Where should you invest first for it to pay off? In user experience or advertising?

Companies often classify user experience analysis as unnecessary, but they often don’t realize that testing solutions with users is the key stage of digital solution development. Have you ever made sure that you did everything right on your website, but there were no results? User experience often helps you achieve your goals.

Investing in advertising, about which companies make a decision “quickly”, impulsively, is very usual in a period of crisis. Advertising is necessary, but at the same time we must ask ourselves what happens when the user decides to visit our website. What will you offer him and what will his user experience be?

User acquisition will be more effective if you invest in user experience first and then in advertising. why is that? Let’s look at an example of an online store.

You have an online store…

Let’s say you have an online store that is visited by 2,000 potential customers every month. When buying, 40 of them leave the store (so the conversion rate is 2%). Let’s say the average purchase value is €100, but there is no cost per individual purchase. We decided to invest 5,000 euros in advertising or improving the user experience. The average cost-per-click (CPC) is 1 euro.

First example: investment – advertising

Let’s take a look at investing in advertising in concrete terms, by the numbers. First, you invest 5,000 euros in advertising. Assuming that each click on the page costs you 1 euro, you get 5,000 visitors. Thus, the CPL (cost per lead, i.e. the price of one “lead” contact of a potential customer – eg email or phone number) is €1. Since your conversion rate is 2%, you can expect 100 new purchases. Of course, the cost of purchase (CPS) goes up to 50 euros per purchase (5,000 euros / 100 purchases). This month you gained 5,000 new visitors, to which we added 2,000 existing visitors, so you have 7,000 visitors, of whom 140 made purchases (40 existing plus 100 new).

The results of the one-month result at the annual level are 29,000 visitors, 580 purchases, the cost of one successful purchase is 8.62 euros.

Another example: Investment – User Experience

You are now changing the story and investing €5,000 in or improving your user experience. You hire an agency to perform user experience analysis for you and follow their recommendations. In the first month, the investment in improving the user experience does not pay off and is only a cost. But this is a long distance race and let’s see what happens after a certain time.

You are still getting 2000 users and 40 sales have been completed successfully (2% conversion). The cost of each purchase has increased to 125 euros per purchase (CPS).

In the first month, there were no tangible results, but in the next month, improving the user experience yielded results. The conversion increases by one percentage point to 3%. Improving the user experience leads to continuous growth and not just a one-time effect. The number of sales was 60 in each subsequent month, and 700 sales on a yearly basis.

If we draw a line, the user experience investment brought in 24,000 visitors, 700 purchases, and the cost of one successful purchase was 7.14€.

The table compares the results of operations without investments, then investments in advertising and user experience for one year.

User experience first then advertising, UX Lab advises

Investing in user experience ensures better results with the same number of visitors to your website or online store. It guarantees balanced sales growth, approximately half the conversion rate, and approximately 20% cost savings per sale.

If we take the average purchase value of €100 and the conditions described above, with an investment in user experience, we can expect annual sales of €23,000 more than without investment and €13,000 more compared to an investment in advertising.

The right decision is a coordinated investment in both areas, which creates the return that we want to achieve in the final stage. In any case, in all cases it is advisable to invest first in website optimization or sales funnel productivity and only then in advertising, search engine optimization, content marketing and the like.

UX Lab: Testing with users is important

We usually want to work quickly and successfully, and UX Lab notes that speed and success in the digital space are often words that don’t “go along”. Quick solutions are often incomplete with obvious errors and deficiencies, and the user experience suffers, and thus the website or online store.

The user experience experts at UXLAB advise testing with users. In Slovenia, this has not yet become a standard, and not much attention is paid to user experience analytics. Almost half of the companies admit that they do not do this type of analysis (Source: UX Lab). The exception is agencies that research user behavior more than companies, but a third of Slovenian digital agencies do not use user experience analysis.

User experience analysis is not a one-time job, it’s a process

When you have a product, you need to ensure its usability and competitiveness, and think about how to make the whole experience better. Competition never sleeps and you can’t sleep either. We have already mentioned that regular analysis in Slovenia is more the exception than the rule. Research by UX Lab has shown that there is practically no systematic analysis of user experience in our country.

Analyzes – both in companies and in agencies – are often done unplanned or as needed. The problem is that without it, we don’t know how users interact with our product or service.

Testing with users is a competitive advantage for the company and significantly reduces the risk that the product will not meet the requirements of the target groups. Through the analysis, you will have a clear idea of ​​which solutions work and which do not. This will guide you, shorten the development cycle and save money, and you won’t hurt yourself with unsatisfied users. The perspective of another person, the user, is important, because through their eyes we can recognize shortcomings in the website, mobile application and the like, which we may not have realized or noticed ourselves.

Project management requires us to be careful about the amount of time and money we spend. This is where user experience or analysis comes in, because with its help we can reduce costs that can be allocated to additional changes. So we can be prepared for the shortcomings earlier.

User Experience: 5 people find 85% of errors and 15 find 100%

Let’s take the example of testing an interface with users. Some research clearly shows that only 5 test users detect 85% of errors, while testing with 15 users allows us to find all interface errors. 5 Users gives us good enough insight into website status and optimum layout.

In the UX Lab, up to 20 user experience analyzes are performed using “eye-tracking” technology annually, which in companies has a strong impact on the productivity of the digital sales funnel and the success of digital solutions for the customers themselves.