A just released survey of the top 40 e-commerce sites asked users to rate their satisfaction with the buying experience. In the results, the survey director notes “higher customer satisfaction ratings often translate into loyalty and purchase intent”.
It is amazing that we still need surveys to tell us that. Web usability started as an art and is now an established science that uses audience personas, usage stories and needs mapping to optimize site flow, calls to action and creating an engaging yet efficient experience tailored to each visitor.
Jacob Nielsen in recent studies found an improvement of 83% to 138% in KPI’s resulting from a web usability redesign. In about 12% of the cases, the increase was tenfold.
With every web initiative need to provide Return On Investment (ROI) justification, most sites and applications have huge potential for improvement and can easily justify usability upgrades.
How to build a strong ROI case
The common formula for the commerce site business potential is based on the simple concept of getting as many visitors as possible and converting them into paying customers.
Business = Visits x Conversion Rate X Average purchase amount (For each revenue stream on the site)
Let’s look at each of these 3 components that largely determine site performance: volume, conversion and purchase size and see where the usability comes in.
Volume: traffic is comprised of new traffic and repeat traffic (V = Vnew + Vrepeat). Attracting new visitors to the site can be expensive and the acquisition cost is often reduced from the total revenue generated. Repeat and loyal visitors are essential to profitability and any improvement in the repeat visitor rate has significant impact on the bottom line. Good user experience that contributes to customer satisfaction will increase the number of repeat visits and add traffic without the acquisition cost.
Conversion Rate: The other critical role of usability is to make sure each visitor is provided with their specific needs which are not always a direct purchase. In a previous post I looked at the new e-commerce paradigm that acknowledges the multiphase shopping experience and provides information, interaction and solutions for visitor in every phase of their purchasing decisions. User experience optimization can have a dramatic effect on converting a visitor to a customer.
Purchase Size: Amazon started product merchandizing, upsells and recommendations more than a decade ago but many companies still are not perfect at providing users with additional options and suggestions throughout the checkout process.
Therefore the impact of usability on the Business consists of the increase in repeat traffic (∆Vrepeat), the increase in conversion rate ∆CR and the increase in purchase size ∆PA or in a formula: B = (Vnew + (Vr + ∆Vr)) x (CR + ∆CR) x (PA + ∆PA)
Usability contributions to cost reduction and savings:
- Reduction in marketing spend for new customer acquisition. The same traffic goals can be achieved with more repeat traffic reducing marketing expenses for new traffic generation.
- Reduction in calls to phone support
Other factors to consider:
- The cost of doing nothing. Not improving usability can actually hurt the factors listed above as the market is not static. The overall web usability standards have increased with rich interfaces and Ajax style functionality. Sites that have not caught up, look dated and clumsy. The competition is not static either. If your site’s experience is inferior to the competition, traffic will move there.
- Social media and word of mouth quickly spread good experiences and bad one to an extremely wide audience.
And lastly, without good web analytics program and measurements, you may not know to identify the challenges of poor usability or the contributions of improvements so consider setting an analytics baseline prior to any substantial improvements.