The ROI of great UX

Every successful company respects the clear link between great user experience and bottom-line success. Revenue growth at companies considered leaders in customer experience is double that of less experienced peers, according to McKinsey research. Many other studies show how both customer and employee experience improve business performance.

Delivering great experience, of course, depends on great design. Yet it’s an area of expertise that companies have pared back significantly during the economic downturn: For example, the volume of UX job postings has dropped 70% since early 2022. IDEO, the famed product and UX design firm, has been managing cutbacks since 2020 and laid off one-third of its staff in 2023. 

Heading into 2024, CIOs and other enterprise leaders might consider rebalancing their UX and design investments. Despite ongoing economic turbulence, business leaders “need to get out of the functional and financial mindset,” says Nathan Shedroff, a longtime design and UX consultant and author. “You have to move into the qualitative and take advantage of good UX where it differentiates products, services, and experiences from competitors.”

Here are three fundamental reasons to consider that shift—and show how expertise in experience design can deliver outsize returns. 

Design leaders lead in revenue growth and shareholder return

 Companies that share four core characteristics of strong design capability, as defined in another McKinsey study—analytical leadership, cross-functional talent, continuous iteration, and user experience—significantly outperform less advanced competitors. Tracked over a five-year period, corporate design leaders generated 32 percentage points higher revenue growth and 56 points more shareholder return than their industry counterparts.  

The value of UX leadership applies equally across industries

The potential for companies to reap the benefits of design-driven growth is enormous in both product- and service-based sectors. In the McKinsey study, design leaders in the top quartile of three very different sectors—consumer packaged goods, medical technology, and retail banking—far outpaced performance of their less-advanced counterparts. 

Companies can’t afford the cost of poor design 

Even when people love a particular company or product, according to a PwC global study, 32% of those customers will abandon that brand after a single bad experience. That’s a brutal opportunity cost, but if leaders can solve those design and UX issues, they can recoup not just lost revenue but significant profit. The same PwC study showed that customers who were provided a great experience were willing to pay a premium—up to an additional 13%.

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