Maximising Returns: The ROI of UX

Learn about the impact UX research creates on businesses and navigate the different factors influencing its calculation.

Author

Kham Chakhap

Date

July 14, 2023

"Focus on the user and all else will follow." - Rule #1, Google’s "Ten Things" Philosophy

Have you ever opened a mobile application, only to find it too cluttered and difficult to navigate? More often than not, you would end up dropping off! We've all been there. Now imagine this scenario multiplied by the number of smartphone users who have faced a similar issue. What we are left with is a significant lost opportunity to harness the potential of these users. Having a seamless user experience (UX) is one of the most effective ways to increase customer engagement and boost spends.

Before diving right into the article, let’s establish a clear understanding of what constitutes User Experience or UX. By definition, UX refers to the overall experience a user has when interacting with a product or service which encompasses aspects like the usability, accessibility and aesthetics.

Business Impact of UX

Based on research conducted by Forrester, every $1 invested in UX yields a whopping 9900% increase in returns!  Considering the rapidly evolving digital landscape, it is evident why tech-savvy companies like Apple, Facebook, Google, etc. are making substantial investments in UX to deliver user-centric digital experiences.

Source: https://s3.amazonaws.com/coach-courses-us/public/theuxschool/

A good UX story can be impactful and teach us a great deal. There are countless success stories demonstrating the positive correlation between UX and business performances. For instance, take the example of Amazon’s strategic investment in UX. A recent survey found that most generations rank Amazon’s UX as the most appealing. Amazon succeeds by offering a search-oriented interface which connects with both old and new internet users right from its inception. They also factor in a smooth purchasing process, personalized recommendations and new products resulting in a staggering $57 billion in revenue in the first quarter of 2023 alone.

Consumers come back for the ease of use and intuitiveness such a product offers. If we examine other successful tech/ecommerce companies, you will see this holds true for all. In the age of digitalization and waning user attention, UX can make or break a brand.

The impact of UX on businesses

A seamless user experience (UX) can make or break a brand in the age of digitalization. It holds the key to increasing customer engagement, boosting revenue, and gaining a competitive advantage in today's crowded marketplace. Here are 3 of the biggest impacts UX can have on businesses:

Improved conversion and revenue: To quote an interesting metric on Toptal, slow-loading websites cost retailers more than $2 billion in lost sales each year. Conversely, a well-designed UX encourages users to interact with your product and spend more time with your brand. When users find it easy to navigate your product and find what they are looking for, it translates to a higher chance of them converting to a paying customer. This directly impacts your bottom line.

Build a loyal customer base: A strong user experience (UX) is vital for building customer loyalty. In fact, 88% of users are unlikely to return to a website after an unpleasant experience. By ensuring a user-friendly and accessible product, businesses can satisfy customers, encourage repeat visits, and generate positive word-of-mouth recommendations.

Competitive advantage: In today’s crowded marketplace it takes only one bad experience to take a potential user away and for them to land on a competitor’s roster. Prioritizing and investing in good UX will help you build stronger relations and customer loyalty to help you stay one step ahead of the game. This will contribute to your brand’s growth in the long run.

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Myths about UX Calculation

Measuring the true ROI of UX can be challenging due to several factors at play. To help you get a clearer picture of the returns UX can bring in, let us fact-check and debunk some of the myths surrounding how it is measured:

Myth 1: ROI of UX is Unquantifiable

It is time to dispel the idea that ROI of UX is not measurable. While determining the exact monetary value might be challenging, there are various qualitative and quantitative methods like usability testing, interviews, surveys, etc. that make it possible to assess the effectiveness and returns on UX. With the advent of technologies like Facial Coding and Eye Tracking, we now have powerful tools at our disposal to uncover deep insights and focus on analyzing exact metrics that give you the optimum result.

Myth 2: Well-Designed UX Is Just about Aesthetics:

A well-designed UX serves as a bonus branding exercise for an organization. Users are more likely to choose an intuitive and well-designed product or service over one with a subpar UX. This leads to positive brand perception and fosters customer loyalty, in addition to getting the expected improved metrics for conversion rates, user flow, etc.

