Running the numbers – calculating the ROI of your UX investment

How do you eat an elephant? As the saying goes, one bite at a time. For those who are committed to UX but are worried about UX initiatives slowing down or stalling altogether, we understand. It takes concerted effort to keep going, but UX action — no matter how small — is essential to success for EdTech product teams.

It’s actually cheaper to keep UX in action than it is to let it atrophy. Below we explore three calculations that can help you combat the risks of UX inaction across your three Ps — profits, processes and products — and make the business case to your internal stakeholders.

Marginal Profits

With UX, spending money now can mean making money in the long term. Let’s use an example: A website or digital product is intended to lead users to purchase. However, the website’s UX is so poor that many users abandon before they make a purchase.

For example, if users typically spend $40 per visit, but 50 abandon your website each day, you’re losing out on $2,000 per day, or $730,000 per year. In this example, let’s assume that a $50,000 investment in research, design and testing would remedy the issues for your users. With those issues addressed, you would be on a new path to increased revenue, breaking even on the investment in 25 days.

Process Errors

In product development, errors happen. As much as 50 percent of development time may be spent on avoidable rework, many of which may be caused by flawed research, user testing, or poor user interactions or the design itself.

Research suggests that a full quarter of rework errors can be fixed by employing best practices of UX research and design. Let’s look at an example of a product development process with and without best-practice UX, and the cost savings that occur as it relates to addressing errors.

For example, assume $5 million is spent on development and engineering teams per year, and UX is not properly implemented in the overall process. With work being completed in two-week sprints, that could mean half a sprint (40 hours) is spent on rework per person on the team. One engineer at the rate of $150 per hour would spend 40 hours of an 80-hour sprint fixing errors, costing $6,000. Over the course of a year (26 sprints), that’s $156,000. Now imagine if you had a team of 10 engineers addressing errors, working at the same rate.

Whether you have a team of one, 10 or even 50 engineers addressing errors, when best-practice UX is implemented throughout the process, the number of errors upfront is reduced. Developers and engineers might need only 10 percent of their time to address errors, meaning more than $1 million is saved:

In our experience, engineering teams are often hamstrung by the effects of poorly implemented UX research and design. We advise clients to ease the burden on their engineering teams by making a smart investment in best-practice UX that will clear a significant portion of the challenges they inevitably face.

Productivity

For our final calculation, let’s explore productivity. As demonstrated earlier, UX investment can course-correct projects with badly defined requirements, sloppy project management, or avoidable rework. The benefits for the digital product team are apparent, but what about other teams across the organization? We sometimes encounter businesses that utilizes a proprietary tool for essential business operations or client service across the organization. The right UX investment can help those teams, too.

For example, let’s say 1,000 employees at an organization use such a tool. If an investment in better UX could improve usability to save just one hour per employee per week at the average hourly rate of $30, the resulting savings would be $30,000 per week or $1.5 million per year.

UX is like a muscle that should be strengthened with ongoing activity — incremental investment, incremental improvements, incremental returns. Ultimately, it creates opportunities for your organization to earn more, deliver greater value for users and helps your team be more productive.