Calculating the Return on any investment can be very tricky, if not planned for before the investment is made. User Experience, however, because of its love for metrics comes packaged with measurable data. Here are some ways to ascertain the appropriate Return on Investment (RoI) for UX.
First up, define the Key Performance Indicators (KPIs)
Depending on the areas of the business or product that UX is critical to, you need to draw up the KPIs and the data needed to calculate the RoI. Is UX going to save the business money, is it going to help make more money? How will UX achieve this? By persuading people to buy more? By helping them decide or buy faster? By reducing errors in process? Once you have the KPIs detailed and defined, capturing data against each and evaluating the outcomes becomes the basis of RoI calculation.
Open a discussion for KPIs, rather than define in isolation
While businesses and UX firms might more or less agree on what KPIs to consider, they might differ greatly on which are relatively more important than the others. The process of prioritization of KPIs will help you assign weights to the actual data when measured.
Determine the costs of bad features and errors in experience
It is fair to assume that for any given product, there is no perfect design. Rather it is always a work in perfection. But without user research, perfection is further away. Often resulting incomplete experiences of users and negative repeat usage. Ascertain the loss of revenues from such scenarios. Add the cost of getting the issues fixed to this. Now, consider in comparison the cost of conducting user research. How does this compare to cost of rework and correction, plus the quantum of opportunity and image loss. Measuring the loss of brand image is again a decision of what to measure. Decreased hits on the website? Lower satisfaction survey scores? Drop in sales? The key is to look at which metrics are most meaningful to the business and prioritizing them.
Rationalize the metrics
Everyone would love to define their KPIs and metrics as ideal at 100%. It is important to rationalize expectations taking into account market realities and begin with reasonable numbers.
Are the metrics really related to UX?
More often than not, the metrics businesses really care about might not be directly related to UX work. And consequently, the business may not care about the specific metrics that UX returns. It is important for UX firms to get a buy-in from their clients about the metrics that UX can own up to directly, in the short and long-term, and the ones can never be fully owned by UX.
Calculating RoI from UX is key to marketing UX Design to organizations. It answers the most important questions any C-level executive will think of first. It needs to be calculated on a case-to-case basis, with KPIs and metrics that are specific to the business in question. What is most important to the organization and to the person you are interacting with? When it comes to the internal processes of UX firms, another kind of RoI comes into play – Return on Idea! But that is another topic for another day.