Why Smart Businesses are So Focused on User Experience (Part 1 of 3)

I recently gave a UX talk to an audience representing many different jobs and skillsets. A group like that offers a unique challenge in terms of what to talk about, and how deep to go. I didn’t want to bore the user experience professionals, and I didn’t want to overwhelm others with technical details. I opened up a new presentation and got lost for a while just looking at a blank slide. This is where I thought I’d put that “what is UX” intro. But something felt off.

And then I realized: I’m not sure we need to do that anymore. User experience is moving beyond a trendy buzzword into something that’s a given for any business that’s truly concerned about fostering loyalty and retention, supporting and enhancing their brand, and increasing conversions and sales. UX is mainstream.

That said, I wouldn’t want to leave anyone behind. If UX truly is new to you, here’s a quick primer:

  • It encompasses all the interactions a customer has with a product or service.
  • It’s a subset of, but distinct from, customer experience (CX), which includes all the interactions a customer has with a company.
  • It’s not limited to digital. A bicycle has a user experience. A playground has a user experience. A dishwasher. A light switch. If it has an interface, it has UX.
  • UX strives to make the complex simple, and even fun. If something feels easy to use, you can bet there’s a lot of thoughtful design behind it.
  • If you count yourself among UX practitioners, you’re trying every day to improve the usefulness, ease of use, and efficiency of interacting with a product or service.

Even though we may not need to talk as much about what UX is anymore, we often do still need to talk about why it’s important. It’s a head-scratcher for UX professionals like me, but there are businesses who haven’t yet prioritized investing in improving their user experience. There are three basic reasons we focus on UX: One, it’s good for business. Two, it’s good for customers. And three, it’s basically expected these days. We’ll cover reasons two and three in subsequent posts, but let’s get started with the very real business benefits of UX investment.

What Makes UX Good for Business?

Measurable Return on Investment

An argument that sometimes derails UX conversations is around how to measure return on investment. It’s true that there are aspects of UX that are difficult to quantify, but UX does have measurable ROI.

  • A 2012 Fast Company article about the business case for UI design says “Numerous industry studies have stated that every dollar spent on UX brings in between $2 and $100 dollars in return.”
  • In the book “Cost-Justifying Usability,” Claire-Marie Karat references a study where $20,700 spent on usability resulted in a $47,700 return on the first day the improvements were implemented.
  • That same book references another study where $68,000 spent on usability on another system resulted in $6,800,000 return in the first year.
  • The 2014 Forrester report on the Business Impact of Customer Experience revealed that moving from a below-average customer experience to an above average one would return $1.6 billion in additional annual revenue for wireless carriers, $1.4 billion for airlines, $572 million for retailers (up 152% from 2013), and $494 million for insurers (up 61% from 2013).

Reduced Project Costs and Development Churn

Another measurable result is around operational efficiency and cost savings. Investment in UX has been shown to directly reduce project costs and development inefficiencies. It is far less expensive to prevent a problem than to fix one.

  • In his book, “Software Engineering: A Practitioner’s Approach,” Robert Pressman shares that, for every dollar it costs to fix a problem during design, it costs $10 during development, and $100 after release.
  • The Software Data Systems (SDS) Consulting special report on UX Business Impacts and ROI indicates UX investments made in the concept/design phase reduce development cycles by 33-50%.
  • That same report shows that 47-66% of total project code is user interface, taking up to 40% of development effort. It’s smart business to get the user interface right the first time.

Increased Customer Adoption and Loyalty

Once a product is in front of your customers, good UX helps increase customer adoption and loyalty. Adoption is important, but retention is where the magic happens.

  • Depending on which study you read, and what industry you’re in, it costs anywhere from five to 25 times as much to attract a new customer as to keep an old one.
  • Research done by Frederick Reichheld of Bain & Company (the inventor of the net promoter score) shows that increasing customer retention by 5% increases profits by 25% to 95%.
  • Good user experience can even boost customer value perceptions. In Oracle’s 2011 Customer Experience Impact Report, 85% of users state they would pay up to 25% more for a superior experience.
  • On the flip side, that same report shows that 89% of customers started doing business with a competitor following a poor customer experience.

Reduced Support and Acquisition Costs

Other business benefits of good UX fall into the realm of “hidden ROI,” but are no less important. Consistent, long-term investment in good user experience greatly reduces your support and customer acquisition costs.

  • Users who are happy with your product or service will require less help desk support and, because good UX fosters loyalty, they will be happy to report bugs and errors to you (rather than abandon you).
  • Usability facilitates adoption. A well-designed product will offer a relatively frictionless learning curve, which will help cement new customers as ongoing users and, eventually, advocates.
  • Good UX doesn’t just affect customers. If employees find a design frustrating, e.g. a salesperson trying to sell a product that’s difficult to demonstrate or explain, a call center manager trying to respond to a poor design that generates support calls, or a production manager dealing with lost worker productivity due to an inefficient internal tool, the costs associated with that can often be directly traced back to suboptimal UX.

With the appropriate investment, focus, the right UX partner and supporting processes in place, you can effectively lower development and operational costs, help mitigate risks, foster loyal and happy customers, and greatly increase productivity and satisfaction among your employees.


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