How to Measure the ROI of User Experience


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Slides from the webinar with Susan Weinschenk on how to measure the ROI of User Experience.

How to Measure the ROI of User Experience

  1. 1. Webinar:How to Measure the ROI of User ExperienceSusan Weinschenk, Weinschenk Institute, LLCAlfonso de la Nuez, UserZoom#uzwebinar
  2. 2. Susan Weinschenk Alfonso de la NuezFounder and Principal co-Founder and co-CEOWeinschenk Institute, LLC UserZoom@thebrainlady @delanuez23 @userzoom
  3. 3. Quick Housekeeping • Chat box is available if you have any questions • There will be time for Q&A at the end • We will be recording the webinar for future viewing • All attendees will receive a copy of the slides/recording • Twitter hashtag: #uzwebinar
  4. 4. Sample ROI Calculation100 visitors a day come put an item in the shopping cart of your e-commerce siteBut 30% don’t complete because of a user experience problem with the cartYou are losing 30 sales a day due to a UX issue @ $10 a purchase = $300 a day lost300 x 365 = $109,500 a year lostIt will take $20,000 and 2 weeks to fix the UX issueIn 10 weeks you will have made up the $20k you spentIn 2.5 months you will have paid for the fix with the increased revenue: ROI in 2.5 months
  5. 5. What We’ll Coverdifferent ways to calculate ROIhow to deal with estimates and assumptions for key indicatorswhat key indicators you should usehow to actually measure to compare with estimatehow to estimate cost of the UX work itselfwhich should you do: fix later or get it right from the start?the role of tools (card sorting, user testing, etc) in your ROI calculationsfixes rather than UX from beginning
  6. 6. My First ROI Calculation (circa 1994)Software for bank tellers5000 usersInterface was hard to learn and hard to use -- poor user experienceAssumptions: waste 5 seconds per transaction100 transactions per person per day5000 people x 100 transactions x 5 seconds = 2.5 M seconds = 41,666 minutes = 694 hours x $7/hour = $4,858 a day x 252 days = $1,224,216
  7. 7. That’s Not All!Take training from 2 weeks to 2 days, saves $1000 in training costs per new person10% turnover = 500 people a year x $1000 = $500,000 per year in trainingPLUS help desk -- reduce calls by half, save 300 calls per month x $10 per call = $3,000 a month = $36,000 per year$1,224,216 + $500,000 + $36,000 = $1,760,216 in first yearCost to fix: $500,000Recoup investment in 3.5 monthsROI = 3.5 months
  8. 8. To Calculate Your ROI1. Decide on your key indicators2. Estimate lost opportunity or cost of having a poor user experience3. Estimate the cost to research and fix a poor experience or cost to create a new one to start with -- cost of doing it right4. Do your calculations5. Turn your money into length of time to recoup the investment
  9. 9. There is no magic ROI formula
  10. 10. What should we measure? time on task? task success? satisfaction? efficiency? errors?
  11. 11. There is no one “key performance indicator”
  12. 12. ROI Calculation Examples•Errors:•(# of Errors) X (Avg. Repair Time) x (Employee Cost) X (# ofemployees) = Cost Savings•(2 errors/week) X (60 minutes) X ($30/hour) X (100 employees) =$6,000 per week = $300,000 per year
  13. 13. ROI Calculation Examples•Cost of Development and Maintenance:•(# of changes) X (Avg. hours per change) X (cost of developer) X(4, if change is late!) = Cost Savings•(20 changes) X (8 hours each) X ($40/hour) = $6,400 if fixed early,or $25,600 if changed late
  14. 14. ROI Calculation Examples•Productivity:•(Time Saved) X( Employee Cost) X (# of employees) = CostSavings•(1 hour a week) X ($30/hour) X (1000 employees) = $30,000 perweek = $1,500,000 a year
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  16. 16. This year,The problem only gets worse as IT grows ubiquitous.organizations and governments will spend anestimated $1 trillion on IT hardware, software,and services worldwide. Of the IT projects that are initiated,from 5 to 15 percent will be abandoned before or shortly after delivery ashopelessly inadequate. Many others will arrive late and over budget or requiremassive reworking. Few IT projects, in other words, truly succeed.
  17. 17. software specialists spend aboutIn fact, studies have shown that40 to 50 percent of their time on avoidable reworkrather than on what they call value-added work, which is basically workthats done right the first time.
  18. 18. Why Projects Fail•Unrealistic or unarticulated project goals•Inaccurate estimates of needed resources•Badly defined requirements•Poor reporting of the projects status•Unmanaged risks•Poor communication among customers, developers, and users•Use of immature technology•Inability to handle the projects complexity•Sloppy development practices•Poor project management•Stakeholder politics•Commercial pressures
  19. 19. Designing the User Experience• User Research• Storyboarding, Designing, Prototyping, Visual Design• User Testing & Iteration
  20. 20. Is It Worth It?• Cost to design it right the first time• Added cost than if you just designed it the way you normally do• Cost to fix the user experience problems after the fact• Opportunities lost if the user experience isn’t right
  21. 21. Watch Out• Definition of “done”• Definition of “success”
  22. 22. When You Design The User Experience– Saves user time– Saves developer time– Increases customer satisfaction– Increases use of the technology– Reduces training costs– Reduces calls to the help desk– Increases self-service
  23. 23. Using ROI To Plan Your UX WorkProject Fix or From $ amount to be Cost of UX to ROI Scratch? gained or saved fix or design A Fix B From Scratch C From Scratch D Fix E Fix
  24. 24. Medicine Net Website Re-Design
  25. 25. The Role of Testing & Research Tools in ROI• Use to benchmark for “before” and “after” comparisons• Data from which to base your assumptions & estimates
  26. 26. Advantages of Remote Tools• Less expensive than in-person, moderated data collection• Collect data from more people for less cost -- enough to run statistic significance• Collect data from diverse geographies for less cost• Reduce the cost per project of doing user research and user testing during design• Get results fast
  27. 27. intellectuals solve problems; geniuses prevent them ~albert einstein
  28. 28. Email: Twitter: @thebrainlady Phone: 847-909-5946 Website: Facebook: Weinschenk InstituteSusan Weinschenk, Ph.D.Weinschenk Institute, LLC