Measuring the ROI of your UX research to share with your stakeholders
USE COMPANY KPIs TO MEASURE AND BOOST THE ROI ON YOUR UX RESEARCH
As industry leaders in user experience (UX) research, we are pleased to offer you access to our latest white paper: How to Measure the ROI of UX Research to Share with Stakeholders.
This white paper helps quantify the return on investment (ROI) of UX Research, giving you key insights to persuade your stakeholders to increase their investments in UX Research. Using your brand’s core KPIs at the heart of your ROI calculations, we will teach you how to effectively and accurately measure the value of your UX Research.
Additionally, we cover essential aspects of user testing and usability testing, ensuring you understand the importance of these elements in your UX research. Our methods include various metrics and user research techniques to provide comprehensive insights.
Table of Content
- What is the value of UX?
- Use Cases
- UX & KPIs
- NPS & SUS
- Cost of UX
- Foundational Research
- Requirements Gathering
- Review & Testing
- Reporting
- Summary & Conclusions
- Bibliography
What is the Value of UX?
“User experience” encompasses all aspects of the end-user’s interaction with the company, its services, and its products.
– Nielsen Norman Group, 2020
Businesses invest in many things designed to meet their goals and increase profitability. Equipment, training, and hiring are all considered necessary investments. When a manager asks for new equipment, someone is going to want to know what the return will be on that – what goals will be met through the upgrade.
Multiple sources have shown that the return on investments (ROI) in UX and user-centric design is one of the highest rates of return a company can realize in a business investment.
– McKinsey & Company report on the business value of design, 2018
IBM commissioned a study in 2018 from Forrester Research on the ROI of their design thinking method. The report, The Total Economic ImpactTM Of IBM’s Design Thinking Practice, includes dollar amounts attributed to human-centric design:
Forrester’s interviews with four existing IBM clients, data from 60 survey respondents, and subsequent financial analysis found that a composite organization based on these interviewed organizations experienced … an ROI of 301%
— Forrester Research, 2018
To quantify the return on UX investment you must identify the goals that will be affected. For executives, understanding the value of UX means understanding how UX affects the KPIs.
Assess where your company is on the maturity scale of UX. Jakob Nielsen notes it may take 40 years to move from Stages 1 through 8 – a fully mature company using “user research to determine its overall direction and priorities.”
— Nielsen, 2006
In the earlier stages of maturity the primary UX activity centers around usability testing of already-developed products. The KPIs will revolve around:
- Development and QA hours for rework to fix problems
- Customer service hours spent dealing with problems
- Effects on NPS, sales goals and customer retention
MEASUREMENT OF DEVELOPMENT REWORK:
- Create epics in Agile that are coded for rework. Once they are pointed, you have a basis for how many developer and QA hours will be spent.
- If you do not know actual salaries, you can use a company average or even an industry average to assign the dollar amount for each hour.
- Look back at scope-of-work documents and RFPs. They may itemize the value of features in development for a client. That will help to quantify a failure.
In addition to the development costs, consider lost revenue and penalties paid that result from
breaching SLAs and contracts.
ADDITIONAL COSTS OF FAILED PROJECTS RESULT FROM:
- Damage to reputation – KPI of new signed contracts and leads
- Alienation of customers – KPIs of service work and churn/retention
- Harm to employee morale – KPIs of velocity and churn/retention/turnover
TO QUANTIFY WITH ACTUAL DOLLAR AMOUNTS, WORK WITH INTERNAL PARTNERS:
- Average amounts can be used in lieu of specific information if not available.
- For instance, estimates show that to replace a salaried employee in the range of $50K the cost is 20%. As salary rises, so does replacement cost.
Use Cases
VIRGIN AMERICA AIRLINES
- Goal: Better experience when booking airline tickets online
- Deliverable: Responsive website and native iOS and Android apps
UX PROCESS:
- User research started with pain points and requests from clients.
- Focused on increasing number of digital bookings, especially on mobile devices.
- Used analytics and optimized with AB testing.
