June 26, 2015
At this point of time, there is a consensus in the industry on how user-experience design will save development time. The development time spent on rework is saved as requirements are defined upfront from user’s perspective. Additionally, user experience design helps team to priorities feature and have laser-sharp focus on user needs, which in return saves dev time spent on unnecessary features.
However, there is a bigger role user experience design in making product profitable.
The return on investment (ROI) for UX is not limited to the effort saved but also encompasses the optimization of revenue flow.
In any consumer facing product, two factors determine the profitability of business.
First, cost of acquiring a new customer and second, life time value the customer will bring to business. In simpler words, how much should we spend to reach a customers and how much revenue they can create for our business.
The traditional way to reach customer is through advertising and marketing. This model of broadcasting is one-way and highly expensive. Of late, there have been successful product adopted by masses which have by-passed the traditional advertising (think WhatsApp, Dubsmash, or even our own Kolaveri-Di) by leveraging on concept of connected people.
A thought through, well-designed user experience compels user to share their delight with their peers. This word-of-mouth is more viral in present day era and can be successfully amplified over social media. Think, people actually asking friends to use an app for the delight and not for coupons. The first time I used WhatsApp was when my friend told me how we can be connected without having to spend on SMS packs. I did not need any signing up benefits as the delight was a sufficient criterion.
A delightful user experience cuts the advertising and freebie spends.
Once we have sufficient user base, the next challenge is to optimal utilize the life time value. Going back to WhatsApp, if I do not stay hooked to WhatsApp for more than the free-trial period there is no money made. If I renew my subscription even for a year or two, WhatsApp would earn more than what it had invested in getting to me with their super-cool chat services.
How do we ensure customer is retained, engaged and eventually compelled to spend money on our product.
The customer acquisition may be done with the might of advertising but retention, engagement and importantly sustainable monetization is possibly only through user centered design.
Paul Graham of Y combinator, stated that most products die as they solve problem which do not exist. The only way to build successful products is to understand the needs of person who would be using it.
UX saves your development time, enables to reach larger audience and brings revenue to your business. Period.