What’s the ROI of UX?

Much has been written about the value of user experience (UX) and how a user-centered design approach can help organizations avoid some of the classic pitfalls that cause IT projects to go over budget, extend past deadlines, or fail outright. Most of the discussion focuses on revenue and cost saving metrics.

While it’s certainly valid to make the financial case for UX, I believe that for many organizations it’s not only about profits but also about people. After all, software applications don’t run businesses, people do.

These days, UX is the norm, not the exception. The debate is over. The real question is not whether to take a user centered approach to IT projects but instead, which projects are most aligned with business goals and have the greatest impact on stakeholders?

Good UX is worth billions

The decision to invest in user experience can be supported by cost-benefit analysis, and a wide array of experts have given us tools and metrics for this purpose.

  • Dr. Susan Weinschenk, in her 2005 white paper Usability: A Business Case (nicely summarized in this animated video), argues that up to 50% of programmers’ time is spent on avoidable rework. In addition to cost savings, she cites a number of ROI measures on the revenue side and provides some sample calculations. There is a nice summary of her paper here.
  • Yuri Vetrov, in his article How to Calculate the ROI of UX Using Metrics, explains the nuts and bolts of conversion rates, average revenue per user, support costs, and user performance. In passing, he also mentions non-monetary results such as job satisfaction and loyalty – for internal applications, these “soft”, non-financial metrics can sometimes carry more weight than monetary ones.
  • The Nielsen Norman Group has one of the more extensive reports available on the topic: Return on Investment (ROI) for Usability. It’s not a free report, but if you need fodder to convince upper management of the value of UX, it’s worth obtaining a copy.
  • One of my favorite UX gurus, David Travis, writes on his blog that “usability initiatives deliver a major return on investment: it’s not unusual for usability projects to return benefits of 5-10 times their cost in the first year alone.”
  • A Google search on “the ROI of UX” will turn up countless more opinions and measurement approaches.

The common thread here is that user-friendly applications boost productivity, profits, and brand value.

If you want further proof, take a look at Jared Spool’s now famous blog post on why UX means big business: 3 Big UX Lessons Ripped from 2012 Tech Headlines. He uses the Apple/Samsung patent dispute, Facebook’s acquisition of Instagram, and the failed launch of iOS maps to demonstrate that good UX is worth billions.

Keeping it real

It makes sense that companies like Amazon, Apple, Samsung, Instagram, Google, and Facebook would invest heavily in user experience. Software applications and cutting-edge technologies embody their core businesses, which is why they rigorously test and measure even the most minute interface changes. (If you’re curious, Luke Wroblewski has written a great article on how Amazon’s UI has evolved over time.)

But what about the rest of the business community? What about government agencies, international organizations, and the social sector? Does user experience matter as much to them as it does to technology companies?

The answer is a resounding “yes”. In fact, many of these organizations are chanting the UX mantra and putting money where their mouth is. Maybe not as much money as the tech giants do, but still, the UX investment trend is clear.

A/B testing during the Obama campaign. (Source: http://kylerush.net/blog/.)

Organizations of all sizes rely on technology to help them produce and sell goods and services, as well as communicate with employees, customers, partners, and constituents. Good UX gives these organizations a competitive advantage.

And yet, when it comes to justifying investment in UX, the unspoken truth is that very few organizations will actually go through a full-blown cost-benefit analysis before taking a user centered approach. Why is this?

The answers vary from organization to organization and country to country, so I have come up with three reasons drawn from my experience here in Switzerland. I would be curious to hear from readers whether they have had similar experiences in their local markets.

1. Common sense

When presented with the user centered design approach for the first time, business managers generally “get it” right away. Most have been around long enough to have seen several technology-led projects fail to meet user expectations, leading to costly rework and a non-negligible degree of friction between the business and the IT department. A user centered approach is attractive because it meets the test of common sense.

The other factor at play here is that metrics-based meausurement of UX initiatives often has little relevance for internally facing applications. This is especially true for revenue related metrics. With internal applications, collecting the hard data can be complicated and costly, too, which is why budget-conscious managers tend to rely on user satisfaction surveys and agile user testing to obtain feedback.

Perhaps most importantly, when management actually gets involved in the various phases of a user centered project (e.g. when they participate in user testing), they see firsthand how the UX approach builds consensus between IT and the business, and how it ultimately leads to better outcomes for end users.

2. Politics and peer pressure

Internal politics drives a lot of decision making. If business line A has productive and satisfied users, while users in business line B are disgruntled and complaining, senior management is bound to uncover the reasons. UX is a good way to score political points, both with top management and the user base.

Externally, business and IT managers speak to their counterparts at other companies and organizations. They compare notes and share information about what’s working and what’s not. If someone has had positive results taking a user centered approach, his or her peers are going to consider investing in UX for future projects of their own.

3. The Apple effect

Compounding the effects of common sense and politics is the effect of Apple. Thanks to the explosive growth of mobile devices and the wider consumer application ecosystem, attractive and well-designed user interfaces are part of our daily experience. People appreciate good design and increasingly expect it.

When the app you use to program your home refrigerator feels more sophisticated and user-friendly than the complex and clunky tool you use to manage your payroll system, it’s time for a better user experience at the office.

The bottom line

What’s the takeaway from all this?

If you’re already on the UX bandwagon, you’re in good company. UX is common practice in many modern IT departments and increasingly shows up on RFPs.

If you find yourself faced with advocating for UX in your organization, keep in mind that a cost-benefit analysis may not be necessary depending on the nature of your project. Often you need to convince stakeholders before having actual numbers to back up your arguments.

So how do you get buy in? Here are a few tips that might help:

  1. Demonstrate why the project is important for the business in terms of strategic objectives and the number of customers, employees, or partners it impacts.
  2. Research the competition. A best-in-class analysis of what other organizations or companies are doing in your sector will help you make a case based on competitive advantage. You could also invite outside experts to present a usability and competitive assessment to your decision makers.
  3. Get stakeholders to experience the UX process themselves. Invite them to test the current application – often they are not the ones who have to use the tool on a daily basis. Better yet, ask these stakeholders to compare the current application with a clickable prototype of your envisioned solution.
  4. Don’t forget the chocolate! If you’re trying to persuade, there’s nothing better. All UX meetings should feature chocolate.