“The result is a clean approach to airplane booking that’s mobile-first and strikingly pain free.”
— Flaherty, 2014
- 3x Increase in mobile conversion with the Virgin America app
- 2 Seconds to load, the fastest for any airline site at the time
- No 1 Featured app in the App Store and Google Play after launch
- 20% Decrease in web-related support calls
LYFT RIDE-SHARING APP
Goals:
- Increase transparency and increase reliability for the ride request workflow.
- Have an interesting visual and interactive design.
- Be very useful for target audience.
Deliverable:
- Redesign the app in response to user feedback.
UX Process:
- Reviewed usage data and feedback submitted in the app and through email.
- Conducted weekly QA sessions with stakeholders, friends and family.
- Ran user testing with real passengers and drivers.
- AB tested design iterations.
TESTING SESSIONS CHARACTERISTICS:
Lyft has conducted over 400 hours of user testing and validates their assumptions along the way. This is good because it builds confidence in the team, stakeholders and customers.
— Nectar blog, retrieved 2020
RESULTS OF UX TESTING:
- AB testing revealed that users preferred a different design than expected.
- A database of user experiences was created to understand user needs.
- Color usage was modified to emphasize important CTAs.
- Enhanced features were added so riders could more easily identify drivers.
- Map view was improved to show the direction cars were traveling.
- Experience was improved for first-time users.
LYFT REDESIGN KPIS:
- Improve user experience
- Grow market share
- Attract and retain drivers
RESULTS:
- Gathering feedback and testing with drivers raised retention and helped with designing effective incentives for drivers.
- Focus on the workflow of requesting a ride and increasing safety measures grew market share and improved overall user experience.
Use Cases: Javafly
JAVAFLY COFFEE E-TAILER
Goals:
- Improve conversions.
- Improve brand perception.
- Increase revenue-per-client on the website.
Deliverable:
- Redesign the website, improving usability and user satisfaction.
UX process through design partner GobySavvy:
- Increased understanding of the brand and business goals.
- Internalized customer personas.
- Conducted UX review of Javafly.com.
- Analyzed data, categorized issues by severity and presented recommendations.
- Provided a roadmap to improve key metrics using AB testing.
Use Cases: SUBMIT
Sample case study:
Sales had a goal of increasing lead generation year-over-year.
The KPI to measure progress:
Number of Engaged Qualified Leads in Sales Funnel (Enochson, 2017)
Leads were gathered through several different channels:
- Phone contacts
- Trade show and convention attendees
- Word-of-mouth recommendations
- Website visitors
Measuring those contacts would show if lead generation numbers were improving.
QUALIFIED LEADS:
- Analytics data showed that only 3% of website visitors were asking for information.
- A conversion funnel was set up in analytics with the CTA ‘SUBMIT’ as the conversion action. More submissions should mean more leads.
- Data showed users were exiting the funnel after entering an email address but before entering a phone number (required field).
- A discussion with Sales revealed that they did not really need a phone number since they collected an email address.
Solution:
The form was changed so that phone number was optional.
Results:
Number of conversions rose, positively affecting the lead-generation KPI.
HOW TO TURN THAT INFORMATION INTO A QUANTIFIABLE ROI FOR UX:
- Research showed how to remove a barrier to conversion.
- Sales placed a dollar value on each lead that was generated.
- Each lead had an estimated worth of $20 according to Sales.
- UX efforts resulted in an increase of 20% in leads generated from the website.
- Total number of leads from the website last year, quarter three, was 200.
- 200 X $20 = $4000
UX & KPIs
HOW UX’S USE OF ANALYTICS DATA CAN HELP MEET KPIS FOR SALES AND SERVICES:
- Qualified Leads: Analytics data show breakdowns in the conversion funnel that are leading to fewer contacts from website and apps.
- Time on Task: The less time to complete an action, the more likely a user will complete a conversion funnel.
- Number of clicks: Fewer clicks can mean less frustration.
- Error rate: Fewer errors indicate that the application is more intuitive.
