As UX professionals, we see inherent value in improving the experiences of products and services. But many people don’t see it that way. And sometimes, those people make decisions about your funding.

If you need to demonstrate the value of your design efforts, one of the most effective methods is to calculate your return on investment (ROI). Essentially, you need to show how your design changes impact the bottom line — revenue, cost savings, or another key performance indicator (KPI).

There are four steps to calculate ROI:

1. Collect a UX metric in a benchmarking study
2. Choose a KPI
3. Convert the UX metric into the KPI
4. Report the calculation responsibly

Step 1: Collect a UX Metric in a Benchmarking Study

You can perform this calculation for a project, a feature, or a product. Whichever you’re working with, you’ll need to choose a UX metric — numerical data that tells us something about the user experience.

Ask yourself: What will demonstrate an improvement in the experience?

There are lots of popular metrics that would work well for ROI. Many of these will come from one of four sources:

• Surveys or questionnaires distributed during testing
• Analytics
• Quantitative usability testing
• Customer support

Example UX Metrics

To measure your impact, you’ll need to collect your UX metric through a benchmarking study —  before and after your design change.

Example: Health-Insurance Website

We’re working on the registration process for online accounts for our health-insurance policy holders. We know from qualitative research that people often struggle to register for their accounts.

Possible UX Metrics for the Registration Task

• Success rate (quantitative usability testing): If we ask participants to try to complete the task, what proportion of them are successful?
• Completion rate (analytics): If we look at people who begin the registration process on the site, what proportion of them complete the process?
• Ease-of-use rating (surveys or questionnaires): If we ask people how easy the process is, how do they rate it?
• Customer-support tickets (customer support): How many people contact support in order to complete this process?

In our benchmarking study, we might decide to collect several of these metrics, along with others that describe the experience of the entire site. However, we’ll probably only use one of these UX metrics in our ROI calculation.

Step 2: Choose a KPI

Next, you’ll need to select a KPI to translate your UX metric into. Ask yourself: what does my organization care about?What are the metrics that everyone — not just the design team — pays attention to? 

Or, more specifically, think about who you’ll be presenting this ROI calculation to. Stakeholders, executives, clients? What do they care about?

KPIs depend on the specifics and the culture of the organization, but most KPIs come down to money (even in nonprofits).

Examples of KPIs:

• Profit
• Cost
• Customer Lifetime Value (CLV)
• Employee-Turnover Rate (ETR)
• Employee productivity
• Donors & donor growth

In most cases, you’ll be trying to turn your UX metric into a monetary amount. That isn’t always necessary, however. Remember, ROI calculation is about showing how design impacts what the company cares about. Sometimes that might mean, for example, calculating the amount of time that is saved with a more efficient design. 

Of course, in some organizations with high UX maturity, the KPI and the UX metric may be the same — maybe everyone already cares a lot about reducing time on task. In those cases, ROI calculations may be unnecessary, because the work of proving design’s value is already done!

Step 3: Convert the UX Metric into the KPI

Calculating ROI is basically converting units. You’re taking one unit (for example, the average number of seconds it takes a user to perform a task) and turning it into another (monetary cost savings). 

So, what would you do if I asked you how many liters are in two gallons? 

Yes, I know you’d just Google it. But if I took Google away, you’d need to know the conversion ratio. You’d need to figure out how many liters are in one gallon (3.8 liters), and then you’d multiply by two to get the answer (7.6 liters).

In the same way, we need to find a conversion ratio for our ROI calculation: that is, we need to find out how to turn a UX metric into a KPI.

Sometimes, these conversions are fairly simple. It may just be a matter of multiplying two numbers together. In other cases, the calculations can be much more complex.

Example: Health-Insurance Website

If we decide that our UX metric is customer-service tickets about registration, it’ll be pretty easy for us to convert this into money. 

We just need to figure out how much each ticket costs our company. Most customer-service departments will have that information available. 

Once we know that number, we’ll just multiply that cost by the number of reduced tickets.

So, let’s say we had 23,000 tickets for registration in the month before the redesign. Our design improvements fixed some glaring usability issues and made the process much smoother, so people can easily complete the task on their own. We have 1,100 in the month after the redesign. That’s a ticket reduction of 21,900.

Let’s also say the cost per ticket is $6 — the average cost of the customer-support personnel’s time to resolve one ticket. We’ll just multiply 21,900 by the cost per ticket to get our projected monthly cost savings: $131,400. (Annual savings: ×12, unless you have seasonal variations.)

Step 4: Report Responsibly

It’s important to remember: ROI calculations are strategic exercises to help you conceptualize the relative value of design projects. They are not financial projections. Please, do not go show these numbers to the finance department and tell them to expect to see this exact increase in the bottom line. 

As a result, they don’t have to be perfect. They can be estimates — as detailed as you want them to be. Some teams choose to factor in inflation or add in the cost of electricity and heating offices as well as the cost of employee time. But estimates are usually fine for UX savings, since the main reason to compute them is to compare with the R&D costs for the improvements, which are also (rough) estimates in most places.

The critical thing is to be transparent in your reporting. Make sure your audience understands where your numbers came from. That’ll be useful in setting expectations, but also in backing up your calculation’s credibility.

You’ll also want to factor in the cost of the project itself. And, remember, design improvements are cumulative. That means that an improved design could give us $300,000 in new revenue this year, but it’ll also likely provide the same increase the year after that. For that reason, it’s a good idea to look at ROI projected out onto 2–5 years.

Example: Health-Insurance Website

We’ll want to make sure we include all of the important details in our reporting to our stakeholders. For example:

“We observed a reduction in the number of support tickets for the registration task by 21,900 tickets. Assuming each support ticket costs us $6, that’s a projected savings of $131,400 in one year, or $393,000 over three years.

Since the design project cost about $75,000, our return over three years may be around $318,000.”

Why Bother Calculating ROI?

Our UX problems are often respect problems. Better respect for UX is hugely important for  getting more resources and inclusion, and thus ultimately increasing the UX maturity of the organization. Showing impact is a big part of that, particularly if you can quantify that impact.

There are plenty of online ROI calculators that will do your work for you, but they can help only if your scenario is exactly the one that the calculator is designed for. 

It’s worth learning how to determine your own ROI conversion ratio and performing the calculation yourself. Once you acquire this skill, you can apply it beyond the more obvious scenarios and use it to calculate and demonstrate improvement for any project.

Learn How to Calculate ROI for Any Scenario

The health-insurance website example in this article is pretty straightforward. We have more examples from real companies (Acorda Therapeutics, Inc.’s intranet and Mozilla).

But what do you do if you want to:

• turn satisfaction scores into profit?
• turn task completion into sales? 
• calculate how much time your team could save by using a design system? 
• calculate potential ROI before a project even starts?

To learn how to set up your own ongoing benchmarking practice and calculate ROI for your own projects, check out our full-day seminar, Measuring UX & ROI.