Do you know the story of the $300 million button?
An e-commerce site was struggling with customer dropoffs. A form on the checkout page was the problem. Customers made it to the checkout button, and then dropped off without completing their purchase.
The form was simple. It asked users to register or log in with their email addresses and password. It had a forgot password link too.
UX expert Jared Spool and his team ran a series of usability tests to figure out the problem. Turns out, users didn’t want to spend time registering or remembering which email address they used last.
First-time shoppers didn’t want to register— they just wanted to buy their stuff and get out. Repeat shoppers could rarely remember the email-password combination they used last, which got frustrating.
The UX team suggested another button to replace the form–Continue.
Shoppers no longer needed an account to shop on the site, they could skip right to payment.
Thanks to the new button, customer purchases went up by 45%. In the first year, the button alone brought in an additional revenue of $300 million.
That’s the ROI of UX research.
This is a great story, but it’s not enough to convince a stakeholder about why UX matters for your particular product. You need to show them tangible value. This article is about how to do that.
We also have an RoI calculator to ready the numbers for your pitch! Just stick on till the end of this read, we’ll get to it.
The ROI of UX
How do you convince a business leader/stakeholder about the value of UX research?
A lot of businesses are clear about wanting to be user-centric, but don't know how to do it. They dismiss UX research as too expensive or too hard—as something reserved for large organizations with resources to spare.
The examples don’t matter. You can talk about how Spotify built a revolutionary service with the power of UX research, until the cows come home. Spotify’s Discover Weekly feature, by the way, is a great instance of how successful prioritizing user needs and personalization can be.
If you’re trying to show the value of your work to decision-makers, you need to start with cold, hard numbers.
How to Prove the Value of UX Research to Stakeholders
In the early stages of building a UX research team, it is crucial to prove the value of your work to stakeholders. This can be done in a number of ways, but some of the most effective methods include:
1. Show, don't tell
Instead of simply telling stakeholders about the benefits of UX research, show them.
This means bringing stakeholders into user interviews, showing them clips of users complaining loudly about a broken feature—whatever it takes to show your stakeholders' user insights they didn’t know.
The team at PandaDoc did this by running a usability test in the cafeteria. Yup, that’s right—in the cafeteria in front of all the engineers and designers actually working on that feature.
If it’s hard to get stakeholders to you, you may need to go to them and demonstrate what they’re missing.
2. Tie your findings to the organization's North Star
Every organization has a North Star—a metric that represents the organization's ultimate goal. It can be to increase revenue, customer retention rates, or daily active users.
When conducting UX research, tie your findings to the organization's North Star. This will help to show stakeholders that the work is relevant and valuable to the organization's overall goals.
Your work won't always tie directly to revenue, so if it's something else, make sure you get access to analytics data that shows how you impact that metric.
Common metrics to track:
- Churn rate: The percentage of customers who stop using the product or service in a given period.
- Retention rate: The percentage of customers who continue to use the product or service over time.
- Onboarding rate: The percentage of new users who successfully complete the onboarding process.
- Activation rate: The percentage of users who take a specific action, such as making a purchase or signing up for a newsletter.
- Support tickets reduced: The number of support tickets that are submitted by customers.
By tracking these metrics, you can show stakeholders how your UX research is impacting the product or service. Ideally, your product team is already doing this—work with them to capture the right data and see how releases based on your research moved the metrics.
3. Mention costs
Sometimes your research doesn’t lead to higher revenue or lower churn, but it does lead to not building the wrong thing.
Let’s say your findings proved that users don’t want X feature which would take 6 weeks to build.
Great—you just saved a lot of cost. Engineering, design, product time—not to mention the opportunity cost of building the right thing.
The value of your research in this case is tens or hundreds of thousands of dollars saved.
4. Talk about it all the time
Being a UX research evangelist is a full-time responsibility. Bring up your team’s work in your insight reports. Present findings at all-hands meetings. Talk about your work to other teams!
How to Calculate ROI for UX Research
Got all the metrics and data? All you need now is a calculator to do the math and estimate the ROI of your UX research projects.
In fact, we’ve gone ahead and created a free UX research ROI calculator for you to play with!
Check out Looppanel’s UX Research ROI calculator here.
How to Use UX RoI Calculator
Our ROI calculator has 4 tabs, based on which metric matters most to you.
So pick your North Star— is it usability improvement, support tickets, improved activation rate, or even savings from not building a feature no one wanted?
Once you’ve picked the metric, select the corresponding tab.
Enter all the information required in the columns highlighted. And voila, the calculator will automatically calculate the estimated ROI of your UX research project!
Feel free to make a copy and customize the calculator to your own use case. You may want to use other metrics or make assumptions if you’re not able to get some data.
Wrapping Up
When using a UX ROI calculator, keep in mind that the results are just estimates. The actual ROI of a UX research project will vary depending on several factors, such as the quality of the research, the implementation of the research findings, and the overall business context.
Also, UX ROI calculators typically only measure financial benefits. Better UX has a lot more benefits that are harder to quantify, like increased brand loyalty, better employee morale, and reduced risk.
Despite these limitations, UX ROI calculators are a valuable tool for businesses considering investing in UX research. So go forth, and run the numbers!
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