Different metrics to define the ROI of UX
User experience is a vital piece of any product whether it is digital or physical. We always talk about the importance of user experience from the user’s point of view. In this article, we will see how we can measure the Return On Investment (ROI) of UX that helps you think UX from the business point of view. And it might help you to convey enabling UX service for the product to your client or stakeholder.
We will be also solving some math (Don’t worry it’s not that complicated) that can clear the picture of enabling UX service for the digital product.
Let’s get started… 👇
1. Conversion Rate
Conversion rate is calculating the percentage of users who completed the desired task/actions like subscribing to a channel/newsletter or purchasing products/services.
Example: A YouTube channel is visited by 10,000 people for a month. During the same month, 200 users subscribed to the channel. Thus, the YouTube channel conversion rate is 200/10,000 = 2%
Let’s understand few things before improving the conversion rate, Conversion rate can’t be changed by running some heavy advertising campaign or activity around the product, because it measures the rate once people are at your product and start using it.
So the learning here is, if you want to improve the conversion rate then you should highly consider UX design as a solution.
Still not convinced? Let’s do some math here,
Consider you have 100 visitors/day.
40% of them don’t convert because of UX issues. And they wanted to buy a product/service worth $10.
Your daily loss = 40 x $10 = $400
Yearly loss = $400 x 365 = $146,000
Don’t even try to calculate for 10 years, because it’s too much.
What do you think now, is it a fair amount to invest UX design?
2. Drop Off Rate
Drop off rate is the percentage of people who left your funnel at a particular stage before completing a conversion.
People confused between Drop off rate and the Bounce rate. The difference is that the bounce rate only measures when users leaving after seeing the first screen .
Now it’s necessary to know at which stage users dropped and this can be identified by using the most widely used tools Google Analytics and Hotjar. These tools give you a detailed behavior map of the user journey.
Once you identified the gaps it’s time to work on improving the user experience of those gaps in the user journey. So UX design plays a major role here to reduce the drop off rate of the journey.
3. User Retention Rate / Lifetime Value
A retention rate gives a number to the percentage of users who still use an app a certain number of days after install.
All stakeholders and UX designers want their customers to return for more. And good UX can turn the things into your favor. Here along with the UX, you may have to work on some user engagement stuff too.
People naturally tend to choose/like the product those are something familiar to them or previously used by them (One of the UX laws).
Increasing user retention rates not only better the conversion rate but it also saves acquisition cost spend on marketing and that is a very cool thing.
According to the research, improved User Retention Rate can 3x the overall business value.
4. Helpdesk/Support Cost per User
Whenever the user gets confused upon UX mistake, either they drop off at the point or asks for the support team to address the issue. Every support call or ticket requires support team efforts and it cost to do it.
If the application has only a few support members out there to solve user queries and several requests kept increasing day by day because of the same UX mistake then it might be a disaster for the team to give support to all of the requests quickly.
By investing in UX these issues can be resolved where users can easily find the information they need and they will be able to navigate through the system effectively (Without any guidance from the support team).
5. Training
People don’t prefer reading instruction and user manual.
If your digital product still needs instruction before using it then you might be in trouble (Instead of giving the instruction, improve the experience of the product). And people don’t want a complicated product to solve their problems.
The instruction and manual won’t be required if UX of the product is designed well (Considering the mental models of the user).
6. NPS (Net Promoter Score)
Net promoter score measures the willingness of customers to recommend a company’s products or services to others.
This metric looks out of the list but it’s necessary to measure the customer satisfaction of the product and the satisfaction is related to the experience they received from the product while interacting with.
This metric can be measure in the form of surveys or feedback modules with open-ended questions because it helps you to understand the customer’s thoughts in detail about the product.
These are generic metrics you count on for ROI that apply to any digital product. You can list down your own metric which would depend on the domain like Average order value (AOV) for the e-commerce domain.
The above metrics tell you the ROI of UX, which you have to always keep improving by learning the user behavior and fulfilling their needs using these UX design. User experience design is not only just working on user goals, but it’s also about achieving business goals too.
