Maximizing Returns: Understanding the Impact of UX on ROI

Intro

When evaluating a business's success, one key factor is the return on investment (ROI). In user experience (UX), calculating the ROI can be challenging as it involves quantifying intangible elements. However, understanding the ROI of UX is crucial for making informed design decisions and driving business growth.

The Need to Calculate ROI for UX

Many executives need help making impartial design choices, with less than 5 percent being able to do so effectively. This is because user experiences are subjective and focused on how individuals feel when interacting with a product or service. To measure the ROI of UX, research is essential in identifying the aspects worth measuring and determining necessary improvements. By analyzing the outcomes and calculating the ROI, businesses can assess the effects of changes and make data-driven decisions.

Key Arguments for Calculating ROI

There are several reasons why calculating the ROI of UX is important:

Raising Lifetime Value (LTV)

Attracting new customers is important, but retaining existing ones can be even more valuable. User-centered design enhances the lifetime value of customers by providing a positive initial purchase experience. Satisfied customers are more likely to make repeat purchases and become loyal advocates for the brand. By focusing on UX and improving customer retention, businesses can increase their ROI.

Conversion Rate Optimization

Converting opportunities into leads is crucial for the success of any business. However, visitors to a website need to be more engaged with the content or take the desired actions, and conversion rates may suffer. By measuring the ROI of UX, businesses can identify areas for improvement and optimize their websites to increase conversion rates.

Cost Reduction

Poor decisions in UX result in costly consequences. For instance, if a product has a subpar user experience, customers may need help making purchases or completing registration processes. This can lead to increased support tickets and a drain on resources. By investing in UX improvements, businesses can prevent such issues and reduce costs in the long run.

The Importance of ROI Measurement

ROI measurement is crucial for businesses to determine the effectiveness of their UX efforts. It helps answer important questions, such as whether customers are satisfied with the product and if they are able to derive value from it. Without calculating the ROI of UX, businesses may be unaware of the reasons behind user abandonment or dissatisfaction. By understanding the ROI, businesses make more informed decisions about which UX investments generate a profit and which ones need adjustment.

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5 Ways to Measure the ROI of UX

While there is no one-size-fits-all formula for calculating ROI, several established methods exist to measure the ROI of UX. Here are five key metrics to consider:

1. Bounce Rate

The bounce rate refers to the percentage of visitors who leave a website after viewing a single page. Businesses can encourage visitors to stay longer and explore other pages by optimizing the UX design. Comparing the bounce rate before and after UX improvements provides insights into the ROI of UX.

2. Net Promoter Score (NPS)

The Net Promoter Score is used to gauge customer loyalty and satisfaction. Businesses can assess the impact on customer satisfaction and potential revenue growth by measuring NPS before and after UX enhancements. While NPS may take longer to measure, it provides valuable insights into the long-term effects of UX improvements.

3.Conversion Rate

Measuring the conversion rate is an effective way to evaluate the impact of UX improvements. By tracking the proportion of people who take a desired action, businesses can assess the effectiveness of their UX strategies. Measuring conversion rates over a significant period and comparing them to previous periods is important for accurate analysis.

4. Revenue per Customer

Examining the average revenue per customer helps determine the impact of UX on customer spending. If UX improvements enhance the customer experience, customers are more likely to make additional purchases or renew their subscriptions. Monitoring changes in revenue per customer can provide a tangible measure of the ROI of UX.

5. Drop-off Rate

The drop-off rate measures the percentage of users who leave the conversion funnel at different stages before completing a desired action. This metric helps identify specific pain points in the user journey and areas for improvement. Tools like Google Analytics, MixPanel, and MS Clarity provide valuable data for analyzing drop-off rates.

Wrapping up

In conclusion, calculating the ROI of UX is essential for businesses to make informed decisions and drive growth. By measuring key metrics such as conversion rate, bounce rate, drop-off rate, NPS, and revenue per customer, businesses can assess the impact of UX improvements and optimize their strategies for maximum ROI.

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My flexible pricing model

Working with traditional freelancer/agency pricing can get complicated. My pricing model is simpler.

Simply hire me by the month at a fixed cost.

Need to pause the work? That’s fine. Since there aren’t any long-term contracts, we can pick things up later when the time is right.

Schedule a consultation call to discuss my specific rates, go over any questions you have, and walk through the next steps.

Prefer email instead? Reach out to me at hello@timhaskins.design

A little about me

With deep roots in brand, design, and technology, I specialize in delivering best-in-class UX & UI. I've done this for hundreds of companies around the globe over the past 25 years.

