5. 6
What can UX improve about a business?
Increase Sales
Reduced tech support calls
Customer productivity & happiness
6. 7
UX “professionals are called upon to take businesses with
an interest in reaching broader audiences and make them
accessible to every segment of the market”
- Eugenie Bertus & Mark Bertus, “Determining the Value of Human
Factors in Web Design”
7. 8
How can UX improve sales growth?
Learnability
Transfer to other products
Recommendations to others
Renewals
8. 9
Method 1: Model the
value of individual UX
decisions with a decision
tree
Method 2: Model the
value of organization
wide investment with pro
formas
17. 18
The expected value … is the weighted average of all values…
The value may not be expected in the ordinary sense—the "expected
value" itself may be unlikely or even impossible (such as having 2.5
children)…
24. 25
What happens if we include user
research up front to understand risk
better?
25. 26
Benefit #1 of user research
Better estimation on whether the market response
will be
Great:
Awful:
Fair:
Possible test results of a study with 5 people:
34. 36
So, how much should we spend on
running this kind of study?
35. 37
EVSI=Expected Value of Sample Information
Value of sample information =
Expected Value of Doing Test
(if test were free)
– Expected Value Without Test
= Pay up to $987k for UX benefit #1
or up to $1.25m for both UX benefits
36. 38
Method 2: Pro Forma + UX Data
Example: Model The Value of
Organization Wide Investments In UX
37. 39
1
Model the company’s finances
over time
2
Model the spending on UX
3
Model the effect of UX on sales
over time
Steps to build model
38. 41
It’s a lot of spreadsheet, but not as much as
you might have expected!
40. 43
Get a few numbers from the friendly guy in the
finance department
Current revenue
Number of years to
simulate
Annual growth rate
Tax rate
EBIT margin
Capital Expenditures as
a % of revenue
Working capital as a %
of revenue
Depreciation as a % of
revenue
Weighted average cost
of capital
Cost of equity
Cost of debt
Weight of equity
Weight of debt
57. 60
Investment In
User Experience
Higher System
Usability Scale
Higher Net
Promoter Score
Sales Growth
How
Software Industry Averages
68 -15% 14%
Target
80 20% 19%
3% of spending
9% of spending
58. 61
Example: An Average Software Company
Increasing SUS from average to best has the potential to
increase sales growth 3.1%-8.4% per year
The financial returns on average would be:
A 67% internal rate of return (IRR)
54% Return on Investment (ROI)
59. 62
Method 1: Model the
value of individual UX
decisions with a decision
tree
Method 2: Model the
value of organization
wide investment with pro
formas
The goal of this presentation is to show some techniques that can connect UX improvements & financials.
I’ve been looking into the relationship between UX and sales growth. Based on what I’ve read in research, there are several ways that UX could improve sales growth for a company.1. Initial Learnability: Make it easy for teams evaluating a product to get started and feel productive fast, so that they will buy the product2. Transfer to other products: Streamline the experience so that users of one product can quickly pick up other products and make an accelerated buying decision3.Recommendations to others: Make the lasting experience positive so that our users encourage others to buy4.Renewals.Once they’re a customer do they stay a customer and renew year after year?What do you think, do you think these are likely to affect sales growth for your product(s)?Sources:For learnability: http://usabilitygeek.com/the-difference-and-relationship-between-usability-and-learnability/For marketing: Net Promoter Score
Scenario: Early usability testing.Let’s do a scenario that’s a bit exaggerated Let’s say we’re working for a company named Acme. Acme’s starting a new project and they’re planning to run development first on a design project that you’re not sure whether people will buy based on the plan.
Acme company is ready to invest in developing a new product. You think that they should do more user research first, to find out about the market and to begin design before development.
There’s a lot of spreadsheet to build… But it’s not as much as you might think. I’m showing this not to intimidate, but to show you that almost all of the model is displayed in one screen and the text is almost readable – it’s not that much. And more importantly, the unique stuff is highlighted in blue – you can see there’s not really that much data you have to fill in to make this model work for most software companies because the rest is standardized or abstracted. You can always build more but you don’t have to build more to start.
I’m not going to get into too much detail on this, but the basic idea is that you model the spending in the past and forecast future spending.To do this you have two choices: (a) take several semesters of finance, or (b) talk to your friendly internal financial guy who’s most likely already done all of this for you. This is a standard model which all public companies are required to do and most other companies do it anyways, because it’s the way you make simple financial forecasts.
Standard financial models help model the impact of quality of sales results.Research backs these models up between the points.System Usability Scale scores, and other surveys, are used to collect data about usability, features, and quality. There’s great work out there showing that 2200 SUS survey scores are connected to net promoter scores. There’s also lots of research showing that NPS and related surveys are connected to sales growth.You can tie this all together with a standard financial model, which looks at a product or company metrics.I’ve used all this information for an example model that looks at average scores and financial metrics for software companies in general. Based on the data that’s already out there, at software companies in general there’s a huge potential ROI, return on investment by putting more into usability.
Average software company from >180 public software companies
This is consistent with the largest survey I’ve seen for the ROI of UX (done by Jakob Nielsen), which averaged around 68% ROI – so if anything, 54% this is a bit below the likely industry average.One way to compare these numbers would be on what you’d invest in – for example, a US bond would return 3% a year whereas UX could return 54% a year.