- Pogo sticking: If analytics show a pattern of users moving from the home page to a sub page, then back to home and to a different sub page, and then back to home, etc., this indicates a problem finding the desired content.
- Hours for follow-up with customers: Interviews and observations to gather requirements which lowers rework and speeds time-to-market.
- Churn: UX intervention can lower tensions and help to lead to resolution. Leading a deep dive into the pain points of the customer’s experience and offering solutions can turn the relationship around and have a positive impact on churn.
- NPS: UX tools such as UserlyticsTM make it easy to track NPS and make it a part of regular reports, revealing problems early.
“Jacob Nielsen found that when UX improves the customer experience, it raises a company’s KPIs (Key Performance Indicators) up to 83% in conversion lift.” — Friis Dam, 2020
HOW UX CAN HELP MEET KPIS FOR MARKETING:
- Website traffic: Understanding search algorithms and managing data is important to meet KPIs around unique sessions, bounce rate and time on site.
- SEO Keywords: Knowing keywords in web searches, and what visitors are searching on the site is important to meet KPIs on unique sessions, bounce rate & time on site.
- Time-on-task and error rate: Show where poor usability is impacting user experience. Lowering time and errors are common KPIs.
- Conversion rates for CTAs: Once conversion funnels are set up in analytics, clickstream analysis shows where users are having trouble. UX recommendations will help improve conversion KPIs.
- SUS: UserlyticsTM makes it easy to administer the System Usability Scale survey to allow comparison of overall usability with industry benchmarks.
HOW UX CAN HELP MEET KPIS FOR DEVELOPMENT TEAMS:
Development and QA hours:
Foundational research assures that the tool that is built is the tool users need and want. There is less rework when the user journey is mapped by UX and clearly understood by Design.
Sprint velocity and burndown rate:
When bug tickets interrupt Sprints, velocity goes down. These KPIs can be raised by better research and testing before deployment.
“Programmers typically spend 50% of their time on avoidable rework.”
— Justinmind blog quoting
Dr. Susan Weinschenk, 2017
HOW UX CAN HELP MEET KPIS FOR PRODUCT TEAMS:
- Product management hours: When UX takes the lead in customer interactions to uncover breakdowns and needs, product management can focus on managing overall strategy. Hours dealing with customer problems are reduced.
- Time-to-market and Product Launches: UX research reduces development rework and confusion. A 2016 survey on the role of design in start-ups showed a belief that early focus on better design leads to a 30% faster product cycle.
- Enhancement requests: If UX research isn’t done before development customers will address missing functionality through enhancement requests. This KPI can be lowered through timely research.
NPS & SUS
ABOUT NPS – THE NET PROMOTER SCORE:
- The Net Promoter Score measures how likely your customers are to recommend you to another company or individual.
- The tool is a survey based on one question – ‘How likely are you to recommend, on a scale of 0-10?’
- A score of 9 or 10 means that person is a promoter; 7 or 8 is classified as passive; 0-6 and you have a detractor.
- Overall, the median score for companies is a +44. In the technology domain, a score above +32 is considered a good score.
“A positive NPS (>0) is generally considered as good.”
— Severson, 2016
ABOUT NPS – THE NET PROMOTER SCORE:
- By offering UX support around Net Promoter Score, you are making UX a partner in raising scores and meeting KPIs.
- Because dollar amounts may be tied to this KPI, it’s possible to show positive ROI if scores can be raised with UX help.
- Use vendors including Userlytics to calculate your NPS and make it part of your metrics dashboard.
WAYS TO IMPACT YOUR NPS SCORE:
- Put a process in place for tracking the score, identifyingvtrends and taking action.
- Give timely responses to feedback when you have contact information.
- Follow up with customers to see if your actions have improved their experience.
USE SCORES AND COMMENTS AS JUMPING OFF POINTS FOR FURTHER RESEARCH:
- For example, a survey response might include feedback about how difficult it was to create an account.
