ROI and UX Design: How to Measure Impact?

Working as a UX designer, down the lane you’ll get to sit and note down the measure on what impacts your designs have made. Designers’ efforts and outcomes would always be quantified, just like any other business process. It also allows us to keep track of the Companies that can use design ROI for that. This statistic includes revenue and aids in cost reduction and risk mitigation.

ROI measure helps the company and the team to evaluate the total spend, which includes cash spent on hiring staff, developing new products, or purchasing tools and equipment for the business. So, now let’s delve deep into what is ROI in UX Design:

ROI in UX Design

It is said that ROI in UX is acknowledged as offering the highest rates of return on investments that a firm may make. So for a company to determine how and what went into the investment with respect to design team hiring all the way till the final product/feature launches along with the impact design made towards company revenue streams. It is based on research – “A right investment made on design, can provide up to 300% of returns on the investment” 

Not just design work, even the development efforts could be reduced based on the finite number of iterations based on the user feedback, rather than just guesswork around the iterations. So it was a brief about how ROI in UX Design works and makes a vital impact. Let’s now look into ways to measure usability ROI.

Ways to Measure Usability ROI

There are multiple ways a company or a team together can come up with metrics used to calculate ROI. The company must first choose the appropriate measurements based on its overarching goals and then match the KPIs with those goals. Based on what impacts a team wants to major, the ROI metrics are added to PRD for calculating the impact once the product or feature is launched.

Let’s look into different ways of measuring ROI, based on the metrics like:

• Conversion Rate: Criteria to measure this metric is to check based on the number(#) of users who are completing the funnel or the journey till the end.

For example: Facebook Ads are placed in order to make the user complete the shopping of the desired product. To know about the conversion rate, it would be checked on the basis of the number of users actually clicking on the product displayed till landing or getting redirected to the product website.

• Average or Net dollar per user: Criteria to measure this metric is to check on the percentage(%) increased in currency(Rupee/Dollar etc).

For example: While shopping on any website or app, let’s say a new product or feature is launched. To evaluate how much it is enhancing the net revenue the team can use this metric. Based on the successful orders placed or number of times the feature is used the net revenue increase is calculated.

• Increase in Impression or Page Viewability: Criteria to measure this metric is to check on the number(#) or percentage(%) increased in pages viewed. This metric is also used to evaluate advertisement performance, along with impressions to install the app or to buy a product. 
• Decrease in drop-off: Criteria to measure this metric is to check on the number(#) or percentage(%) decreased or reduced in the drop-off.

For example: Let’s assume a new feature is added which is supposed to reduce the user drop off. To evaluate the performance of that feature based on the number or percentage reduced would determine if the feature really worked or not.

• Decrease in helpdesk support: Criteria to measure this metric is to check on the number(#) or percentage(%) decreased or reduction in help desk support. It means that if an app itself is very clear, the user is comfortable while using the app and is sure of what to do. It would directly reduce the number of calls going to the helpdesk. For any application that has made everything very simple and sorted for users, there is a high chance that customer care staff is lesser there.

For example: Myntra has a very clear showcase of all the critical points like refund, replacement or exchange policies which doesn’t need a user to reach out to the helpdesk on a frequent basis. This way the company is saving extra cost on customer care agent’s hiring process, training and salaries.

• Training Reduction: Criteria to measure this metric is to check on the number(#) of days or hours reduced for providing training to the staff. This way the company can cut on the cost of courses, classes, and study material along with soft dollars like time and effort put in to train the new workforce. Clear the requirement and the job description to avoid putting extra effort into training the user. This additional cost could be given to the executives for their personal development.

For example: A good example for this could be customer care training cost and efforts. Companies which hire a bulk number of customer care executives should consider these metrics as a game changer. 

• Increase usage: Criteria to measure this metric is to check on the number(#) or percentage(%) increase in people or sessions. This data could be easily fetched by the DS team of the company. To increase the usage, design can put effort into making the application engaging.

For example: Let’s take an example of an E-commerce application, generally there are long user sessions because they are so good at providing multiple user options. They place it with hick’s law where they increase the number of options for a particular item such that the user would keep on looking for the right option. This way the company makes profit based on the time spent as well as there are chances that users might end up buying more things than actually needed.

• Decrease in time consumed to complete a task: Criteria to measure this metric is to check on the number(#) of minutes or hours reduced in overall task completion time. Making a user reach the end goal quickly and early would increase the chances of better conversion rates. Designers should work towards reducing the number of repeated or irrelevant steps coming in between the most critical and important tasks for which a user is coming to the website/app.

• Decrease development effort: Criteria to measure this metric is to check on the number(#) of minutes or hours reduced for continuous maintenance of the application. This may or may not be design-related work, but this reduces development efforts, labor rate, and server costs which cost a huge amount of money. A company generally bears a lot of extra costs to set up maintenance servers and hire extra workforce to maintain the website/app, all this would be avoided if the right measures are taken at the beginning itself.

• Error Deduction: Criteria to measure this metric is to check on the number(#) or percentage(%) or money results. This could be either from the development side or even from the design side. Reducing error would increase a lot of other metrics like conversion rate, reduced drop-off, and net revenue. Error could be a major problem whether it’s on the sign-up page or payment checkout page. Reducing and recovering soon from such errors saves a lot on extra spending.

