ROI of UX: How to Prove the Value of Good User Experience

UX is often seen as a nice-to-have rather than a necessity, but the data on the ROI of UX tells a different story. Companies that invest heavily in UX consistently outperform their competitors, achieving higher customer satisfaction, increased conversions, and greater retention.

Convincing stakeholders to invest in UX research can be challenging. In this article, we help you with compelling arguments that can secure stakeholders’ buy-in for UX research and measure the ROI of UX. 

What’s the connection between UX and business revenue? 

User Experience (UX) is like the quality of service in a restaurant. If you enjoy the service, you’ll return and even recommend it to others. The same concept applies to websites and apps.

Here’s how UX directly influences business revenue:

A hike in conversions 

Imagine visiting a website that’s easy to navigate. You come there and quickly find what you need. You’re more likely to buy something, right? This simply means an increase in conversions. In fact, a Forrester report suggested that a well-designed user interface can increase conversions up to 200%.

At the same time, comprehensive UX improvements can take it all the way up to 400%, a lot higher than websites with poor UX. 

All of this is because good UX makes it easy for users to complete their goals, like making a purchase or signing up for your service.

Retaining existing customers 

Think of your favorite app. You keep using it because it’s user-friendly and enjoyable. A positive UX encourages users to return, reducing their chances of switching to a competitor.

Boost customer loyalty and advocacy 

When you have a great experience with a brand, you tend to stick with it and even recommend it to others. Loyal customers continue to spend money and bring in new customers through word-of-mouth.

Helps in cost-cutting

A well-designed UX reduces the need for customer support. If users can easily find what they need and solve their problems, there will be fewer support requests, saving the company money.

Why do we measure ROI of UX? Spoiler: stakeholder buy-in

User experience is everything. It always has been, but it’s undervalued and underinvested in. If you don’t know user-centered design, study it. Hire people who know it. Obsess over it. Live and breathe it. Get your whole company on board.

Evan Williams, entrepreneur, co-founder of Twitter and the founder of the blogging platform Blogger

That being said, measuring the Return on Investment (ROI) of UX is crucial, especially when trying to secure stakeholder buy-in for UX-related initiatives like redesigns and research. Here’s why it’s important and how it helps overcome stakeholder objections:

Quantifying the value of UX

Some stakeholders might see UX as a “soft” investment, not directly tied to financial gains. They might question the value of spending on UX if it’s unclear how it impacts the bottom line. Quantifying the value of UX through ROI can help you provide concrete evidence of its impact.

This can include metrics like increased conversions, higher retention rates, and improved customer satisfaction. Showing these numbers makes the benefits of UX tangible and understandable.

Financial investment justification

UX improvements require time and resources, which translates to financial investment. Stakeholders need to see that these investments will yield significant returns.

Measuring ROI can help you demonstrate how every dollar spent on UX can lead to increased revenue and cost savings. Therefore, you can easily justify the expenses involved.

Alignment with business goals 

Businesses have specific goals, such as increasing market share, enhancing customer loyalty, and boosting profitability. Measuring the ROI of UX initiatives shows how these efforts align with and support the broader business objectives. It helps stakeholders see the direct correlation between UX improvements and achieving business goals.

Adjustment of UX improvement strategy 

Continuous measurement of ROI allows for the adjustment and fine-tuning of UX strategies. Certain initiatives can be re-evaluated and improved if they aren’t delivering the expected returns.

This ensures that UX efforts are always optimized for maximum impact. That way, you can make a stronger case for ongoing investment.

Key UX ROI metrics

Let’s now look at some key UX ROI metrics to put your stakeholders’ minds at ease. 

Conversion rates

Measures the percentage of users who complete a desired action, like purchasing or signing up. Higher conversion rates often indicate a successful UX. 

Example: If 100 users visit your e-commerce site and 5 make a purchase, your conversion rate is 5%. A redesign that simplifies the checkout process might boost this rate to 7%, indicating improved UX.

Customer retention rates 

Tracks how many users return to your product or service over time. Good UX typically leads to higher retention rates as users find the experience satisfying and valuable.

