You want your SaaS business to attract new consumers and If you want to continue attracting new consumers, you must invest continuously in your business. To achieve that, you found that the answer was User Experience Design, shortly UX Design. You agreed on that because the idea seemed logical, and you let somebody apply UX Design to your platform.
Of course, when you invest in something, you want to see its return. Does the investment become profitable or causing loss? Should you continue to invest in that or stop investing in that? Generally, Return on Investment (ROI) is conducted to analyze the probability of gaining a return from an investment. The good news is the same applies to UX Design. But how? How UX, which seems so abstract, can be measured with such a concrete analysis like ROI?
In this writing, after going through UX Design and its importance, measuring the ROI of UX will be explained. At the end of this writing, you will gain a better understanding of the ROI of UX Design.
Why Is UX Design Important for Businesses?
User Experience Design (UX Design) is the process of creating a meaningful and relevant interaction for users. UX Design regulates how a user feels and what she/he thinks while interacting with a product.
UX Design is not only about the design of the system. UX handles almost every aspect of the product which the users interact with, so UX is a multi-disciplinary area. While approaching the users' interactions from various perspectives, such as visual design, programming, consumer psychology, economics, it also transforms the product's design into a user-centered and meaningful environment for the users.
With a successful UX, visits to a product increases, the number of loyal customers elevates, the market shares increase and the product gains a more substantial market power. UX is also crucial for small businesses to find a place in rapidly growing industries.
Shortly, UX is essential for businesses to sustain success through fulfilling their users' needs and creating a positive user experience.
How Does UX Design Help Business?
A UX Designer, the person who conducts UX Design, aims to optimize the product according to the user's needs. The UX Designer is concerned with the entire user journey because the user's time spent on the product not only shapes their perception about the product itself, but also the brand name as a whole.
While optimizing the design of a product to present a better interaction for the users with the brand, a UX Designer is concerned not only with the design, but also several other facets of the product such as branding, usability, and function. Therefore, UX Design is not only about the design of a product, it is also a process of optimizing the product from many aspects.
UX Designer tests the user's behavior, uses different algorithms, and adjusts the algorithms according to the user's changing needs and behaviors.
One of the fundamental challenges of UX Design is that it is not a static process. Once UX Design is applied on a product, the UX should be developed and updated periodically.
"Why one-time UX Design is not enough?" is the first thing that comes to mind at this point. The answer is straightforward: The behavior of the consumers is continuously changing. Therefore, the constant need to adjust a product is important for increasing the users' positive experience and sustaining the continuous flux of traffic.
Until this point, it was only mentioned about the impact of UX Design on the interaction with the users. However, a good UX Design also provides optimization for the business team.
While amending the user experience, you can increase the productivity of your team. Therefore, a good UX Design is the key to sustainable and developing businesses.
What Is the Potential Return on Investment of UX Design?
At the definition, UX seems excellent because, with a professional UX Design, a better user experience and more visits to the product can be maintained. How about the value of UX Design?
The value of a UX Design can be answered with Return on Investment (ROI). With ROI, one can gain an understanding of the value of the UX Design’s impact.
ROI is a widely used index that indicates the probability of gaining a return from an investment and ROI is generally expressed as a percentage.
ROI = profit from an investment / investment cost
For example, if you invest $100 in creating an advertisement, and consequently your sales go up by $200. Thus, the ROI is equal to (200 – 100)/100 = 100%.
According to a blog article, the companies that highly invest in UX Design receive a 75% increase in their sales.
According to Robert Pressman, “The return of investment in User Experience Design is 100 dollars for every $1 invested.”
How to Measure ROI of UX Design?
ROI is used to indicate the impact of an investment in UX Design. It is essential to realize that when the ROI of UX Design is calculated, there are other indirect effects of UX that cannot be put simply into ROI calculations. The reason is that when you invest in a design project, the main target is improved user experience and satisfaction, which are all returned to profit for a business indirectly. Therefore, calculating the ROI of UX contains many direct and indirect factors.
ROI of UX has two crucial components: time and money. When you invest in a design, you also invest in time and money. The good news is that with a good UX design, the sales of your business will go up while the amount of labor required lessens.
ROI is the indicator of whether you invest your time and money into a good UX design. It is important to choose the right ROI to see the value of the investment in UX. The applicable ROI of a UX Design is based on the goals of the business.
To measure ROI of UX, here are some fundamental ROI calculations of UX Design:
1) Single Usability Metric (SUM)
SUM is important to identify the problems, and consequently, to find effective solutions for UX. SUM is a standardized metric. It indicates usability, which is effectiveness, efficiency, and satisfaction.
2) Conversion Rate
The conversion rate is the total ratio of total visitors. For a SaaS product, the conversion rate is the ratio of the number of users turned into customers. It is generally indicated in percentage.
3) Drop Off Rate
Drop off rate is a critical indicator of a potential problem, which is losing customers. For example, suppose many users did not finish their buying process and leave the product consistently. In that case, it might be the indicator of a problem with the design because the platform is failing to acquire potential conversions.
After calculating the drop off rate, the UX designer can take the necessary action to optimize the UX and consequently improves the conversion rates.
Examples of ROI on UX Design
Forward-thinking businesses invest in UX Design because of understanding its potential ROI. Here are some examples of the ROI of UX from prestigious companies.
According to Joe Gebbia, who is the co-founder of AirBnB, design saved their company from failing, and the design converted the company to a billion dollar business. In other words, investing in design was the turning point for AirBnB.
IBM cut costs by $20.6 million by focusing on design. The company attributed this success to collaboration and efficiency due to good and user-centric design. Also, IBM’s design projects resulted in an ROI of 301%. Source
Amazon achieved a record annual sales revenue of $177 billion in 2017 by enhancing user experience. Also, Jeff Bezos, the CEO of Amazon, invested 100 times more into user experience than advertisements in the first year of Amazon. Source