- If a KPI is set for a 10% increase in online accounts for quarter 4 this year over last year, improving the sign-up process can help achieve that KPI.
- If reducing churn is a KPI, a positive trend on NPS is an important metric.
ABOUT SUS – THE SYSTEM USABILITY SCALE:
- SUS is a ten-question survey that measures the usability of all types of hardware devices and software programs, applications and websites.
- The survey has five questions that it asks in two different ways to combat user bias in answers. An example of a pair of questions on the SUS:
ABOUT SUS – THE SYSTEM USABILITY SCALE:
- Like NPS, the SUS score offers a standard measurement to compare across all digital tools, identifying if the application is above- or below-average for usability.
- The score, which is derived through a formula to arrive at a comparative ranking, is reliable even with small sample sizes.
- Poor usability is a barrier to conversion and can have a large effect on reaching KPIs.
- Userlytics allows clients to administer the SUS as part of qualitative user testing with no extra cost, enabling the UX team to amplify their positive ROI.
“Based on research, a SUS score above a 68 would be considered above average and anything below 68 is below average…”
— www.usability.gov, 2020
Cost of UX
UX COSTS ARE BASED ON:
- Salaries of UX staff on hours-per-project basis or cost of outside consultant
- Professional development and training
- Costs of tools such as a testing platform, voice of customer survey, heat mapping, and data analytics
- Cost of equipment and lab, if applicable
- Cost of journal subscriptions
- Field studies with travel costs
- Any incentives paid to participants
It’s not difficult to quantify costs for recruitment. If you are offering $25 Amazon gift cards to five interview participants, your cost is $125.
If you are using a vendor and each test session in your subscription represents 1 percent of your annual subscription cost, and you use five sessions, you’re spending 5 percent of your subscription. It’s a known cost that you can report on.
When you are conducting qualitative research – not based on numbers – you need fewer participants to uncover actionable insights.
- Be ready to offer an estimate of costs for UX on a particular project based on goals and KPIs.
- Ask project stakeholders for a budget upfront.
- If your budget is small, be realistic about what you can deliver.
- If you deliver on what you’ve promised and it has an impact, stakeholders will be more willing to spend in the future.
- Include metrics for success in your research proposal and be sure to communicate those metrics in your research report.
The Vice President of Digital Experience for a large organization noted that he allocated UX resources based on the size of a project.
Projects that had a high-impact value, such as a major redesign of a website, received more UX resources than smaller ad hoc projects.
He also noted that when a small project showed success by improving user experience, that success made it easier to secure resources going forward.
Foundational Research
Foundational UX research is meant to uncover unmet needs in the domain so that any projects that go forward are filling a real gap.
Triggers Include:
- Request from a product manager
- Request from an executive
- Current customer request
- Information from Sales on what potential customers are talking about Industry trends
- Competitive analyses
The ROI is potentially greater for foundational research than later UX work because the financial risks are much higher for businesses when launching new products.
In a mature organization, UX recommendations should heavily influence a go/no-go decision for new product and feature development.
When a project is an enhancement or a redesign of an existing product or service, the costs of the work by developers can be measured by work done in Agile sprints.
If you are focusing on potential work for undefined projects, then costs may be harder to define.
COSTS INVOLVED IN FOUNDATIONAL RESEARCH THAT AFFECT ROI:
UX hours for:
- Reviewing call logs from customer service
- Reading feedback submitted via forms and emails.
- Analyzing analytics data looking for breakdowns in conversion funnels
- Observing sales meetings to hear requests.
- Interviewing stakeholders to find pain points and gaps.
- Voice of Customer tools that send feedback surveys and collate data
- Incentives for participants
- Subscription costs for Userlytics for testing done on competitor tools
TO QUANTIFY ROI, BALANCE THE UX COSTS AGAINST THE COSTS FROM:
- More customers calling into customer service and negatively affecting Service KPIs
- Users going to social media instead of sending feedback to company and damaging the reputation of the company and lowering NPS scores, affecting Sales and Marketing KPIs
- Lost service contracts when problems persist under the radar for too long, affecting Sales KPIs
“We have voice of customer [tools] so if there are big problems, we’ve already heard about it.”
