ROI on Design

Chapter 1

Understanding the Value of Design: How to Measure Return on Investment (ROI) in User Experience (UX) André Rolla Always, everywhere in the world, since Design began integrating with business and especially in the realm of digital product design, one of the roles of designers is to promote and seek to expand the design culture within organizations. Gradually improving processes, practices, and results, and consequently expanding the impact of the field.

Picture by Alvaro Reyes on Unsplash Designers tend to focus more on the human aspect of products. However, the clearest way to demonstrate the value of Design practices within an organization, especially in UX and UI, is by showcasing the return on investment (ROI) achieved when processes are well-executed.

ROI is a calculation to determine if an investment was worthwhile, measuring the return compared to the amount invested. The formula for the calculation is quite simple:

ROI = (revenue — cost) / cost x 100

I won’t delve into how the calculation is done, but you can read more details in this excellent post by Suzi Sarmento.

In this article, I will explore some of the benefits of having a mature Design culture in the development of digital products.

The creation of every digital product or feature follows a path:

Understanding — Grasping the problem Analysis and Immersion — Conversing with those experiencing the problem Ideation — Proposing hypotheses for solutions Validation — Validating hypotheses with those facing the problem Refinement — Improving hypotheses using insights Implementation — Actually putting the solution into action Monitoring — Assessing whether the problem has been solved Design directly impacts all these stages and is an extremely procedural activity. However, it is often seen as a ‘delay’ or ‘cosmetic’ by developers and business people less familiar with design tools and objectives. Sometimes, it doesn’t receive the investment it deserves and might be the first expense cut when budgets need adjustment. This means that UX efforts need to be constantly justified until they become more inherent to the organization’s culture.

So let’s understand how well-executed Design processes contribute back to the company:

Pic by David Travis on unsplash 1 — UX activities can reduce development inefficiencies

It reduces development time wastage by up to 50%.

According to Susan Weinschenk — Chief of UX Strategy at the American Human Factors International — half of developers’ time is spent fixing problems that could be avoided. UX and user-centered design help define usability needs before development begins, preventing rework.

Video by Susan Weinschenk According to a Forrester survey, well-executed UX activities can reduce project development time by 33 to 55%.

User involvement early in the process and validation tests conducted before the implementation phase help prioritize development tasks.

UX studies prevent substantial changes when the project is already advanced, where the cost of change is very high. A study by IEEE Spectrum in 2005, titled "Why Software Fails", indicates that changes made to a product in production can cost up to 100 times more than changes made while the product is still a prototype.

Often, user experience is seen as an activity only related to the human factor in the relationship between a service and its customers, linked to intangible measures such as satisfaction and emotional factors in product usage. However, the design process must always consider financial and technological factors.

Every design project is premised on balancing three spheres:

1 — User Desirability — What do people desire?

2 — Technology Feasibility — Is it technically viable?

3 — Business Viability — Is it financially viable?

2 — UX impacts various business metrics where ROI can be calculated

In addition to internal benefits related to product development operations, a good user experience impacts many business performance KPIs, as illustrated by the following examples:

Lower customer acquisition cost (CAC) Increased product conversion Reduced support costs Reduced training needs Increased retention Increased market share Reduced user task execution time Reduced user errors Increased user satisfaction

Pic by fancycrave on unsplash It is important to pay attention to these indicators because many benefits of design practices are invisible, the result usually comes from a set of efforts made by various areas of the company that add up. Many benefits of UX efforts often go unnoticed.

The value of exceptional design is incremental. Thousands of small, well-thought-out decisions focused on the user experience and business objectives create the value of design in software development.

Dr. Weinschenk mentions in her publication three very useful formulas for calculating the results of actions related to cost savings:

Cost of error correction:

(# of errors) x (average repair time) x (employee cost) x (# of employees) = Cost saved Example: (2 errors/week) x (60 mins) x ($30/hour) x (100 employees) = $6,000/week or $312,000/year

Development and maintenance cost:

(# of changes) x (average hours per change) x (developer cost) x (4, if late in the project) Example: (20 changes/month) x (8 hours each) x ($40/hour) = $6,400/month (if fixed early in the process) or $25,600/month (if fixed after development)

Productivity:

(time saved) x (employee cost) x (# of employees) = Cost saved Example: (1 hour/week) x ($30/hour) x (200 employees) = $6,000/week or $312,000/year

The above calculations can be adapted to the reality of each business and serve as a basis for an initial analysis of problems and improvements that can be addressed within the organization. Designers themselves, in collaboration with Product Owners, have the responsibility to seek and unearth these numbers. For a design culture to flourish, it is imperative that designers know which problems need to be solved and why.

And the investment in UI? Why should we?

In a study conducted in Switzerland in 2010, researchers gave 60 adolescents two simulations of a mobile phone interface with the same layout, but one was aesthetically superior to the other, and they assigned a series of tasks to be performed.

As expected, participants rated the version with more pleasant aesthetics higher, but the more beautiful version also had an impact on performance — on average, participants took less time to complete tasks. This indicates that visually pleasing interfaces help users work faster.

A study in the Netherlands asked 828 participants about a generic website. Researchers found that participants’ perception of how easy the site was to use and how pleasant they found it was strongly influenced by how visually pleasing it was.

– Keep in mind that we’re talking about the perception of ease of use and not ease of use itself, good UI does not in any way replace good UX (although these activities are integrated, the aesthetic quality of the interface is part of the experience). We will see later, however, why this perception is important.

Another study in Canada shows that people process information more efficiently and are more patient when completing tasks in environments that follow Design principles.

The theory is that a clean and well-ordered design minimizes the brain’s need to process information — the processing happens more automatically. It was also concluded that a visually pleasing interface creates a more enjoyable and engaging atmosphere, retaining the user’s attention for a longer time.

So why does a higher perception of usability, more efficient information processing, and a greater tendency to stay on an interface help in the end?

Pic by Daniel Korpai on unsplash The easier an interface is (or is perceived to be), the more users will be willing to learn how to use it and will continue to use it.

When users stay in the app for longer periods, the chances of them learning how it works correctly and/or completing a task increase. There is a higher likelihood that they will perceive the value the product has to offer and become a customer, improving acquisition ROI and reducing retention efforts.

In addition to increased confidence, a well-finished Visual Design enhances the user’s trust in the product and the company. The most important factor in evaluating the credibility of a digital product in a first encounter is how professional its website is (especially for B2B).

This makes sense — people subconsciously think that because the company’s digital presence is attractive and shows attention to detail, its products and services should also meet that standard. Of course, the digital experience with the product must maintain the quality standard.

It is becoming increasingly evident that Design is gaining a strategic role in the business world. And the trend is only growing as the world becomes more digital, new technologies and ways of experiencing services emerge, and designers are responsible for integrating these new possibilities with users. The demand for designers has never been higher, and professionals need to be increasingly versed in the language of business.