UX research has the power to make or break any business. The challenge is that leadership teams are, in a lot of cases, not able to draw a clear line between user research and business results. This often translates to underfunded and/or under-resourced research teams.
Without providing solid reasons for leadership to invest by showing them the ROI of UX research, it is tough to prove the real impact that user experience research has on a company's bottom line.
So, how do you quantify revenue generated by investing in UX research? And how do you present that to your higher-ups?
In this article, we will cover some major areas where you can experience a higher return on investment by investing in UX research. This way, you can get specific and demonstrate to your leadership team the precise impact UX research has on their metrics.
Before we walk you through some specific ways of how you can prove the ROI of your efforts, let's first clarify one thing- when calculating the ROI of UX research, the end goal is usually monetary, but not always.
It is not always about the dollars you are generating. The ROI of UX research is more about demonstrating that it positively impacts the overall user experience, thereby improving your bottom line.
Let's get started!
Expected UX Research Impact on Businesses: The Hard Stats
This inability to prove UX research ROI is among the most significant barriers to securing executive buy-in, budget, and sustaining investment for user research. Without hard numbers, it is impossible to prove how investing in user research pays off for businesses - with that in mind given, below are some stats that will help you build the case for UX research ROI:
- Companies that apply user research and design principles grew their value 211% more than the S&P 500 over a 10-year period.
- 54% of U.S consumers feel brands fail to meet their experience standards - UX research plays a crucial role in delivering a great user experience.
- Developers spend 50% of their time on avoidable rework - UX research can help you get a clear vision of the product you need to build.
- 70% of online shoppers abandon their carts because of poor UX - companies need to invest time in user research to create the best possible user experience for every visitor.
- 56% of customers stay loyal to brands which “get them.”
These numbers are incredibly powerful. They demonstrate how UX research influences user experience, user loyalty, and their repurchase perspective. Additionally prove the cost saving implications to a business.
You will drive the point home by taking these numbers and correlating them to your operational business metrics.
Here are Some Obvious (and Not So Obvious) Ways to Prove the ROI of UX Research to Leadership
We all know that to deliver a great user experience, we must build our digital platforms or design our product around our users' needs, and user research is the key to doing that.
Also, UX research plays a crucial role in the product design and development phase. It helps reduce usability issues and prevent damaging the brand image due to problems in user experience.
That said, connecting your user research efforts and metrics with financial data is not an easy task. For instance, does knowing your users really help you design a better product, and how can you predict the ROI before the product is released?
That being said, we know you have to prove the return on investment. And the easiest way to do that is by picking one factor you want your UX research to impact. It might be revenue, or it might be a reduction in development costs. Try to identify that one metric - the benefit of picking just one metric is that it is far easier to focus and align it to business goals.
Once you can directly tie business goals with the UX research ROI, think about tracking the additional metrics (we will cover these metrics below).
The major areas where you can experience a higher return on investment by investing in UX research are:
- Increase in conversions
- Increase in customer loyalty
- Better product
- Reduced development costs
Let’s get right into it!
#1 Investing in UX Research Can Increase Your Conversions
The ROI of delivering a great user experience is quite visible - Every dollar invested in ease-of-use returns $10 to $100. You must have heard or read the stats before. But the ROI of investing in user research is not that visible. So, by clearly linking user research with UX, you can make the returns on user research visible.
Fully understanding the wants and needs of your users will allow you to enhance their user experience and reap enormous rewards. In fact, companies that deliver great user experiences will see it reflected in their stock price.
Also, UX issues can directly cost you revenue, as poor UX can lead to site abandonment and lost revenue. So, every company needs to invest time, energy, and money in user research to create the best possible user experience for every visitor.
#2 Improving UX Can Increase Customer Loyalty
80% of internet users are willing to pay extra for a good user experience, and 32% of users will leave a brand they love if they have one bad experience. So, if you want to give customers a reason to keep coming back -you must deliver them a great user experience. You might be wondering where the place for UX research is here.
When it comes to delivering a great user experience, many business leaders believe they need innovative ways to do so. And most leaders ignore the impact UX can have on their business performance and ROI until most users begin to complain about their website, app, or products.
However, it would help if you showed them that failure to perform deep user research in the early design phases of your website or the development phase of your product could negatively impact the UX. And improving product experience for the user is the key to winning repeat sales.
We all know repeat customers are the lifeline of any business; they are the ones that are easier to upsell. Also, their heightened loyalty to your business is a crucial generator of referrals which bolster your customer network. This is not an assumption. According to stats, 56% of customers stay loyal to brands which “get them.” and 65% of a company’s business comes from existing customers.
This way you can easily prove the return on investment by investing in user research.
#3 Investing in UX Research Can Improve the Product
If the last two points did not convince you just how crucial it is to invest in user research, then I guarantee this one will.
To deliver to the customers a product or service they want, we first need to understand the customers. So, we can say the better we know our users, the more successful our product is going to be.
Wondering how user research can help? Well, UX research is a surefire way to get a clear vision of what our users want (and don’t want). And the sooner we introduce user research into the development process, the sooner we can identify problems, prioritize, and start figuring out the solutions to these problems, which can help us build a better product - the one our users need.
Take this example: You have an idea for a SAAS solution and decide to launch without UX research. The market penetration is low, and the target audience seems disengaged. UX Research would have highlighted the 'need' within your chosen audience and can help highlight additional target markets. It can also help post launch in gaining UX insights as to 'what' and 'why' the penetration is low, allowing to amend your offering and realize potential growth, faster.
You can start digging into users’ requirements and pain points by conducting user research. This insight lets you see if your idea will click or not. Once you figure out your idea is something users want, you can work on it.
In short, user research can prevent us from making mistakes based on unfounded assumptions. As a result, this could save our business a great deal of money.
#4 Investing in UX Research Can Reduce Your Development Cost
Not all costs come with a clear price tag — investment in user research is quite hard to quantify, but not investing in UX research can prove expensive.
According to Usability.gov, 50% of the time invested in development accounts for rework. Every business should invest in user research to save a vast amount of money on these avoidable issues.
Why? Because failing to perform deep user research in the early design and development phases is why developers have to spend time making changes after initial deployment.
Also, this can ruin your user experience. And we all know poor UX can hurt business. 88% of people are less inclined to return to a site after a bad UX.
This is important to show how not investing in user research can directly impact your business bottom line negatively.
Wrapping Up: What ROI Should Businesses Expect from Investing in UX Research?
We hope the ways we have covered above will help you show to stakeholders the value that UX research brings to an organization. Though calculating ROI accurately for a UX research investment can be a complex and often miscalculated number.
Something you should always bring in conversation is that a deep understanding of your users is the prime benefit of investing in user research. The better you understand your users' pain points and needs, the more successful your product is bound to be.
Better products = more sales and conversions.
“The impact of UX is crystal clear: the more satisfied your users are, the more likely they are to do whatever it is you are encouraging.”
- Abby Covert, author, How To Make Sense of Any Mess