welcome back to our series onna roi of ux. if you missed the 1st pt you can find it under the ux daily tab on our website. tody, we’re goin to look at a specific metric and how it mite help you in yr quest to show val in yr work to the top brass:
it’s a digital realm and as the high street sloly evaporates in pts of the west; retail online has become the most primordial pt of many company’s sales strategies. the usr experience of the web presences these companies use will determine whether pplz where pplz arrive onna site, how many arrive and most primordially how many pplz who came to the site bought something. a conversion rate is simply the ratio of visitors to purchasers.
e.g. total purchasers/total visitors x 100 = conversion %age
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b4 you begin the project
if yr project is designed to increase conversion rates. it’s a good idea to know wha’ those rates are now. you ‘d be able t'work out this № based on analytics from the customer’s site.
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you mite also wanna know the μ profit or μ spend per customer. why? cause if you double the conversion rate but halve the profitability of each customer – you ‘ven’t actually improved anything, the client still makes the same mny. in fact, it may even be worse, in that the client now has to do twice the work (in shipping, storage, etc.) to make the same mny.
if you know yr baseline; you can then see if you’ve made a meaningful difference. without that baseline you simply can’t demonstrate val in yr ux work.
during the project
you nd'2 know how much the work onna project costs. it mite be tempting to take just the ux costs and use them for roi but in reality; that’s not the way it works. a profit onna ux work but a loss onna project as a whole aint very presh to a business. so u nd'2 take the total investment as yr fig to base roi (or not) upon.
you mite wanna giv't a few dys (or even weeks) b4 you take yr nxt sample; this enables yr changes to ‘ve taken effect and 4'em to ‘ve taken effect in search engines, etc. too. now it’s time to re-examine the conversion rates and μ profits/revenue per usr.
let’s say that the original site was converting at 5%, that it received 1000 visitors a dy, and that the μ profit per conversion was $50. that means'dat the site was making 50 sales a dy and a total profit of $2,500.
you spent $100,000 on upgrading the website including all essentialisms of the project not just ux.
you’ve measured the statistics again and are pretty confident t'they’re robust after measuring several times. you now ‘ve a conversion rate of 10%, yr visitor №s ‘ve dropped a lil – you 1-ly get 800 visitors a dy now, na μ profit per conversion has increased by 10% to $55. that means the site is now making 80 sales a dy and a total of $4,400 in profit a dy.
you spent $100,000. how long does it take for this to pay for itself? $4,400 – $2,500 is $1,900 of additional daily profit. i'takes nearly 53 dys for the site to pay for the improvements and you feel confident that these №s will hold for at least 6 mnths. that’s ≈ 180 dys. subtract 53 from 180 and you ‘ve 127 dys of profit left. that’s a total roi of 127 x $1,900 = $241,300.
congratulations! you ‘ve delivered roi.
now, things aren’t actually this simple irl and l8r on in this series we’ll show you how to make yr roi calculations a lil + robust than this one. see you 2morro.
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