The Business of User Experience

The Business Metrics of UX

As UX professionals, our role frequently gets labeled as being “an advocate for the end user”. We empathize, we sympathize, and we strive to create experiences that are intuitive—leveraging familiar behaviors to make interfaces discoverable. Being successful at this means we might have a raise in customer satisfaction. More often than not, successful UX work prevails when no one is complaining.

Happy feelings and non-existent complaint forms don't translate into a budget report. Let's look at some of the metrics that good user experience work can affect and also translates into business success:

• Cost Savings
• Revenue Growth
• Efficiency Gains

Cost Savings

This is one of the clearest ways UX positively impacts the bottom line. Take for example a product redesign. A new color palette or logo won’t do much but a redesigned navigation scheme can be powerful. Users were able to find what they were looking for faster, more intuitively and through their delight, your support request tickets dropped by 50%. Your cost of business went down from a redesign.

Revenue Growth

Here’s a more obvious one: launching a new product brings in new revenue. Take the cloud computing world: when OCI released a mobile session management tool, tenancy owners could manage their accounts on the go, unlocking new usage patterns and ~$15 million in additional revenue flowed in.

Efficiency Gains

“Time is money.” Benjamin Franklin wrote that back in Advice to a Young Tradesman (1748), and he’s still right. UX isn’t only consumer-facing: we design for co-workers too, like our developer friends. Save them just five minutes per task and that adds up to hundreds or thousands of hours across the annual development lifecycle.

Applying the Math to User Experience

Art is subjective, a few paint blots may appear meaningless to some, but universe-creating to others. In UX, we back up our instincts with proof. Usability tests, focus groups, competitive analysis, these are the tools we use to justify our decision making processes. Let’s go a step further and view UX through a business lens. Here are five formulas to quantify UX work:

• Return on UX Investment
• Task Time Savings (Efficiency Impact)
• Conversion Rate Impact
• Customer Retention and Churn
• Support Cost Reduction

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Return on UX Investment Formula

From Forrester Research our first formula should be a familiar one. We are simply applying a ROI formula to our UX investment. That formula looks like this:

A straight-forward and scalable formula that can put your UX work into terms of loss, break-even, or profitability. Here is a simple example for reference; If a UX redesign costs $200K but reduces support tickets saving $500K annually → ROI = (500K–200K)/200K = 150% 😎.

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Efficiency Impact Formula

Task time saving formula or efficiency formula is a powerful metric for UX. This takes into account some of the principals of success that, we as UX designers, employ. Formatted for annual calculation, the formula is calculated as:

This formula is from usability.gov. If annual savings exceed UX costs? You’ve got a self-funding UX program based on efficiency improvements alone! 🏹

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Conversion Rate Impact Formula

Back in my early days as a landing page optimizer, conversion rate was key! Traditionally for e-commerce projects, this formula looks at the behavior of users once you get them in the door. Do they become more than just a visitor? Do you 'convert' them to paying customers? Landing pages are the bare minimum example, but this can easily be expanded to look at free-tier services transitioning into subscribers. From the Baymard Institute, this is the Conversion Rate Impact formula:

Getting a user to make the leap from a free-tier to a paid subscriber can generate enough revenue for your entire business. You Tube channels are always after subscribers and as UX professionals designing services and products, this is a metric we can't afford to overlook either. 💰

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Customer Retention and Churn Formula

There is a lot to say about this business metric and UX work. According to Harvard Business Online, it is roughly 5 times more expensive to sign a new customer than retain a current one. According to Attention Insight a poor user experience can cause a high percentage of users to abandon a product or service. A percentage as high as 79%! Customer retention can be directly linked with customer satisfaction. We might not be getting thank you cards in the mail, but when customers aren't abandoning a product, our business leaders would be wise to invest in UX. Here is the formula from The Harvard Business Review.

Customer retention in a product or service that consists of user interface is almost wholey impacted from user experience. Even as AI continues to grow, it has critical blind spots. It can’t interpret the subtle motivations, emotions, and contexts that shape human behavior. It can’t balance the competing priorities of diverse stakeholders. And it can’t transform abstract business goals into intuitive, meaningful experiences that truly serve users. User experience designers can, and with the help of this formula, we can prove our impact on the bottom line. 🏆

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Support Cost Reduction Formula

Support is an interesting beast for UX. I got my start at OCI working with the support team. By it's nature, good UX would negate the need for a support team. There would be no questions and everything would be so understandable, we could all go home and just let the product run. This just isn't true in the real world and any good business is going to provide a way for their customers to reach out with questions. Where UX work comes into this process is efficiencies. Can we speed up the support ticket process? Can we reduce the amount of support tickets? Straight from the cloud computing scoreboard itself, our final formula, Support Cost Reduction, is derived from Gartner.

User experience work can target this metric on two fronts, the consumer side, or the company side. For the consumer, we want to make sure we gather all the necessary data to assist them while not off-putting the user from form fatigue. From the company side, we need to put systems in place that expedite the outcome of customer inquiry. (Want to see an example of how I accomplished this very task in Cloud Computing via Limits? Click here) Good user experience can reduce customer confusion and speed up your backend processes so even the most complex questions are answered well before you hit that critical SLA time frame. 👍

The User Experience Business Relationship

When I started in this field, my university called it “New Media.” UX itself was something I had to explain. Even today, businesses value UX but often don’t know how to account for it, especially under pressure to justify budgets.

With 15+ years in the industry, I’ve become an advocate for UX work and for the value it delivers. At Oracle, I pioneered a UX Business Impact Scoreboard tying design outcomes to both customer and business KPIs. When tough decisions loom, this is what demonstrates UX’s tangible effect on business.

Companies may have the ability to make the engines, put the seats down, give it four tires, and package it with a pretty name and color, but like Dr. Ralf Speth of Jaguar, Land Rover hinted at, do you want to see the cost of bad design?