— digital experience leader, 2020
CALCULATING THE ROI ON ANALYTICS
Costs:
- Setting up appropriate tagging. It is not possible to gather data retroactively. Tag as much as possible so that when you need data it is available.
- Time to set up conversion funnels in the tool based on KPIs.
- Training to understand data analytics and using the tools.
Benefits:
- Fast access to real user information
- Supply of numbers to share with stakeholders
- Ability to compare ‘before and after’ metrics is a great way to show ROI.
TO REPORT ON ROI, QUANTIFY THE COST OF A PROJECT WITHOUT FOUNDATIONAL RESEARCH:
- Find a previous project of a similar scope.
- Add all the epics that were pointed.
- Add project management hours, advertising and marketing hours, and advertising and marketing collateral costs.
- Include hours spent on implementations with clients.
- Include incentives paid to customers for Beta tests.
- Calculate and add in rework needed before wider launch.
- Figure costs to create documentation and training materials.
- Count the hours spent by customer service answering calls and troubleshooting with clients, entering bugs, and processing service requests.
THERE ARE SOME COSTS THAT WILL BE HARDER TO QUANTIFY:
- What projects were delayed while focus was on something else?
- What potential clients were lost to competitors over missing functionality?
- What talent may have been lost to the company due to resource management?
WHEN LOOKING FOR THOSE HARD-TO-FIND PIECES FROM A PAST PROJECT:
- Meet with subject matter experts in product management to get specifics.
- Review archived documents from the project.
- Review analytics around the project.
- Reach out to the Sales and Service.
The total cost of the project is what is at risk if no foundational research is done.
Work with product managers to identify examples of successful launches based on research to compare with troubled launches that did not have foundational research. See how the costs compare.
In the absence of any specific information from your company, at least share some case studies that highlight the high ROI other companies have seen for foundational research. A search of the web offers many examples.
The first time that you go through the process to collect all the data on costs of an entire project, it will be labor-intensive. The good news is that you will be able to reuse the data for the next time you need to calculate ROI for foundational research.
Requirements Gathering
Requirements gathering (Discovery) uses UX to find out how to fill an identified gap.
In a SaaS company, there is always a balance between what should be custom work and what should be done as enhancements across the product.
Without research, the chance that more customization will occur is high, and that brings higher development and service costs to support multiple versions.
Users may ask for enhancements that will not effectively fix the breakdowns. Costs for delivering ineffective solutions include development rework and damage to reputation and the customer relationship.
THE ROI IS THE COST OF UX VERSUS THE BENEFITS OF BETTER KPIS:
- Fewer hours for project management
- Less rework by development, and QA
- Fewer hours for Service dealing with issues
- Higher NPS and SUS
‘Badly defined system requirements’ is listed by IEEE as one of the main causes that software development projects fail.
— Justinmind blog, 2017
“The cost of fixing errors after development can be 100x more than before development…”
— Justinmind blog quoting, Dr. Susan Weinschenk, 2017
Review & Testing
An economical way to conduct usability evaluation is through Expert Reviews such as cognitive walkthroughs and heuristic evaluations performed by UX professionals.
ROI is high since the cost is limited to the time of the professional reviewer.
If reviews are performed on prototypes, the ROI is even higher since no development hours have been spent on the project yet.
If performed on tools already deployed, reviews can confirm breakdowns first noticed through analytics or customer feedback.
Looking at conversion metrics before a review and again after recommendations have been adopted gives a good comparison for ROI.
AUTOMATED DATA GATHERING INCLUDES:
- AB testing allows you to put different designs in front of large sample sizes to reach a statistically-significant result.
- Heat mapping shows you where users are looking on the screen and can be combined with AB testing to evaluate competing designs.
After a goal is set, these tools can measure which interaction design is more successful in terms of reaching the goal.
The costs of these tools, calculated per project based on a percentage of the total subscription cost, are added to UX hours for set up, training and analysis.