Benefits of Measuring ROI

While a company promises to deliver quality, they need to be sure about the ROI. Metrics help the company in many ways from getting to know about profits, losses, design impacts, or even the investment made during hiring, onboarding, etc. Let’s look into some of the benefits:

• Drive Strategy & Organisation Strategy: Knowing the right direction to move is important for any business to thrive. The team should come together and sit to discuss the major metrics they want to achieve. Such as early-stage startups do, they make a product strategy based on which each quarter is something new to work on and to evaluate it there. This keeps the organization know about all the burns, losses, profits, and investments they are making. 
• Support Decision-Making: ROI provides us with insights, which support long-term planning and better decision-making. The company as well as the team can plan based on the insights we get using different ROI metrics. By considering the projected returns over an extended period, decision-makers can evaluate the sustainability and viability of an investment.
• Aids Resource Allocation: ROI analysis is very efficient to help in appropriate resource allocation. By prioritizing investments based on their potential returns and aligning resources with projects or initiatives that have a higher ROI. It ensures that resources are allocated in such a way that most necessary metrics should be met first, which would eventually maximize the returns on the investment made so far.
• Performance Evaluation: We have seen that ROI serves as an evaluation metric to measure the success or failure of an investment. Therefore by continuously tracking the ROI of different projects or strategies, decision-makers can identify which ones are delivering the desired results and make informed decisions based on the performance data.

Problems or Difficulties While Measuring ROI

To measure the ROI not just one pod or a team, actually, the whole organization comes together with some initiatives and OKR which are evaluated based on the impact they bring. ROI is generally confused with only the cash profit a company makes, but it is more than the cash profit which is also known as “Hard Dollars or even Physical profit”. ROI is more than just the money, it also comes as a good NPS(Net /promoter score), Retention, Usage, and spread of word of mouth about the product or app, or feature these are also known as “Soft Dollar”.

To arrive at the right ROI measure, you as a designer must ascertain which way of measuring ROI is optimal for your project and your company’s hurdle rates.

While writing the right steps towards ROI, there are certain difficulties a team or a company faces with respect to design and product, let’s look into some of them:

• Design Complexity: There are high chances of having a complex launch, which might include complex flow and design. This causes issues with the right measure of ROI, which results in failing to meet the expected impact and results which are either hard dollars or soft dollars. Basically due to design complexity costs related to hardware, storage, equipment, or workforce support for the existing infrastructure may be excluded from ROI. Along with this, ROI might also cause additional gaps in the decision-making process because it is unable to account for factors like these in the calculation.
• No Defined Satisfactory: While determining ROI, defining a satisfactory exact level of profit and investment can be very difficult to achieve. To come up with the right ROI measure, product, and revenue teams need to be clear with the profit and investment expectations. Both profit and investment have various concepts to be looked into like –
  • Profit includes – Profit before and after the investment and taxes, profit post deductions and allocation, etc.
  • The investment includes – Cost assets, gross and net book values, etc.

• Intangible Gains: For the ROI measures to be truly useful in the decision-making process, a proper set of information must be used. Whether it’s about an increase in revenue, cost, or even conversion rates for everything, the team which is measuring these ROI needs to see the outcomes and effects of the project on the company based on the real data.

Many businesses bring in other intangible benefits to the business. These benefits are very difficult to reliably measure, but at the same time justify the investment put into the process, workforce, etc.

Learnings

• ROI & UX Design are related as a product or service’s success and profitability are greatly influenced by the UX design.
• It’s crucial to assess how UX design affects ROI. Organizations may prioritize UX investments and make educated decisions by measuring the value that UX design brings to the table.
• Qualitative data gives context: Incorporating qualitative data, such as user input and usability testing, in addition to quantitative measures, helps fully capture the user experience.
• Comparative analysis and case study Industry benchmark and actual case studies can be used to gain insightful knowledge and establish reasonable ROI measurement assumptions for UX design projects.

Conclusion

In today’s digital environment, measuring the effect of UX design on ROI is essential to corporate success. It makes it possible for businesses to comprehend the value and advantages that UX design provides to their goods or services. Businesses may obtain deeper insights into the effect of UX design on user happiness, conversion rates, customer retention, and ultimately, the bottom line by tracking pertinent metrics and using both quantitative and qualitative data. Maximizing return on investment requires matching UX design goals with overall business objectives. 

In addition to improving the user experience, investing in UX design helps businesses save money, win over more clients, and compete more effectively. The ability of businesses to make data-driven decisions, allocate resources wisely, and continuously develop their products or services to fulfill user wants and go above and beyond customer expectations is improved by those businesses who place a high priority on quantifying the impact of UX design on ROI.

Must Check:

• What is ux design?
• Difference between UX UI design?
• Top UI/UX Design Terminologies That Every Designer Must Know.

FAQs: Measure the ROI of UX Design

1. Why is it important to measure the impact of UX design on ROI?

Measuring the impact of UX design on ROI is important because it helps businesses see how valuable it is to invest in making their products or websites user-friendly. It lets them make smart choices, focus on improving user experience, and manage their resources wisely. This leads to happier customers, more sales, and bigger profits in the end.

2. What are some common challenges or barriers in measuring the impact of UX design on ROI?

There could be some common challenges in measuring the impact of UX design on ROI.

• Design Complexity
• No Defined Satisfactory
• Intangible Gains

3. What are some potential benefits of measuring ROI in UX design?

There are some potential benefits of measuring ROI in UX design :

• Drive Strategy & Organisation Strategy
• Aids Resource Allocation
• Performance Evaluation