Sunday, December 8, 2013

The Return On Investment (ROI) of User Experience

User Experience Design (UXD) is the science and art of designing a product like a website or software application so that its:
  • Easy to use
  • Fits expectations of the user
  • Meets business goals

There's a whole methodology around designing the user experience.  So is it worth it to do all that work to design a user experience?  Lets answer the question by delving into the return on investment (ROI) of User Experience and of doing user experience work.

Gartner is is the world's leading information technology research and advisory company that puts out reports for developers and engineers.

They estimate that this year, worldwide IT spending reached $3.7 trillion.  Gartner also project that by 2017, worldwide IT spending will reach $4.3 trillion.

A similar organisation, IEEE, put out an article called 'Why software development projects fail.' and shared some key stats such as:

1. The percent of products that are aboandoned because they are hopelessly inadequate is up to 15% of all projects
2. The percent of revenue that goes to the IT group is 5% of a companys total revenue.(up to 10 % if its a telecomms/financial company).
3. The amount of time that developers spend on rework that is actually avoidable is 50% of their time.
4. The cost of fixing an error after project go-live is 100 times that of fixing an error before the project is completed.

Of the top 12 reasons why projects fail - 3 of them are directly related to user experience and those are:

1. Badly defined requirements
2. Poor communications among customers developers and users
3. Stakeholder politics

The kind of work that User Experience Designers (UXD's) do is stakeholder interviews, user research, user testing, and user centered design. These are things that can fix at least 3 of those 12 reasons as to why software development projects fail.

You can actually calculate the savings or revenue or additional benefit that you get from improving your user experience in a product.

First example - lets say that you owned a small private jet airline and you offer flights all around the world.

So you have a website where people can buy flights through your booking engine, but the searching and paying part of the website is confusing and hard to use and you have estimated that 300 customers are actually abandoning before paying because of a poor user experience, so lets do some calculations.

Each customer pays an average of $5000 over the course of a year.  So you are losing $4109 a day or $1,500,000 a year.

If you spend $50,000 to fix the user experience issues and another $50,000 to rewrite the code based on those user experience improvements, we can estimate that you are going to spend $100,000 improving the user experience.  It will take you roughly 24 days to realise the investment.

There are many measurements that would be useful such as:

1. Conversion rate - ie the number or percent increase of visiters to the website who make a purchase
2. Or we might be interested in percentage drop off
3. Whether fewer complaints being logged
5. Fewer calls to your guest contact centre
6. Higher usage / # of return visits
7. Save users time (measure the length of time to perform an end to end booking 1 year ago versus length of time to do an end to end booking now)
8. Number of errors reduced.
9. Perhaps we want to increase the amount


Here's a quote from Albert Einstein I will leave my readers with: "Any intelligent fool can make things bigger, more complex, and more violent. It takes a touch of genius -- and a lot of courage -- to move in the opposite direction."

-Deb.

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