Many UX researchers don’t know how to answer the only question that matters to executives: “What’s the return for this research project?”
Measuring the return on investment (ROI) proves that customer research can drive significant, measurable business growth. It’s also critical for demonstrating your own strategic value within the business. Quantifying your work is critical for budget approvals, job security, and research’s influence within the organization as a whole.
It’s like the Jerry Maguire scene where a football star (Cuba Gooding Jr.) makes his sports agent (Tom Cruise) repeat back his goal for contract negotiation: “Show me the moneeeeey!”
When you pitch a project, you need to do the same — show executives the money. Read on to learn how to calculate the ROI in dollars and cents so they can see how much they could gain by moving forward.
Surface the struggle
To put a dollar sign on the solution, you have to first identify the problem.
Think about the areas where people are getting stuck or frustrated with the current experience. From support tickets to usability studies, mine the data for recurring issues.
Consider how each issue affects your users, your team, and the business. Then, establish a baseline for the problem’s impact. Let’s say the customer service team spends 15% of their time walking people through the same annoying design issue. That’s a ton of wasted time and money. Fixing it could save the company cash — and give you a clear ROI story to tell.
Marvin’s qualitative analysis or survey analysis capabilities can expedite this step, drawing key themes from hundreds of customer surveys or lengthy user interviews in minutes.
Measure the right metrics
Once you’ve spotted the problems, consider the metrics that best convey the current state of the union. You’ll use these to create a benchmark for your starting point and measure improvement along the way.
Here are some metrics we recommend you use to measure user research ROI:
- Customer satisfaction: How satisfied are your customers with your company’s product, service, or interactions? This metric is traditionally measured with a Customer Satisfaction Score (CSAT). To obtain it, you send a survey to customers to rate their satisfaction from 1-5 (1 being “very unsatisfied” and 5 being “very satisfied”). This metric is best for gauging someone’s immediate satisfaction after a specific transaction or interaction.
- Customer loyalty: How likely are your customers to recommend your products or services to others? This can be assessed through a Net Promoter Score (NPS), which asks people to rate their likelihood of a recommendation from 1-10. Respondents are then categorized as Detractors (0-6), Passives (7-8), and Promoters (9-10). To calculate your NPS, subtract your percentage of detractors from your percentage of promoters. Unlike the CSAT, the NPS provides an overall picture of how customers view your brand and the general health of your customer relationships.
- Experience Quality Score: What do customers actually feel or experience when using your products or services? Some researchers think the CSAT or NPS doesn’t capture the real user experience or the effectiveness of design. For that reason, Pantheon UX Researcher Jenna Harmon and her team use “Experience Quality Scores,” which combine metrics on behavior (what users are doing in the product) and sentiment (how users feel about their experience).
- Conversion rate: How many people completed a desired action? It could be a trial to paid membership, a product demo to completed purchase, or a subscription renewal. This could be tracked and measured wherever the action takes place.
- Cost reduction: How much money could be saved based on a UX design improvement? Maybe you notice an uptick in support tickets. A usability study could reveal why it’s happening and you could develop recommendations to prevent further profit loss and enhance future customers’ experience.
Do the math
Once you have your benchmark, set a realistic goal for improvement. Look at how the data has trended over time or similar projects to get an idea. Maybe you determine that a design change caused a 10% increase in support tickets so fixing it might lower it by a similar amount.
Now, it’s time to pull out the arithmetic skills you developed in college (or use a calculator, no one will know.)
Calculate how much the financial benefit would be if you achieved your goal. For instance, if your goal is to reduce support tickets for a specific issue, determine how many support tickets there were for it last year. Then, determine the average cost to resolve a support ticket. Multiply the two numbers. That’s the financial benefit of fixing the problem. Next, tally the costs to conduct the research. Include your team’s projected hours, expenses (like survey participants), and tools.
Finally, do the math using the ROI formula:
(Benefit – Cost) / Cost x 100
Now, you have your ROI percentage.
To convert it to money, subtract your savings from your cost. Math not your jam? User Interviews has a great UX ROI calculator that does the heavy lifting for you.
Track & share your results
UX research results are rarely seen instantly. Don’t lose the connection between your work and the ROI that resulted from it. Use a project management tool, like Jira or Asana, to associate your insights with the product change in the developer backlogs. This will make it easier to show the impact of your work when the product change is released. Once that happens, use the metrics you chose earlier to communicate your results to execs.
Make sure to include:
- The problem
- How you solved it
- UX research ROI metrics
There may be instances where the impact can’t be measured in dollars and cents. Improved usability, for example, does not always lead to increased profits. Market demand, price point, and effective sales and advertising also play a role. When that happens, shift from focusing on financial benefit to showcasing how your work led to product improvements or helped other teams achieve their goals.
Additional ways to remonstrate the ROI of user research
Showing executives the money can motivate investment in future research projects. It can also lead to more opportunities for you as an individual contributor—and the research department as a whole.
Over time, this expands the influence of research within the greater organization. You’ll move from being asked to validate decisions after the fact to being consulted on what problems they should be solving.
For more ways to demonstrate your research’s impact, read our guide, “Proving the Strategic Value of UX Research.”