Example: Let’s say 1,000 users sign up for your app and 600 are still active after six months, your retention rate is 60%. If you focus on enhancing the app’s usability and features, you could increase this rate. 

Bounce rates 

Shows the percentage of visitors who leave a site after viewing only one page. Lower bounce rates suggest a more engaging and user-friendly design.

Example: A landing page with a high bounce rate (e.g., 70%) might indicate that the page isn’t engaging or doesn’t meet user expectations. Improving the page’s content and design could reduce the bounce rate, keeping users on the site longer.

Click-through rates 

Measures the percentage of users who click on a link or call to action compared to those who see it. Higher click-through rates can indicate effective UX elements that attract user interaction.

Example: If 500 users see a promotional banner and 50 clicks on it, the click-through rate is 10%. A more prominent or appealing banner design could increase this rate, leading to potential conversions.

Abandonment rates

Tracks the percentage of users who start a process, like filling out a form or shopping cart, but don’t complete it. Lower abandonment rates often reflect a smoother and more intuitive user experience.

Example: If 1,000 users add items to their cart but 300 abandon it before checkout, the abandonment rate is 30%. Working on the checkout process and reducing friction points might lead to more completed transactions.

Revenue per user 

Calculates the average revenue generated from each user. Improved UX can increase user revenue by enhancing satisfaction and encouraging more frequent or larger purchases.

Example: Let’s say your total revenue is $10,000 from 1,000 users; your revenue per user is $10. Enhancing the UX could lead to users making more frequent or larger purchases.

How to measure UX ROI? 

Now, coming to the crucial part, here’s how you can measure UX ROI to demonstrate tangible benefits to your stakeholders. 

Identify metrics vital for the business goals 

Start with the most essential question- what do your stakeholders value the most? 

Are they focused on increasing conversions, improving customer satisfaction, or reducing churn rates? If conversions are a priority, you might focus on improving call-to-action (CTA) buttons and streamlining the purchase process.

Based on their priorities, you can identify these vital metrics that help you align your UX initiatives with business objectives. 

1. Set ROI goals 

Define clear, measurable goals for your UX improvements. Predict the ROI by setting targets based on what you hope to achieve. For example, if your current conversion rate is 2% and you aim for a 3% conversion rate, set this as your goal.

Examples:

• Prognosis: We expect a 20% increase in user sign-ups after implementing a new onboarding flow.
• Target Metrics: Set specific targets, such as reducing bounce rates from 60% to 40% or increasing average session duration by 25%.

2. Collect UX data

Before redesigning, baseline data will be gathered through UX research.

Conduct user interviews, run surveys, and user testing to understand the current user experience and identify areas for improvement. The idea is to understand how users engage with your product and where they encounter issues. 

3. Redesign your product 

Implement design changes to improve the identified metrics based on the data collected. This might involve redesigning key pages, optimizing navigation, or enhancing visual elements.

The goal is to create a more user-friendly experience that directly impacts your target business metrics.

For example, redesign the navigation menu for better clarity and usability if users struggle with a confusing navigation menu.

4. Collect new UX data 

After the redesign, new data will be gathered to evaluate the impact. Measure changes in user behavior, engagement, and satisfaction. Compare this data to your baseline to assess whether the redesign achieved its goals.

Conduct post-redesign surveys to collect user feedback on the new design and its impact on user satisfaction. You can also use analytical tools to track changes in key metrics such as conversion and bounce rates. 

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5. Calculate the impact of the changes 

Calculating the ROI will help assess the redesign’s effectiveness. You can analyze whether the changes met your initial goals and what quantifiable impact was achieved.

You can also determine the return on investment by comparing the cost of the redesign to the benefits realized.

So, if the redesign costs $10,000 and results in a $50,000 revenue increase, calculate the ROI as (50,000 – 10,000) / 10,000 = 4, or a 400% return on investment.

6. Continuously involve stakeholders 

Keep stakeholders engaged throughout the process. Regularly update them on progress and insights from UX research. Continuous UX research presentations can help maintain their interest and support. Sharing early wins and incremental improvements demonstrates the value of ongoing UX efforts.

