This simple formula for calculating the return on UX was shared by a few people over the past few days and I thought it was really useful. It takes the expected/forecast change in value per user action (in money) that the UX enhancement will achieve for each user, then multiplies that with the total number of user actions per year, factors in the project lifespan, and then subtracts the expected development cost, giving a base return on UX work. What I like about it is that it gives a standard way to compare disparate UX initiatives, allowing for more effective prioritisation of work. In some of the work I've done with clients, the challenge of knowing how to prioritise development work when budget and resources are finite is not insignificant, so having a standardised way of assessing return is useful.
The value of UX development is often under-estimated. The piece mentions that Amazon apparently worked out that for every additional 100 milliseconds added to page load time it cost them 1% in sales. I can't find Amazon verification of that but it seems reasonable that Amazon would ask this question and with all their data that they'd be able to establish a close correlation between speed and sales. But there is also the example of when Google ran an experiment to increase the number of search results on a page from 10 to 30 and found that the resultant half a second increase in page load time meant that traffic and revenue from searchers in the experimental group dropped by 20%. With all the points of interaction that it is possible to optimise along a typical customer journey it's not hard to see how the gains might quickly become very meaningful. Mystifying then, that there are still so many examples of awful UX from companies that really should know better.
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