When it comes to understanding ROI across an organization, it’s easy for Marketing and Sales teams to tie performance to the bottom line, like a 50% increase in revenue after a GTM campaign. However, when it comes to understanding ROI of UX research in an organization, the correlation between UX research and an increase in revenue or a decrease in costs can be less clear.
That’s why we sat down with Claudia Natasia, the Director of UX Research at Highspot, to talk about how researchers can evaluate the impact of UX research on their organization, and we walk through her UXR valuation model. If you missed the webinar, we’re a big believer in second chances, so click the link to watch the recording.
Claudia was an investment analyst, and that comfort with financial calculations helped her develop a model for measuring the impact of UX research. Her first bit of advice is that UX researchers need to start using language that merges financial concepts and UX research. For example, “uncovering four insights from an evaluative study lead to an X% increase in revenue.”
Measuring the impact of research starts with empowering yourself and the people in your organization with the language to talk about the impact of UX research. Typically when researchers talk about the use case for UXR and the impact it can have on businesses, there’s no explicit language that ties UXR to ROI.
Next, being able to measure the impact of research is also dependent on being able to calculate the impact of UX research. Here are the calculations that Claudia laid out.
There are 2 calculations UX researchers can use to measure the impact of UX research.
In the webinar, Claudia shared an example of ROE in relation to decreasing costs. While working at a previous company, rising call center costs were an area of concern for the company. Claudia analyzed call center data and discovered that the product drove increased call center costs.
Research uncovered that three product investments were not made, which would have improved the ease of use, and these were the direct contributor to the increased call center costs. This research led Claudia to conclude that if the company invested in these particular areas, this would reduce call center volume and reduce costs by x%.
You can increase LTV either by increasing your price or getting customers to stay longer. This is dependent on the way your pricing is structured. No customer will pay more for a product unless there’s a greater benefit, like more features. Likewise, customers won’t stay if they aren’t happy.
One key factor for SaaS businesses that impacts LTV is the churn rate. Therefore, UX researchers need to focus on increasing a customer’s LTV by reducing customer churn or increasing the revenue per customer.
UXRs can help with feature development by conducting research projects determining the market’s appetite for a new feature or researching how to improve the functionality of current features. The research findings from both types of research will help product teams answer two questions:
Most importantly, it’s about demonstrating how the research outcomes will increase revenue per customer or reduce churn.
After calculating the impact of UX research, the next step is communicating the impact to the rest of your team and executive leadership. It’s not easy to communicate the impact of UX research in simple terms such as “a 30% decrease in customer churn due to the user experience” The key to communication with executive leadership is to communicate the impact in relation to your company’s goals and objectives.
As a UXR leader, you must clearly understand your company’s goals and objectives. Most UXR teams operate as a function of a team, like Product or Design, rather than operating as an independent team.
Therefore, when UXR teams are embedded in a design or product team, their goals and objectives typically fall under those teams and not the broader company’s goals. That’s why it’s essential for UXR teams to tie their work back to company-wide objectives and goals, not just their team’s work. In the webinar, Claudia and Ned discuss that UXR is an equal participant to a company’s broader strategy. Therefore, researchers need to be able to sit at the table and establish goals and objectives in relation to the wider company.
Once UXR leaders tie their work to the overall company goals and objectives, they’ll be able to pick the right projects, measure the impact and goal attainment and they’ll be able to provide executive leadership with figures that illustrate the value of UXR.
Democratization of research and insights positively affects discussing the ROI of UX research. If you democratize research in your organization, more people will feel empowered to do their research and will eventually see the impact of UX research.
Additionally, allow other teams to access and interpret your research findings. Other teams like the Marketing and Customer Success teams will be able to use these research findings to determine which investments should be made into the product to drive revenue.
As a UX researcher, you’re in a unique position to build the business case for UX research in your organization and effectively communicate UX research's impact. The only way to validate the purpose of UX research in your organization is to demonstrate the ROI it can have. However, practice is always better than theory. Watch the webinar replay to learn real-world examples from Claudia and Ned.