ROI of UX | A Beginner's Guide

ROI of UX | A Beginner's Guide

Trapica Content Team

Marketing Guides
6 min read
April 29, 2021

We’re often told to make the user experience (UX) better for all consumers. Whether you’re creating an app, a website, a software solution, or any other platform, a positive user experience helps users enjoy their time with your product and encourages them to save your link to their bookmarks, keep the app, recommend the service to others, or more.

However, understanding whether user experience is contributing to or detracting from your brand is difficult to understand. Does UX really impact ROI? How do you effectively measure the ROI of UX? We’ll also look into why you might want to calculate the ROI of UX investments.

Is UX Important?

In short, yes. Every year, businesses around the world waste resources fixing problems. In fact, some suggest that avoidable rework accounts for 50% of a programmer’s time. When user experience isn’t considered initially, it has the potential to cause all sorts of costs later in the process.

First off, you’re forced into taking a step back and fixing the problem. A small cost in development has now transformed into a large expense after launch. Secondly, costs are increased by training internally for software that is unintuitive and likely to change. According to Why Software Fails from IEEE, only 85% of all projects reach completion. Therefore, $150 billion of the $1 trillion spent on IT projects goes to waste.

Unfortunately, it gets worse because a significant chunk of this waste is entirely preventable. Sticking with the IEEE, UX mismanagement accounts for three of the 12 biggest causes of project failure. The three mistakes were:

  • Poor alignment with developers, users, and customers
  • Lack of defined system requirements
  • Conflicts of interests among stakeholders

The risk of ignoring UX in development is severe and the rewards for considering UX are clear to see. Back in 2018, Walmart underwent a huge reconstruction of its website and it led to a boost in visitors of well over 200%. Bank of America experienced something similar and saw 45% more people registered to the online banking system after updating their UX.

The Problem with Measuring the ROI of UX

You’ve seen the value of UX and hopefully you now understand that user experience is important when developing software for the consumer. As another example, Virgin America redesigned its website with a focus on user experience and conversion rates increased by nearly 15%. At the same time, there was a 20% reduction in the number of support calls related to website issues. For Virgin America, the redesign helped in two different ways.

With the right changes, it’s possible to benefit from the following after investing in UX:

  • Lower development costs
  • Better conversion rates
  • Improved customer retention and loyalty
  • Increased B2B/B2C satisfaction
  • Reduced need for support
  • Ease of use and better usability

With some preliminary UX research, businesses can save both time and money because they don’t need to develop unnecessary features or fix avoidable problems. The issue? UX is difficult to measure and understand. How can we put a number to something when the effect is mainly a feeling for the customer? The customer is happier with the website and they find it easier to use the app, but how can we get something tangible from this information?

Calculating the ROI of UX

We have good news; you can actually calculate the ROI of UX in several different ways. Here are some of the most common methods:

1. Conversion Rate

This is a technique you know already because it has been in this guide. Conversion rates measure the number of people taking the action we desire from them.

Consider this example: If 10,000 people visit your website and 200 people subscribe, you have a conversion rate of 2%. Then, you make a change to the website and redesign it to make it easier for visitors to navigate between pages. Not only this, but you also fix web errors and make the website more reliable. After making these changes, you notice that conversion rates are up to 6%. Assuming you didn’t make any other major changes, you can confidently assume that these UX adjustments caused a jump in the conversion rate.

2. SUM (Single Usability Metric)

When a UX problem develops, we can normally highlight where customers are falling from the conversion funnel. Sadly, we don’t learn why they are dropping. With the SUM, we have an opportunity to measure errors. Standardized usability metrics measure things like task time, task completion rates, error counts, and satisfaction.

The more you learn about the errors, the better position you have to fix them and improve your ROI. Now, customers move through the conversion funnel smoothly and you can use other techniques in this list to measure an accurate ROI. If there are a lot of errors to fix, ROI is low.

3. Drop-Off Rate

Similarly, drop-off rate is another metric that tells us how many people are leaving the funnel. Rather than reviewing the whole funnel, we can assess the performance of each step. The formula is as follows:

  • (visits to a particular step - visits to the step before) / visits to the step before x 100

As an example, let’s say that 250 people have items in your cart each day. Despite this, only 40 people convert and spend their money. We can plug these numbers into the formula:

  • (40 - 250) / 250 x 100 = -84%

After improvements to the cart and the web design, let’s say the drop-off rate reduces to 60%. Again, use these numbers in a decreased drop-off rate calculator and you’ll have something tangible to work with.

4. A/B Tests

When attempting to measure UX, A/B tests have great value because they allow you to compare to variables. With half of all visitors going to one variation of the website, all others are sent to another and you can compare the conversion rates of each. As well as conversion, you can compare bounce rates, clicks, page views, and other analytics.

A/B testing allow you to focus on two areas:

  • Business metrics
  • Usability metrics such as task time and completion rate

5. Questionnaires

Depending on what you’re trying to achieve, may also be a good tool for gauging feedback on software or website design. Here are some examples:

  • Subjective Mental Effort Questionnaire (SMEQ)
  • After Scenario Questionnaire (ASQ)
  • Usability Magnitude Estimation (UME)
  • Measure of Mental Effort (NASA-TLX)
  • Single Ease Question (SEQ)

While some questionnaires have lots of questions seeking qualitative data, others have just one question. Ultimately, you learn the difficulty of tasks during testing. If a product is difficult to use, you know that consumers won’t stick around and will potentially choose the competition over your own service. When a product is simple to use, it puts the company in a stronger position to generate positive results.

If you want to gauge overall satisfaction, Net Promoter Score (NPS) is widely considered the best option. With just one question, it breaks down your audience into three categories; they’re either a Promoter of your brand, a Passive user, or a Detractor. Ideally, the majority fall into the first two categories because a Detractor actively seeks to damage the brand through negative word of mouth.

When Would You Need to Know the ROI of UX?

As a business or marketer, it’s always good to make a product or service as intuitive as possible for customers. If you improve the customer experience, they’re more likely to remain loyal, recommend the brand, convert, and contribute to the business. However, there are other occasions where you need to calculate the ROI of UX.
For example, you may need to prove the efficacy of marketing expenditure to stakeholders. Here, usability studies can show the troubled areas and why you’re working on them. Secondly, calculating the ROI helps you to assess all marketing expenditures. Through this calculation and the identification of problems, it’s possible to allocate the marketing budget in the right areas. Thirdly, UX research uncovers problems and helps you create an effective strategy for addressing them.

Does UX really impact ROI? Yes. How do you effectively measure the ROI of UX investment? Through conversion rates, questionnaires, A/B testing, drop-off rates, and single usability metrics.

Marketing Guides
6 min read
April 29, 2021