Guest post: ROI of UX

This week, on Thursday 22 September, U-sentric is organizing a new UX event, “How to sell UX to Management”. It is a great honour to welcome 2 inspiring experts as speakers: Dan Sennet and Colman Walsh, who will share their tips & tricks on how you can convince others, especially management, to adopt a user-centered mindset.

Less than three days away from the event, Dan Sennet, Business Operations Specialist and the VP Finance at motivatedesign.com is delighted to share with you his views on the ROI of UX.

I’m very excited to be presenting at U-Sentric’s conference this week; take the below to be a 30,000 foot view of my take on how to pitch for a budget for UX. I’m the guy in your organization that typically says no to such requests; I go by Dan and I work as the VP of Finance at Motivate Design, a New York City, UX shop specializing in research, design and placements.

Throughout my years of experience in the tech/software world in New York, I have been exposed to UX in many forms, but it took working for a UX agency to make me see that as a company, you have two options — give something to your clientelle that they want or need, or give something to your clientelle that they don’t know that they want or need until they see it. Cater to existing demand or create it. Either way, you need to truly optimize to your intended user’s journey through each touchpoint.

Watermark Consulting published a paper last year entitled “Demonstrating the Business Value for a Great Customer Experience.” They ultimately conclude that, “… a great customer experience, and the internal ecosystem supporting it, can deliver tremendous strategic and economic value to a business, in a way that’s difficult for competitors to replicate.”

That sounds fantastic on paper coming from an extensive study, but pragmatically, it can be very difficult to measure the return on investment on effort spent to create something that is not tangible. The problem is that It’s not like I say to you: “give me $1 now and in a year from now, I’ll give $1.05” — ROI can be very hard to measure and that is one of, if not the most, difficult challenges facing our Business Development team, and likely, most people reading this. The good news is that there are a plethora of digestable examples that actually did prove out the equation:

New, improved situation = UX best practices + current situation

Just ask Apple. Or Facebook. Or Google, or AirBnB, or Amazon. IBM is investing very heavily in UX. Upwards of a $100M, 1,000 jobs in 10 cities. They claim (quite confidently) that every $1 invested prompts anywhere between $10 to $100 in return! All of these companies have made a very public, and expensive commitment to UX and whom have benefitted wildly and disproportionately.

Usertesting.com published a great infographic on the topic and particularly noted that an investment in UX will dramatically reduce churn and the cost to acquire customers. They found that it costs 6x more to attract a new customer than to keep an old one and that a 5% increase in customer retention can increase profits up to 5%. Our own experience has proven that understanding each touchpoint in your user’s interactions has a direct effect on reductions in feature-creep, deadline-creep, defective research and money wasted in the production of unwanted products (like the 3d TV).

More broadly, The UK Design Council held a study between 1993 and 2004. The study tracked share prices of publicly quoted companies that performed well in a number of design award competitions. The results showed that these design-aware companies outperformed the FTSE 100 and FTSE All Share indexes by more than 200 percent!

I’ll have more to share this week, but there is more than enough empirical evidence to support the notion that it pays off handsomely to truly understand your user and to frame your interactions with your users from their perspective. Every paper I read, (and there are hundreds more that I didn’t) said the same thing: UX is becoming a universally applicable philosophy — better design will lead to either increased revenue, reduced costs or higher productivity — all key inputs for the bottom line.