Read more: User-centred Design: How to Prove (and Improve) Its Impact on the Bottom Line

Myth 3: Responsibility of the UX Team

UX teams undeniably play a crucial role in creating the backbone of the product’s experience, including aspects of design, usability, and function. But it is essential to take a more well-rounded approach by involving other stakeholders- mainly the product, marketing, insights & analytics teams. By incorporating diverse inputs and perspectives in understanding aesthetics, product flows, and consumer satisfaction, organizations can design UX initiatives that align with their overall goals.

Myth 4: UX ROI is a One-time Endeavor

With technology changing at a rapid pace, it is imperative to recognize that measuring UX ROI is not a one-time effort. Organizations need to keep up with rapidly evolving market trends and consumer needs. Continuous evaluation and adaptation is key to staying ahead of the curve in this competitive landscape as it allows for consistent improvements and optimizations based on user feedback. Performance data and analytics dashboards can continuously monitor UX progress for organizations to ensure that they extract the maximum value for their investments.

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Factors Influencing ROI of UX

Now let us delve deeper and examine some of the factors which influence the actual ROI of UX.

Research and Insights: One of the most critical aspects in designing a seamless user experience is gaining a deep understanding of users themselves. This involves understanding pain points and anticipating consumer needs in advance. By conducting UX research and testing early on during product development, businesses can create more efficient products that meet the client expectations, minimize the need for costly redesigns costs at a later point, and ultimately enhance user engagement and optimize their experiences.

Design and aesthetics: When it comes to user experiences, visually appealing and intuitive designs play a crucial role. They create an attractive and user-friendly environment that reduces friction and discourages users from leaving. As a result, businesses can achieve higher ROI by retaining more users and keeping them engaged.

Continuous improvement: A streamlined process increases operational efficiency and cuts customer support costs, boosting your bottom line. Users may encounter pain points when using your product or service, but an iterative design process can address these issues and continually improve the user experience, making it seamless and hassle-free.

Organizational alignment: Having a holistic view of how the results play out and not having to backtrack makes a ton of difference to ensure you get the most out of your bucks. You should plan out the entire process beforehand. This can be achieved by ensuring the business objectives are in line with what the UX initiatives are trying to achieve.

Calculating ROI of UX

ROI=Returns/ Investment

To gauge the actual impacts of your UX investments, ROI needs to be measured taking all the above factors into consideration. For this calculation, KPIs need to be set in place which include conversion rates, CSAT scores, Task success rates, and others. To optimize UX, understanding user behaviour through methods like A/B testing and usability testing is essential in providing insights and helping optimise ROI.

Hence, the process for this calculation would be to firstcollect data and gather insights. This should be followed by converting them into workable metrics which can then be used to determine the returns on your UX initiatives.

Conclusion

To summarize, there are ideal strategies to achieve the best out of your ROI investments which includes:

  • Integrating UX design principles from the outset.
  • Making informed decisions by gathering primary data and insights to optimize UX.
  • Focusing on user retention and loyalty by through personalized experiences and regular updates.
  • Collaborating between UX designers and other stakeholders to ensure alignment towards a common goal.

94% of first impressions of a brand’s website relate to its design. You can decide how a potential user’s first interaction with your brand is going to be like based on how you design your website/app. The bottom line is- UX is the medium you use to communicate your brand to your audience. Only the best of the brands come out as winners. While UX is just one aspect of how they view a brand, more often than not, customers see a User Experience as how brands are directly treating them. Make sure you give them a flawless experience and everything will fall into place!

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Author Bio

As an intrepid explorer of both physical and intellectual realms, Kham seeks to unravel the intricacies of the human experience and merge them with the transformative power of AI. On odd days, she can be found wandering around trying to find that elusive scenic and quiet café where she can sip on matchas and get lost in the written word.

Kham Chakhap

Product Marketing Specialist

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