actual value. The process that starts with user research, goes through prototyping and wireframing, results in a product, and then improves it with user testing, is not going to give results in a short amount of time.
Additionally, the value of any individual, field, or department is generally measured in terms of the return on investment (ROI). It is not easy to calculate the ROI of UX as in the case of marketing or engineering. This is not to say that design does not give any ROI. Instead, there are several factors that get ignored when calculating design ROI. A UI/UX design firm would select the appropriate metrics and stretch these metrics over a long period of time to give a realistic UX value.
In this article, we introduce you to the concept of ROI and the business value of UX design. The article also refers to some of the typical metrics that can be measured over time to get a realistic understanding of design ROI.
ROI of UX design explanation
ROI is a financial metric that is used to calculate the value of any investment. If you’re running an ecommerce business, for example, and you purchase a particular plugin. You will compare the cost of that plugin to the profit it is bringing to your business. This calculation will give you an understanding of whether the plugin is worth the investment.
What is the ROI of UX?
The return on investment of user experience design is not just about money. It involved customer satisfaction and the impact on their loyalty to your product or service. UX ROI statistics are linked to long-term business goals and also result in competitive advantage.
The ROI of UX design is, however, not easy to calculate. In fact, it will not be wrong to say that calculating the exact return on investment of UX design is close to impossible. There are certain challenges because of which the calculations of UX ROI statistics become complicated for design and designers.
It’s not just about money
One of the most important things to understand is that the ROI of design is not just about direct money-making processes. Since ROI in itself deals mostly in monetary terms, it is not easy to create an equivalent UX ROI calculator.
When calculating the ROI of UI/UX design, you need to look at the bigger picture. The best way to understand this is to switch the focus from money to the value added to customers’ experience. This can be seen by the time people spend on your mobile or web application or the loyalty they show by sticking to your product or service.
Remember, UX is all about making the lives of your audience easier. If your design is doing that, it is giving you the ROI you need.
The long-term impacts
When creating a UX business case, it is not possible to only look at the momentary, short-term impacts of a certain design process or practice. UI/UX design is a time-consuming process that involves numerous iterations. Additionally, to see the true value of a design, it is important to give that product or service some time in the market.
One example of the ROI of a UX investment, in the long run, is the loyalty of customers. For instance, Apple has very strong customer loyalty so even if a product is not up to their expectations, they still stick with the company. This is where we see the long-term impacts of UX design paying off.
Exact calculations are impossible
Another important aspect to consider when calculating the potential return on investment of UX design is that it is impossible to find an exact statistical value of the profit. The primary reason is that the statistical value of a design cannot be calculated until after the product or service is launched and has attracted some customers.
While working on a design, particularly for an innovative product, there is hardly any data or market research to calculate a realistic value for the ROI of UX research. It is, therefore, important to be flexible when calculating and evaluating the ROI of design.
The factors listed above indicate that calculating the ROI of user research or usability studies is not an easy task. This, however, does not mean that UI/UX design does not add any monetary value or profit to a business.
UX design value
Investing in UI/UX design is not just important for modern organizations; it is unavoidable. Almost all the leading companies have dedicated individuals working on better design and to give their audience a better experience. These organizations end up making millions in profit which indicates the monetary value of UX design.
How does UX save money?
UX design reduces the overall budget by adopting a proactive approach where a product is perfected before it hits the market. Also, innovation and prioritization of customers’ satisfaction in UX, gives more retention, referrals, and a wider customer base.
Charlie Claxton, the head of UX at Amazon, sums up the value of design by saying “Every dollar invested in UX yields a return between $2 and $100”. This shows that an organization as big as Amazon understands the importance of UI/UX design. Not only this, they know the ROI of UX and the value this can bring to the business.
There are three major areas where UX can bring monetary value to any organization. These include development time, the number of defects, and maintenance costs.
