1. Making the Business Case for RIAs
(in the SME Market)
AJAXWorld West 2008 // Howard Kiewe
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2. Topics
1. About Info-Tech Research Group
2. What’s an SME?
3. Rational Persuasion: The Business Case
4. Emotional Persuasion:
Social Proof, Reciprocity, & Emotional motivation
5. Recommendations
6. Questions
7. References
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3. About Info-Tech
Info-Tech Research Group, established in 1997, provides IT
research and advice to over 23,000 clients globally, mostly mid
market firms in the US.
Howard Kiewe is a senior
research analyst in application
development. Previously he
provided user research, UX
design, and UI development
services to leading companies.
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4. What’s a Small to Medium Sized Enterprise (SME)?
< 1000 employees
< 200 IT employees
Business case is
similar to larger firms,
but usually less money
to spend
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5. Persuasion: The Rational and Emotional Elements
Rational Arguments:
Cerebral Cortex
RIAs represent a significant change,
so they require significant persuasion
Emotional Appeal:
Hypothalamus,
Amygdala, etc.
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6. Include UX Engineering in the Business Case
AJAX, Flex, etc. provide the tools to create a
rich UX
However, the UX must still be researched,
designed, and tested
E.g. Have you ever used a GUI that made you
long for a CLI?
RIA with a poor UX will not delivered the
promised ROI
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7. Rational Persuasion: The Business Case
Making money by:
Increasing conversions
Increasing upsell
Offering a better UX than the
competition
Saving money by:
Reducing contact center costs
Enhancing employee productivity
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8. The Business Case, 1 of 5
Increasing Conversions
e.g. Single screen checkout & dynamic error checking
Present Site Improved Site
Conservative Best Case
Projected conversion improvement - 20% 30%
Average sale $1,200 $1,200 $1,200
Unit margin % 20% 20% 20%
Unit margin $ $240 $240 $240
Annual site visits 100,000 $100,000 $100,000
Conversion rate (% of visitors who buy) 2% 2.40% 2.60%
Development Costs ($30,000) ($30,000)
Net income $480,000 $546,000 $594,000
Profit - $66,000 $114,000
ROI $1:2.20 $1:3.80
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9. The Business Case, 2 of 5
Increasing Upsell
e.g. Options & customizations
Present Site Improved Site
Conservative Best Case
Projected increased value per sale 25% 33%
Average sale $1,200 $1,500 $1,600
Unit margin % 20% 20% 20%
Unit margin $ $240 $300 $320
Annual site visits 100,000 100,000 100,000
Conversion rate (% of visitors who buy) 2% 2% 2%
Development costs - ($30,000) ($30,000)
Net income $480,000 $570,000 $610,000
Profit $90,000 $130,000
ROI $1:3.00 $1:4.33
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10. The Business Case, 3 of 5
Reducing Contact Center Costs
e.g. Less telephone order taking
Present
Improved Site
Site
Conservative Best Case
Projected call reduction - -10% -20%
Calls per year 60,000 54,000 48,000
Cost per call $14 $14 $14
Costs per year $840,000 $756,000 $672,000
Savings $0 $84,000 $168,000
Development Costs ($30,000) ($30,000)
Net savings - $54,000 $138,000
ROI $1:1.80 $1:4.60
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11. The Business Case, 4 of 5
Enhancing Employee Productivity
e.g. Reducing transaction costs
Present Site Improved Site
Conservative Best Case
Projected reduction in transaction time - -30% * -40%
Transaction time (seconds) 120 84 72
Cost per transaction (at $20 per hour) $0.67 $0.47 $0.40
Transactions per year 350,000 350,000 350,000
Costs per year $233,333 $163,333 $140,000
Savings - $70,000 $93,333
Development Costs - ($30,000) ($30,000)
Net savings - $40,000 $63,333
ROI 1.33 2.11
* Based on test performed by Nitobi Inc., see http://www.massivetechshow.com/resources/ajax.asp
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12. The Business Case, 5 of 5
Offering a Better UX than the Competition
http://reservations.ihotelier.com/onescreen.cfm?hotelID=2054
http://www.asiahotels.com/hotelinfo/Cosmopolitan_Hotel_Hong_Kong/
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13. Emotional Persuasion
Provide social proof
Tap the reciprocity
norm
Tap emotional
motivation
Emotional Appeal:
Hypothalamus,
Amygdala, etc.
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14. Emotional Persuasion, 1 of 6
Provide Social Proof
Social Proof: When we are in
ambiguous situations, we tend to
copy the behavior of those around
us.
This short cut usually helps us
make good decisions quickly.
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15. Emotional Persuasion, 2 of 6
Provide Social Proof
e.g. Point to peers or competitors; refer to authorities
“Brick-and-mortar based small enterprises need a
dynamic Web presence to look credible and
generate excitement about their offerings.”
Info~Tech Research Group
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16. Emotional Persuasion, 3 of 6
Do Them a Favor: Tap the Reciprocity Norm
“Pay every debt, as if God wrote
the bill.” Ralph Waldo Emerson
Reciprocity Norm. Receiving
anything positive requires that you
reciprocate.
Reciprocity’s powerful effect is well
documented by social
psychologists.
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17. Emotional Persuasion, 4 of 6
Do Them a Favor: Tap the Reciprocity Norm
What is
not in your job description or
contract
easy for you to do for them
hard for them to do for
themselves?
These make excellent favors!
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18. Emotional Persuasion, 5 of 6
Tap Their Emotional Motivation
What’s a more powerful motivator?
Gaining a benefit or Avoiding a loss
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19. Persuasion: The Emotional Elements 3 of
Avoiding loss!
Emphasize what could
happen:
Loss of security
Loss of revenue
Loss of opportunity
Embarrassment
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20. Summary of Key Approaches
Rational Persuasion: The Business Case
1. Increasing conversions
2. Increasing upsell
3. Offing a better UX than the competition
4. Reducing contact center costs
5. Enhancing employee productivity
Emotional Persuasion
6. Provide social proof
7. Tap the reciprocity norm
8. Tap emotional motivation
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21. Recommendations
Evaluate before and after with Web analytics and usability tests
Plan to invest in UX engineering
Plan for measurement
Consider impacts on all channels
Develop the business case
Apply principles of social proof, reciprocity, and emotional
motivation
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22. References
Cialdini, R. B. (1998). Influence: The Psychology of Persuasion. New York: Quill. An excellent work on social influence
by one of the field's leading researchers. A rare combination of thorough scholarship and engaging writing style.
Kiewe, H. (2006). The UXE White Paper: User Experience Engineering Essentials [Electronic Version]. user-
experience.info. Retrieved September 15, 2006 from http://www.user-experience.info/uxe. User experience engineering
(UXE) is a structured research, design, and evaluation process whose goal is to make user interactions with a product or
service easy, efficient, and enjoyable. This white paper summarizes the UXE process and evaluates its business case.
Kiewe, H. (In Press). Rich Internet Applications: What’s the Business Case? [Electronic Version]. Info-Tech Research
Group, http://www.infotech.com. Evaluates the business case for RIAs and provides tools to create your own.
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23. Questions?
Howard Kiewe
Senior Research Analyst
Application Development & Outsourcing
Info-Tech Research Group
43 Front Street East, Toronto On.
Canada M5E 1B3
North America: 1 (888) 670-8889 x3043
International: +1 (519) 936-2652 x3043
Cell: +1 (416) 829-8683
hkiewe [at] infotech [dot] com
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