The best way to know if your product is well designed is to test it with the people you intend to use it.
Since cost is half the ROI equation, knowing how to manage the cost of testing is necessary.
Industry standard for qualitative testing is that 5-8 users will reveal 80% of problems. Even testing with 3 users can tell you many of the issues.
The Userlytics remote online testing platform offers a global panel of almost 1,000,000 participants, and customized screener questions can be used to narrow the field for your specific needs. Costs for this are lower since Userlytics handles incentivizing participation.
A subscription to Userlytics also removes the cost of having to maintain a testing lab and equipment while having easy access to video and audio recordings, highlights, and metrics regarding task completion.
Training for UX staff is necessary so that time and money spent on testing is effective.
Userlytics offers training free demos of new features.
In addition to task-based testing, Userlytics offers card sorting and tree testing functionality integrated
within its qualitative recording platform. Being able to test real users’ ability to find products and content
intuitively means more conversions and more sales – key KPIs – boosting ROI for no added cost.
A FINAL WORD ON TESTING: ACCESSIBILITY
Accessibility is an important part of usability. Beyond the fact that it’s inclusive, and it’s the right thing to do, it’s also a legal requirement.
Companies have been sued and have paid very large settlements over failure to provide accessible websites.
Software companies often get requests from customers to ‘make the tool accessible.’
UX practitioners who work specifically on accessibility are specialists, earning certifications.
It is often the case that until a customer complains, accessibility is not on the radar.
It’s much more difficult to fix these problems than to design and develop with accessibility as a requirement up front.
There are automated tools for auditing code, checking that assistive technology, such as screen readers, will function well.
Some agencies, such as Easter Seals, can help by providing evaluations and assistance in recruiting
participants to test accessibility.
The ROI for this type of UX research is high. If you discover problems before customers and users, you may have avoided a lawsuit and fine along with costly rework.
Reporting
Once you have gathered data from your research, you need to turn that into actionable insights:
- Foundational research can yield white papers, storyboards, affinity diagrams, and gap analyses.
- Interviews become journey maps and personas.
- Expert review reports are prepared with screenshots and recommendations.
- User testing sessions are analyzed, and breakdowns are highlighted along with solutions. Userlytics can prepare reports that include severity ratings and metrics.
As you prepare your deliverables, tailor your presentation to your target audience.
Focus on the KPIs and known business goals, highlighting how your findings and recommendations will influence the KPIs.
Gather feedback at each meeting in which you share a report. Find out what information resonated with attendees.
Set next steps and get agreement before leaving the room.
Follow up with stakeholders and share the report widely in your company.
Userlytics allows users to share video highlights, sessions and metrics with stakeholders.
Present read-outs on a regular schedule to highlight UX activities.
Keep the schedule so that internal stakeholders get used to hearing about UX and KPIs.
When you attend company meetings in which financials and goals are discussed, pay attention to the metrics that executives discuss. Use that language when you are talking about UX with the executives.
Offer UX resources at every opportunity.
Be a partner to, and collaborator with, other departments.
Summary & Conclusions
In a company with a mature UX practice, the question of ROI has already been answered.
Many case studies have been published that show the return for human-centric design methods to be very high.
“A 2016 design study of 408 different companies found that the more a company focused on and invested in design, the more they saw sales increase and experienced higher customer retention rates – customer engagement soared, and they moved through product cycles faster. All this simply because they put UX design, and more importantly, the customer, at the very heart of their business.”
— Philips, retrieved 2020
In a company that is still asking about the ROI of UX, UX staffers need to consistently tie user research to the defined KPIs in the company.
The work necessary to uncover goals and KPIs and measure the effect of UX requires, “the heart of a UX professional, but the soul of an economist.”
— Bakioglu et al, 2018
The good news is that once the foundational work is done, it can be the basis for ROI calculations of future
UX proposals and reports.
Userlytics is an effective partner in sharing the value of UX with your stakeholders.
Celebrate your successes and build for the future.
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