To help you write a comprehensive UX research report, we have made a quick video covering every step of the process! ⬇️

Common Myths about UX ROI

A lot of myths float around UX ROI. Here are some common ones we aim to burst: 

UX ROI is immediate

Many believe that the benefits of UX improvements will show up immediately. In reality, it often takes time for users to adapt and for the full impact of changes to be reflected in metrics. Quick results are rare, so patience is key.

UX ROI is all about numbers

Some think that UX ROI can only be measured with hard data, like conversion rates or sales figures. While these metrics are important, UX ROI also includes qualitative benefits like user satisfaction and brand loyalty, which can be harder to quantify.

UX ROI is the same for every business

Not every business will see the same ROI from UX improvements. The impact of UX can vary greatly depending on factors like industry, target audience, and existing user experience. What works for one company might not have the same effect on another.

Innovative approaches to measuring ROI of UX 

As User Experience becomes increasingly integral to business success, innovative methods for measuring its ROI are essential. Here are some cutting-edge approaches:

AI and machine learning

Artificial Intelligence (AI) and machine learning can be powerful tools for predicting the ROI of UX initiatives. With a large amount of user data, these technologies can identify trends and patterns that might not be immediately obvious.

Here are some examples: 

Predictive analytics 

AI can forecast the impact of UX changes on key metrics like conversion rates, customer satisfaction, and retention. This allows businesses to estimate the potential ROI before implementing design changes.

Personalization Algorithms

Machine learning can help tailor the user experience to individual preferences, leading to higher engagement and conversion rates. Predicting how these personalized experiences will affect ROI helps prioritize UX efforts likely to yield the greatest returns.

ROI dashboards 

Creating interactive ROI dashboards provides a real-time view of UX initiatives’ performance. These dashboards can display key metrics and their changes over time, making it easier to track the impact of UX efforts. 

Here are two things about ROI dashboards that will help stakeholders: 

• Customizable metrics: Stakeholders can select the metrics most relevant to their goals, such as conversion rates, average order value, or customer lifetime value. They are not lost in a pile of data, wasting their time searching for metrics that matter. 
• Visualization tools: Graphs, charts, and heatmaps can visually represent the data, making it easier to spot trends and correlations. This helps stakeholders quickly grasp the effectiveness of UX changes.

Data-driven storytelling 

Data-driven storytelling involves using data to create compelling narratives about the impact of UX on business outcomes. This approach not only presents the numbers but also contextualizes them in a way that resonates with stakeholders.

One example is user journeys. Mapping user journeys with data points highlights where UX improvements have made a difference. For instance, showing how a redesigned checkout process reduced cart abandonment rates can be a powerful story.

4 Common Challenges in Measuring UX ROI

Researchers often come across these four common challenges while measuring UX ROI: 

Linking UX to business outcomes 

It’s difficult to connect UX improvements directly to business results. For example, if a new checkout design boosts sales, it’s hard to say if the increase is due solely to the redesign or other factors like a promotion or sale.

Quantifying intangible benefits

Some UX benefits, like user satisfaction and brand loyalty, are hard to measure. It’s challenging to quantify how a happier user might lead to positive word-of-mouth or repeat business.

Short-term vs. long-term gains

UX changes may not show immediate results. While a redesign might not boost metrics immediately, the long-term benefits could be significant. Balancing short-term and long-term impacts can be difficult.

Complexity of user behavior

User behavior is complex and influenced by many factors. Changes in user preferences, market trends, or external events can all affect interactions with your product, making it hard to pinpoint the impact of UX improvements.

Wrapping up 

Now, we know how crucial it is to present stakeholders with numbers, charts, and concrete evidence to show how UX drives business ROI.

While you can spend hours doing this manually, investing in a platform with comprehensive tools can help. UXtweak can help you achieve this effortlessly, providing everything you need to effectively collect, analyze, and present UX data.

Want to know more about how UXtweak can help?

Talk to our team or create a free account and try it yourself!

Conduct UX Research with UXtweak!

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