ROI of UX: Calculating the Impact of User Experience Design

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ux ROI

User Experience (UX) design plays a pivotal role in shaping the success of digital products and services. Calculating the ROI of UX is crucial for businesses looking to justify their investments in design improvements.

One study by KissMetrics found that 47 percent of customers expect a page to load in two seconds or less, and 40 percent will abandon a page that takes more than three seconds to load. Mind you, that’s only one metric. There are a number of other user experience (UX) issues that lead your customers to leave your website for a competitor’s.

What is the ROI of UX?

The Return on Investment (ROI) of User Experience (UX) refers to the measure of the financial return or benefit derived from investing in the improvement of the user experience of a product or service. In simpler terms, ROI of UX  assesses whether the resources invested in enhancing the UX generate a positive financial outcome for the business.

Calculating the ROI of UX

The formula for calculating ROI of UX s:

ROI = Cost of Investment / (Gain from Investment − Cost of Investment)

In the context of UX, the "Gain from Investment" could include increased revenue, cost savings, improved customer retention, and other positive outcomes resulting from a better user experience. The "Cost of Investment" encompasses the expenses incurred in UX design, research, and implementation.

For example, if a company invests in redesigning its website to improve user experience and sees an increase in conversion rates, customer satisfaction, and a reduction in customer support costs, these positive outcomes contribute to the gain from the investment. The ROI of UX is then calculated by comparing these gains against the costs associated with the UX improvement project.

Measuring the ROI of UX is essential for businesses to make informed decisions about allocating resources to design enhancements. It helps justify investments in UX and provides a quantitative basis for assessing the impact of user-centric design on business outcomes.

Quantifiable Benefits of UX

How does good UX create a better experience for both you and your customers? Here are a few benefits of good UX:

  • Shorter Development Time. Remember the five Ps from marketing? Here’s another one: Proper Planning Prevents Poor Performance. Planning out your design and development process by understanding both your customer base and UX best practices will save you time and money in the short term and long run. Simply put, there’s less to revise or correct later.
  • Fewer Customer Service Issues. Sometimes the development process has been discussed in such depth and a site worked on for so long that we assume its use is clear. That’s not a safe assumption. Come to your design with a fresh set of eyes. Carefully recruit customers from your target to beta test and get other outside help, too. Load time isn’t the only UX issue, after all. A navigation structure and information architecture that’s counterintuitive will also result in frustrated and lost customers. If not lost, they’ll end up endlessly calling your support line. That will cost your company more Average Handle Time (AHT) and more training time on how to use the system. For the Verizon Wireless main contact center application, our senior leadership reduced AHT by $80 million and training time by $75 million.
  • Improved Conversions. An attractive website is always a plus, but that’s contingent on having a useful and relevant website. A website that funnels your customers toward a purchase — or even one that just stays out of their way so they can buy — converts more often. Do we understand what navigation, content, and user interface design help our users better interact with and purchase on our website? On the SeaWorld project, our senior leadership needed to optimize the path-to-purchase for SeaWorld’s online visitors to improve conversions.

Measuring the ROI of UX

If you’re new to user experience design, finding the ROI of your UX can seem hopelessly abstract. However, as we’ve seen by now (and as UX 4Sight knows from its experience), it’s not just a metric; it directly translates into dollars and cents. In fact, Forester Research found that, “Every $1 invested in UX brings $100 in return.” We’ll leave you with one last morsel to drive the point home.

An article published in Fast Company analyzes a study of US and European web users’ browsing habits. It found that Americans’ patience for slow pages and buggy UX is far less than their European counterparts. What’s more surprising is one company’s finding of what that impatience could cost. Amazon estimates that a one second delay could result in 1.6 billion dollars in lost revenue per year. You don’t have to have Amazon-level sales to realize that shoddy UX can add up to a significant loss of revenue.

As you can see from the examples above, user experience isn’t just about looks, it’s about system and user performance. It’s also measurable. Besides the traditional web analytics metrics like bounce rate, time on page, and sessions, there are a myriad of other great ways to measure the ROI of UX design. Investing to improve your UI interaction and resultant user experience should be looked at in its broader context. You’re not just spending money for the sake of it. Improving UX improves conversions and directly impacts your bottom line.

Great UX design makes your application or website easy and intuitive to use. For your end-users, this means a better experience with your product. For your company, it means reduced support costs. A streamlined user experience leads to more conversions and sales.

FAQs: UX ROI and Measuring User Experience

1. What is UX ROI, and why does it matter for businesses?

UX ROI, or Return on Investment in User Experience, is crucial for businesses as it quantifies the financial benefits derived from investing in improving the user experience of products or services. This metric helps assess the impact of UX investments and justifies their significance.

2. How is the ROI of UX calculated, and what components does it include?

Calculating the ROI of UX involves the formula: 

ROI= CostofInvestment/ (GainfromInvestment−CostofInvestment)
The gain includes increased revenue, cost savings, and improved customer retention resulting from a better user experience. Costs cover expenses in UX design, research, and implementation.

3. Can you elaborate on UX metrics used for ROI assessment?

UX metrics for ROI assessment encompass traditional web analytics (bounce rate, time on page, sessions) and more specific measures like conversion rates, customer satisfaction, and revenue impact. These metrics together provide a holistic view of the ROI of UX design.

4. Is the ROI of UX limited to aesthetics, or does it encompass performance as well?

The ROI of UX extends beyond aesthetics to include system and user performance. A well-designed UX not only looks good but ensures efficient functionality, reducing user frustration and positively impacting performance metrics, contributing to a higher ROI.

5. How can businesses measure the impact of UX on user retention and satisfaction?

Businesses can measure the impact of UX on user retention by tracking metrics such as churn rates, repeat visits, and engagement levels. A positive UX directly influences user satisfaction, fostering customer loyalty, and contributing to a positive ROI.

6. Why is it essential to measure UX and ROI together?

Measuring UX and ROI together provides a comprehensive understanding of how user experience improvements impact financial outcomes. This approach aids in making informed decisions about resource allocation, justifying UX investments, and maximizing overall return on investment.

7. What role does UX play in the success of digital projects, and how does it relate to ROI?

UX plays a pivotal role in the success of digital projects by influencing user satisfaction, engagement, and conversion rates. A positive UX directly impacts the ROI of digital products and services, making it a critical factor for project success.

8. Can you provide insights into the correlation between UX design and user satisfaction, specifically in the context of measuring UX and ROI?

UX design directly influences user satisfaction by creating interfaces that are intuitive, easy to navigate, and aesthetically pleasing. This positive user experience contributes to increased satisfaction, customer loyalty, and, ultimately, a positive impact on ROI, emphasizing the interconnection between UX, satisfaction, and ROI.

9. How can businesses leverage UX design to optimize Average Handle Time (AHT) and training costs, and how does this relate to measuring UX and ROI?

A well-designed UX can optimize Average Handle Time (AHT) and training costs by reducing user confusion and support queries. In the context of measuring UX and ROI, a streamlined user experience results in cost savings through decreased AHT and lower training expenses, contributing to an improved overall ROI.

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Abdul Suleiman
Abdul SuleimanChief Experience Officer
Abdul Suleiman

Abdul has helped over 40 Fortune 500 companies make informed user-centered design decisions through evidence-based user research and UX best practices. As an Adjunct Professor, Abdul has taught in DePaul University’s graduate UX programs and for nine other universities.

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