Choosing how to invest your budget is always a tough call. You might have ideas for new features or services buzzing around, but which of these is going to give you the best return on your spend? Investing in user experience is a safe bet, because improving UX can improve your bottom line in all sorts of ways. OK, as a UX company, we admit we’re biased on this one. But stick with us – we’ve got five concrete reasons (backed up with data) why we’re right that you should be investing in UX this year.
How do we measure ROI?
It’s all very well making customers happier with improved user experience, but we need to be sure their feel-good factor is actually making your business more money. How we measure ROI in terms of UX depends on your business. For an ecommerce business it might involve looking at conversion rates or collecting data about average order sizes. You might also look for decreases in negative behaviours like shopping cart abandonment rates, bounce rates, complaints or support tickets. An insurance company may measure success in terms of reduced call volumes and increases in satisfaction.
Reason 1: There’s a UX revolution happening
Everyone’s investing in UX these days. This investment is inflating customer expectations and providing a quick and easy service is becoming a hygiene factor. Companies big and small are realising that the best way to get people to spend more with them is to improve the experience they have with them, and that the best way to do this is to involve users in the design process from the start. Some figures; average spend on UX research is increasing year on year. Looking at budget spends on UX back in 2014, most companies were spending between $1 to $500 per month. A year later monthly spend had increased to between $1,001 and $5,500. 4.27% of companies surveyed were spending $5,001 to $10,000 per month with a further 7.29% spending between $10,000 and $50,000. There’s a real risk of being left behind if you don’t start the UX ball rolling soon. Although only just over half of companies are currently doing online UX testing, nearly three-quarters of those that currently aren’t are planning to start online user testing over the next year. However, we’re not suggesting that you blindly increase spend on UX. It’s important that you invest in the right way to deliver a strong return.
Reason 2: Improving UX increases revenue and attracts new customers
UX is the one remaining point of differentiation in a connected world of ultimate customer choice. You can’t compete on price or even product when customers can always shop elsewhere online, but you can compete, and win, on UX. Over three-quarters of companies are doing just that. User-centred design can increase conversions; a site with a well-designed user interface can have up to 200% higher conversion rates than a badly designed one. And people are willing to pay more for an improved customer experience – 86% of consumers will pay higher prices for great customer service. Overall, user experience investment generates a 10x to 100x ROI, or 9,900% ROI. Investing in UX can also make more fundamental improvements to your brand image, boosting the perceived value of your offering and attracting new customers.
Reason 3: Improving UX can cut costs
Too many business leaders rely on intuition and experience to make decisions about what customers want, what psychologists call the False Consensus Effect. We’re prone to think that our own views are also what our customers think. In reality, this often isn’t the case. User testing and Idea validation can uncover these false beliefs before an entire development budget is wasted building the wrong thing. One analysis of the cost of making wrong assumptions in development estimates that programmers spend 50% of their time on rework, correcting avoidable mistakes. Whatever you’re paying your team, that’s a lot of wasted time and money.According to the SDS (Strategic Data Consulting) special report, UX Business Impacts and ROI, UX investments made in the conceptual phase reduce development cycles by 33-50%. A lean UX approach (the way we do things at Natural Interaction) can save money by reducing budget wasted on failed IT development projects. We work by introducing user testing and prototyping right from the start of a design project to validate ideas, ensuring that we build the right thing for the job and don’t have to go back and fix it after launch. UX research early on in a development process has been shown to reduce the length of that process by 33 – 55%. Good UX can also reduce complaints and volume of support requests or encourage customers to serve themselves online to save on staffing costs.
Reason 4: UX investment helps retain existing customers
89% of consumers have shopped elsewhere after a bad customer experience. Investing in UX research can help you identify issues that are upsetting your customers and sending them to your competitors. This process can include user testing (to find usability issues), customer interviews, surveys to understand customer perceptions, and experience mapping to identify gaps in journeys. We can then fix the stuff we identify using interaction and service design.
Reason 5: Investing in UX increases shareholder value
The end result of these cumulative improvements is an overall increase in shareholder value. There’s hard evidence for this; in one study that rated companies on their customer experience performance, companies that rated badly also performed worse than the rest of their market in terms of shareholder value, while the top ten rated companies in the study consistently outperformed the rest of their market Want to talk to us about how we can help you convert your budget into tangible results? Get in touch.
Sources and Further Reading (External sites)
- More information on measuring ROI. (Human Factors)
- Figures on companies currently investing in UX (User Testing), and some more recent stats on UX investment. (Econsultancy)
- The importance of customer experience, a 2011 report. (Oracle)
- Some figures on increased conversion rates from UX improvements. (Forrester)
- Competing on UX rather than price or product. (Adobe / Marketing Society)
- Why we should rely on objective user testing, instead of intuition. (Forbes)
- Estimating the cost of relying on intuition instead of user testing. (Code School)
- How bad customers experiences make people shop elsewhere. (Oracle)
- More about UX and increasing shareholder value. (Watermark Consulting)