user experience & design

UX ROI: What’s the value of investing in user experience? [Video]

Gibson Toombs
February 24th, 2021

Did you know that, on average, every $1 invested in user experience provides $100 in return

UX design plays a critical role in the success of all eCommerce businesses. By improving website navigation, reducing page load times, and delivering personalized content, you can expect to experience lower bounce rates, stronger customer engagement, and higher conversions. 

When making a business case for UX, it’s often best to cut through the marketing talk and drop the dramatics. In other words, how does this affect your company’s bottom line?

Our UX design agency is primarily B2B, so we’re usually working with high-level business execs—sometimes even C-suite. We need to speak their language, and that’s often the language of cold, hard numbers, with one key metric standing out: return on investment (ROI).

Quality UX isn’t cheap, and it’s expected that company decision-makers ask where their investment is going, and exactly how it offers value. That’s what this article is for: a data-driven breakdown of where quality UX slashes costs and the true significance of that ROI.

The value of UX 

Research shows that a well-designed UX can raise a website’s conversion rates by 400%. How’s that for ROI? 

As new technologies emerge and consumer habits change, the design and maintenance of an effective UX is a never-ending project. You have to be able to add new platforms and devices—like smart speakers and smartwatches—into your sales and marketing strategy. If your current tech stack and business workflows don’t support an omnichannel customer experience, then your company is likely in need of a comprehensive digital transformation. A seamless and engaging UX across multiple channels is essential for staying competitive with other online merchants. 

There are many different approaches to optimizing your UX, depending on the size and nature of your business. But for most eCommerce brands, these are a few good places to start: 

  • Implement micro-interactions
  • Deliver personalized product page recommendations
  • Make your site multilingual
  • Simplify the checkout process
  • Upgrade your load balancer to increase site speed
  • Optimize call-to-action (CTA) buttons
  • Implement a responsive web design
  • Conduct customer surveys

If you’re in the process of convincing your stakeholders to invest more in UX design, there are two main factors to keep at the top of everyone’s mind: time and money. By working with a professional UX design agency like Codal, you can expect the following:

Lower development costs

In the software development industry, the typical cost of an engineer is between $80-$120 per hour, with some freelancers charging up to $200. For many eCommerce companies, a significant portion of web development costs goes toward identifying and resolving code errors that are negatively impacting user experience. In fact, the average software developer spends 75% of their time fixing bugs. 

So how can your eCommerce business avoid these stalling errors? The answer is proper UX design. At the end of the design process, our UXers define clear, user-tested requirements for the engineers to build. These requirements help devs prioritize tasks and efficiently implement the UX designer’s vision. 

With a methodical approach that utilizes cutting-edge technologies, you can build a user experience that is less prone to error. And without having to put as much time and resources into fixing bugs, you can cut down on development costs, giving your business more room to innovate and grow. 

Accelerated key performance indicators (KPIs)

We rely on a variety of KPIs to measure the success of a website, and many of these are directly tied to the quality of the user experience. In other words, invest in user experience, watch KPIs improve, and watch your bottom line follow suit.

The most obvious of these is conversion rate, especially if you’re commissioning an eCommerce platform. UX design agencies like Codal have design processes tailored to eCommerce applications, as an overhauled user experience is one of the best ways to boost conversion rate.

Similarly, shopping cart abandonment and bounce rate can be curtailed by improving UX. 70% of online shoppers abandon purchases due to poor UX. And once a customer has a bad experience on your site, it’s unlikely they will return for a second visit—or recommend your brand to their friends and family. 

Here are a few other KPIs that can be accelerated with a powerful UX design:

  • Customer lifetime value
  • Customer retention rate
  • Average order value
  • Customer acquisition cost
  • Time on site
  • Churn rate

Effective user testing 

When we layout our design process to clients, we sometimes raise a few eyebrows at our extensive user testing. As a top-ranking UX design agency, user testing permeates our design process, and many questions how our incessant, repeated experiments translate into value.

Through effective usability testing, you can learn important lessons about websites and applications, such as:

  • How long it takes users to complete specific tasks like checkout or account creation
  • What features and content users do and don’t interact with
  • Which parts of the navigation flow cause confusion or frustration

In short, user testing validates the design choices made by the UX team and confirms the success of their design strategy. For you, this means more satisfied users and continued interaction with your platform. While that’s clearly a benefit, there are more directly measurable savings.

By testing only five users, you can solve 85% of your UX problems. And, as we’ve discussed, fewer errors on the front end means lower development costs. Also, by identifying site issues before customers do, you can take a significant amount of stress off your customer service team. Mozilla, for example, experienced a 70% decrease in customer support calls after conducting usability testing on its site. 

How to calculate the ROI of your UX activities

There are simple equations you can use to see how much opportunity your business is missing out on with its current UX, as well as the kind of results you can expect by implementing a superior design. Here is a quick way to calculate UX ROI:

Value per visit x daily abandoned users x 365 = lost revenue per year. 

Let’s say the average customer spends $50 on your online store, but an average of 60 customers per day bounce before making a purchase—due to poor navigation, slow page load times, a long and complicated checkout process, etc. That means you’re losing $1,095,000 in potential revenue each year. Now, if you invest in UX design, you can start converting those 60 daily abandoners into paying customers and increase your average daily revenue to $3,000. With a $75,000 investment, you could break even in as quick as 25 days. 

Bottom line

It’s no surprise that an increasing number of eCommerce companies are noticing the value of investing in user experience. Joe Gebbia, a co-founder of Airbnb, credits the app’s UX as the main reason for the company reaching $10 billion in sales. And Jeff Bezos, the founder of Amazon, invested a hundred times more into UX than advertising during the company’s first year. 

The statistics around UX don’t lie. By implementing a data-driven, user-tested design, your company can achieve lower development costs and KPIs that will put a smile on your stakeholders’ faces. 

Here at Codal, we’re passionate about designing user experiences for eCommerce companies of all sizes and industries. By putting together a team of expert designers, engineers, testers, and analysts—equipped with the most cutting-edge technologies available—we can bring your UX to a whole new level. Rather than offering a one-size-fits-all solution, we’ll create a strategy tailored to your brand, aimed at improving customer engagement and increasing revenue. 

The effects of UX can be measured in dollars and cents. Make the right investment, and team up with Codal to ensure your business yields the right return.

Ready to get started? Get in touch with Codal today!

Gibson Toombs

Gibson Toombs

Gibson Toombs is a Technical Content Writer at Codal. His writing career began in 2015 after graduating from the University of Oregon School of Journalism and Communication. Since then, he has worked on many projects, covering a wide range of technical topics, from solar energy to cybersecurity. When he’s not taking complex ideas and turning them into easily-digestible pieces of content, Gibson can be found playing guitar and writing songs at his apartment in Chicago.


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