Reduced development time
The projects that take less time are, generally, the ones that have better ROI. This is where UX design is of extreme importance. The practices of user research, prototyping, and usability studies ensure that the development team has a clear understanding of the expected outcomes at all times. This helps in reducing iterations in development and also helps in understanding the pain points of users.
For example, one aspect of the ROI of usability analyses is that these studies reduce the time to understand customers’ expectations. This then saves time in the development of a product that the audience wants. The reduction in development time is directly related to monetary benefits and profit.
Fewer number of defects
The process of UI/UX design is structured in a way that as the product or service nears its final shape, the number of defects reduces. This is because of constant checks at all times and to make sure that all the aspects of the final design are working as expected. Another important factor here is design thinking. When the end-users are made an active part of the design process, the product gets better along the way.
So, UI/UX design helps in creating a product that has fewer and where all the major concerns of the audience have already been addressed. This not only helps in creating a better perception of the product or service but also gives a competitive edge that is otherwise not possible to attain. Good response from the customers and competitive advantage is directly associated with better ROI.
Lower maintenance costs
When talking about UX design ROI, an important aspect to consider is the reduction in maintenance costs. A product created with the aid of professional designers is one that takes the market, audience, and technological constraints in mind. Moreover, such a product is proactive and has the flexibility to improve over time.
This means that UI/UX designers, thinking ahead of time, ensure that once a product is launched, it does not have to face heavy maintenance costs in the form of extensive updates and resolution of bugs. Therefore, UI/UX designers, by reducing the maintenance costs, save money and thus prove their worth.
These are some of the major ways in which UI/UX design helps in saving time and money for big companies. Investing in design, therefore, is not just for the sake of customers but also for the benefit of the organization. An important, however, is about the statistics and calculations involved in the ROI of UX.
Metrics for ROI in UX design
Let’s talk about one of the most critical, and practical, aspects of ROI in UX design: how do you measure the success of your designs? As previously mentioned, calculations of ROI in UX design are not a straightforward task. This also applies to the choice and evaluation of metrics. In most cases, the nature and goals of your product or service will dictate the metrics you should measure.
However, there are various UX ROI case studies that gather some standard statistics. These may not be ideal for all projects but can be used to identify your own metrics.
What are the important metrics for ROI in UX design?
Some of the most important metrics for UX design include:
- Conversion rate
- Dropoff rate
- User satisfaction
- Retention rate
Conversion rate is a very important metric to consider both in online and offline environments. It is important to analyze that when someone interacts with your design and/or gets to know about your product or service, how much time and effort does it take for them to become your customers. Another way to look at this metric is to find out the percentage of people who become your customers after interacting with your design.
Dropoff rate refers to the percentage of potential customers who leave your product or service during the conversion process. This shows that there is something that the audience is not getting or that they expect something different from your product or service. Measuring the dropoff rate can help in understanding the pain points of your potential customers.
User satisfaction is one of the most metrics when it comes to the ROI of UX design. User satisfaction can be measured by conducting usability tests and surveys about the performance of a product or service. This not only helps in understanding the perceptions of users about your design but also clarifies their expectations from you in the future.
Retention rate is another metric to focus on in UX design. Conducting frequent surveys and analyzing the percentage of users who are loyal to your products and services is an excellent way to understand your position in the market. Your retention ate also tells you how good or bad you’re doing with respect to your competitors.
The practice of user experience is often misunderstood and questioned regarding the value it adds and the way it contributes to the profitability of an organization. It is, however, important to understand that ROI calculations for UI/UX design do not follow the generally accepted norms. There are several factors to consider when evaluating the value of a design, the most important of which include user satisfaction and the long-term impacts of a design. UI/UX design holds a lot of promise in creating better ROI. The value it brings to the overall design and development of products or services and the reduction of time and cost that follows speaks for the worth of UI/UX design. It is essential for modern organizations to acknowledge the value of design and make sure that the needs of the audience are prioritized. This will not only help in attracting loyal customers but will also generate monetary benefits.