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Client history

I've worked with many types of clients worldwide. From small startups all the way up to Nike, Adidas, Xerox, Williams-Sonoma, and Lowe's — to name a few.

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My purpose

Everything I do is centered around helping people live fuller lives — a driver for what gets me up each morning. That can take many shapes, such as pro-bono work for non-profits, mentoring other designers, or designing products that impact lives.

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Life-altering moment:

In 2015, I suffered a life-altering traumatic brain injury and lost my ability to do much of anything. Without the ability to fully comprehend language, living with constant vertigo and depression, and the loss of my creative problem-solving skills — my life was turned upside down.

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Fast-forward to today. I consider myself one of the lucky few who fully recovered from an injury like that. I have a deeper appreciation for life now; from mundane tasks to relationships to my craft — which shows in the quality of my work.

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My superpowers

Translating strategy into a marketable product, simplifying the complex, pinpointing a person's hidden pain, and breathing new life into outdated UIs.

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Additional facts:

I live in Portland, Oregon, once had a 30-person design agency for over a decade, launched my own SaaS products, and am raising 3 boys (the latter being the hardest but most rewarding!)

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FAQ

Do you have a team of people or is it just you?

When we work together, I will be the one designing your product and your sole point of contact.

My ideal client prefers working with an individual rather than an agency or team. They want someone experienced who focuses on their project and communicates directly with them — without the bureaucracy or cost of a large team.

From time to time, I'll bring in additional specialists to the project for unique deliverables like branding, illustration, animation, etc. In those cases, I will direct the creative and ensure it's on-brand and at the quality I'm known for.

What is your pricing model?

My pricing model is based on a monthly engagement rather than an hourly rate or a long-term project contract. My clients love this model because they don’t get nickel-and-dimed for changes or feel beholden to a woefully outdated contract.

As you’ve likely experienced, when building a product there are multiple changes, discoveries, and pivots that can occur. That requires a flexible pricing model that can ebb and flow with you.

Within my model, I offer four pricing tiers, starting at $1,500/month (USD). You choose from one of the monthly pricing tiers depending on the amount of work and types of deliverables needed in that given month.

Can you work within a fixed budget amount?

While my model is based on a monthly engagement to optimize my client’s budgets, I have made exceptions in the past. Some of my clients have had fixed budgets that they need to work within, and in certain cases, I can work within that structure. Let’s talk more about your situation and see if it will work.

How happy are your clients?

What tells me my clients are happy (and see value in my work) is that I have 100% client repeat rate — something I strive for — which is reflected in my approach, style, and work ethic.

This means that every client has come back a second time to continue our work together. They wouldn’t do that if they didn’t see value or weren’t happy.

How do you manage projects and communication?

I use a platform called ClickUp to manage and communicate project updates. It also hosts documentation, Gantt charts, and Kanban boards.

Slack is the primary communication tool for me and my clients, though I can potentially use other tools like Teams.

Often my clients have their own platforms, like Jira, Monday, or Trello. I’ve used those and many others and am happy to explore what it would look like for me to use your tools.

What do you deliver?

What I deliver can vary depending on your needs. The most common deliverables are flow diagrams, wireframes, and dev-ready Figma design files (including Design System documentation.)

Secondary deliverables include items such as interactive prototypes, animated UI concepts, custom icons, and audits/user research documentation.

Do you specialize in our industry?

Over the past 25 years, I have worked in dozens of industries versus specializing in just one. My ideal client values this because they want fresh ideas and someone thinks differently. They want their product to be unique and innovative, not follow the same tired strategies.

When we collaborate, I take a deep dive into your business and industry, understanding it thoroughly. This way, I can provide insights that significantly enhance your product's design and user experience.

We need designs yesterday — can you help us?

I hear this often and I totally get it. You have a real sense of urgency and could already be behind on your goals due to one factor or another.

As you’ll see, I can turn around designs very quickly and we can get some quick wins if need be. But to make a product that really stands out, one that meets your goals, and users love, takes time, thought, and research. And while I do have a thorough process for getting us there, my process is designed to be flexible for getting quick wins and long-term success.

Why wouldn’t we just hire a cheap designer from one of those freelancer sites?

Sure, you can hire a designer on platforms like Fiverr or Upwork, but they likely won’t meet your expectations and you’ll typically get what you pay for.

Some clients I've spoken to tried that route before working with me. They found that the design quality was not up to par, and the designers mainly followed instructions without offering innovative ideas. It’s a gamble.

My clients need someone who will deeply engage with their project, show enthusiasm for their product, and propose creative solutions, rather than simply executing tasks as instructed.