Understanding the ROI in Usability

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In our 2.5 years at RBBi and in my career of 15 years before that, what I have seen is that most clients want to skip important phases of a product development. Be it a website, mobile app, consumer product or a service design. Let alone the usability and user experience practices but even small steps that add to time and efforts from the agency or from the client side are skipped in order to save time and money.

If we focus on digital (because that’s where the early growth of Usability and User Experience is being seen in this market) this market is really getting geared up towards the media side of things, lately. I was at a brainstorming session for an event and a gentleman raised, in my opinion the most important point of ‘infrastructure’. What he meant was the part that comes after the click happens with your efforts on the digital media- THE DESTINATION.  Now, I feel that’s where things fall apart.

It’s at this stage the attitude is still along these lines “Oh website? Come on! My cousin’s son does web design. He will give us discount’ OR “I know this, I have designed websites when I was in college” OR “What? You are going to charge me so much? I can get it done at ¼ of this in Lebanon/India/Syria/etc (depending upon where client’s extended family lives). Don’t get me wrong. I am not saying that these countries cannot produce good quality work. But point is not that.

The point I am trying to make is this attitude is due to lack of knowledge of usability and user experience practices and processes involved in making a successful, relevant and working digital product. If a client can understand what this extra investment of time and money in his digital products going to give him return then I can bet he will happily participate in the process.

Which means it comes down to the ROI on the efforts and money he will be putting in it. And it’s not that difficult to understand this. Let’s first look at what are we talking about here.

Better user experience can be achieved by infusing simple usability practices while building a digital product or planning a service design. So what happens if the product already exists? Well in that case Usability Testing and changes based on those test results can be used to better the user experience.

In both these cases, there is a need of extra time and efforts to be spent which results in extra money to be spent. With all the research done in this field it is been established that this cost is usually 10-15 % of the overall project cost. I think should accept one thing here. Looking at the state of the market here in the region, it only makes sense to spend big bucks on these concepts if your business leads and bottom lines are linked to your digital presence.

So, at a broad level here’s how a more usable, relevant and purposefully designed digital presence can you help your business
Getting to the ROI

So how do we prove that? The answer is Usability Testing. Yes, you can use usability testing to show that the benefits of usability engineering outweigh the costs.

There are various methods and each is relevant for various phases of the development.

Let’s look at few examples

Example 1 – Recently we were part of a global user and usability research for Marriott and Ritz Carlton websites. The investment in this was huge. My first question to the client was to hear the motivation and rationale behind this. His answer was simple. He told me that with their data they have estimated to improve their online sell in the first year by more than 10 times of that investment.

Simply put, it’s a way to determine if usability is worth the investment, by comparing the money spent on usability activities with the savings that result from the process.

Example 2 – We conducted a usability study for a well-known regional news portal the expected KPIs were just increased page views, time spent on time and increasing the efficiency. These were business goals and ultimately would result in actual revenue. View Case Study

Defining one “correct” formula to calculate ROI can be a bit tough since the components of ROI change with every company/project.

That said, ROI is always calculated in terms of increase or decrease of a key variable. These increases and decreases usually fall into one of six categories

1 – Decreased call for information and support to your call center or office

First and foremost advantage of having a thoughtfully designed website, where all the possible information is presented in a relevant format. Website has become the first point of information and interaction for most businesses these days.

i.e. We were assigned a task to re-design a dashboard of a self-serve advertising platform. Client used to receive around 20-25 calls a day to get help on the platform. After the re-design those calls dropped to 4-5 calls a day.

2 – Increased Sales / Revenue

Either incremental revenue from add-ons or through an easier sales process, which is typically called “conversion rate” though that often gets mixed up with “website conversions”. The metrics for this are typically found in the sales and finance department.

So, if you are an e-commerce player, airline, hotel or any other business that has a direct sales and lead channel from your online, converting visitors to customers should be the highest priority. You can easily increase the conversion rate by optimising your website instead of spending your valuable money in getting more and more people to it. This is where the problem lies. Digital in this part of the world has always been about MEDIA & MARKETING (Social, online, mobile, etc. etc.) Has anybody ever wondered if they spend the amount they spend on one campaign in doing usability tests and optimisation of their website, they would benefit more?

i.e. You have an e-commerce portal with a conversion rate of 1.5% – Believe me most businesses here wouldn’t even get in to knowing this number.

Let’s say you get 200 people to your site and 3 end up buying from it (Conversion of 1.5%). Now instead of spending more on marketing if you spend on Usability testing and optimisation thereafter, you could increase your conversion to 2%. So with a fraction of your campaign budget you could achieve 25-30% increase in sales.

3 – Increased productivity

Most often relevant to large pools of employees completing certain repetitive tasks on a famous ERP software. Metrics are found in operations, HR, and finance (for overhead items like office space, equipment, etc.) For example, if you optimise the usability on a series of screens so that what was once a 5 minute task is now a 4 minute task, then you’ve increased a person’s productivity by 25%. That’s huge. HUGE. If it’s a call center which has 10 employees who have an average salary of AED 15,000 (+ an unknown amount for overhead), you could either release or re-task those employees on other activities with a savings of AED 37,500/month. (Half of 10 employees x AED 15,000). If it’s a customer service desk where the software is used to transact and service customers, imagine the impact on number of customers that can be served in the same amount time.

With a proper service design this can be amplified even further but that’s a separate topic.

4 – Increased customer satisfaction and loyalty

This is extremely difficult to measure, and should be used as a primary cost justification only in extreme cases. That said, one method of measuring customer loyalty is in terms of customer retention. (Important especially in organisations that know when their customers are most likely to defect to a competitor or a more mature product offering.) The calculation takes into account the cost of new customer acquisition and amortises the cost over the average customer retention period. Increasing average customer retention is a cost savings for the company, and can cost justify UX & usability work related to customer loyalty. The metrics of success will come from sales and marketing.

5 – Decreased training and support costs

If customers generate calls or support tickets or other uncompensated overhead costs to the business, then those costs should be measured. The easiest way to do this is how airlines handle it. When a passenger, for example, calls an agent to check flight status, the airline knows how long that call will last, and based on the average cost/minute for phone agents (including salary, benefits, and overhead like the phone line, office space, electricity, etc), the airline can assign a $ value to the cost of the call. Because airlines handle large volumes of calls every day, if there is an increase of 2500 check flight status calls/day at a cost of /call (theoretical cost!), then we could expect that would increase uncompensated support costs by /day. If the airline wanted to do a eye tracking usability study to get that number down to 1225 calls/day (assuming a clean 50% improvement), then that usability study would pay for itself in 20 days.

Be wary in cases where training and support are part of the company’s core business model – otherwise it doesn’t make sense to decrease these costs, (i.e., if the company’s revenues are earned from consulting)

6 – Decreased Development and Maintenance costs

Measured, validated and clearer KPIs defined by UX processes results in more precise development times thus reducing the time and efforts that go in changing and re-developing the product. It’s more informed as well. So the owners know the expected results as these are already tested and validated with users.

Bad UX is often a reflection of poor design and complexity in the underlying product. A hallmark of good UX is the elimination of unnecessary or marginal features. This reduces the complexity of the code base, making it more robust and less buggy. As a wise man once said, “there are no bugs in the code you don’t write.”

So keep it usable and yeah it does take time and money!

Amol Kadam
Amol is one of the co-founders of RBBI agency- For over 20 years, Amol has conceptualised, designed and managed the production of many digital projects for a wide range of clients involving online branding & strategy, usability, information architecture, UX, interaction design, and online & offline interactive media.

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