The ROI of design
When you invest in something, you expect a return. The investment can be in terms of anything, money, time, resources, etc.
For design, the investment can be in terms of hiring a new designer or an intern, working on a design system, assign more time for research, redesign a flow, design a feature, etc.
You need to care about design ROI to gain executive buy-in and to obtain any resources if you need it.
Issue while defining the ROI of design
It is difficult to define the ROI of design because there are no clear metrics to quantify the impact of just design. When talking about a product, it is a combined effort of several departments and there are no ways to assess or set targets for the output of the design teams.
In a product, while some metrics are design specific, most other metrics are more holistic and it is difficult to say what part design plays in that.
How to communicate the value of our work
As a designer, you have to show your works value to senior executives in the company. These are business people. So instead of explaining the impact of design through qualitative thinking like aesthetics, simple to use, user-friendly, minimal, usable, delightful, etc; you need to translate design’s impact through numbers and metrics.
You need to assess the design performance with the same rigor business track revenues and costs. You need to translate non-monetary benefits to monetary benefits. You need to show senior executives how the designs tie to meeting business goals.
The key is to focus on key performance indicators (KPIs) that are both influenced by design quality and directly tied to the business.
How to connect design with business
First understand the business, what is the business need. What are the metrics which everyone is chasing? Is the company looking for growth over revenue? Are they looking for customer acquisition over retention? This way, you’ll be able to align your design metrics with organizational goals. This is absolutely crucial if you want to show just how much design can benefit your company.
Once you understand what the organization’s goal is, you can define what outcomes you are hoping to achieve.
Let’s understand this with an example:
The company is looking for growth and wants to acquire more users.
Now you can decide how what you are designing will help the organization reach that goal. You may start looking at funnels to see where are user dropping off, this will help you understand what is happening. You may identify that users are dropping off after the login page. You can conduct a qualitative study and ask the users why they don’t ahead with the login page. You might get some insights and it might suggest that they are not able to find out what they are actually looking for. You might want to work on Information Architecture to make the contents more discoverable.
Based on the different results, you might need to change login screens, increase user engagement on the homepage. You can then estimate what it’s going to take to reach the goal, as well as the ROI once you’ve achieved it.
You can further use A/B testing to see if the solution which you have worked on has increased the active users and by how much.
You might be thinking this is all great but what about the case when you are asked to tell the executives the ROI of something you are working on immediately. Well, you can look at the status quo and calculate the impact estimation of your work. It might be guesswork as you are asked about something you don’t know yet. Try to justify everything with numbers in terms of the hypothesis.
- Status quo: What is the current business state (lever) I want to improve?
- Impact estimation: How much will the project improve the business?
Whatever we do as designers should ultimately lead to an increase in revenue or a decrease in costs. That is what the business cares about. In the below image, we can see a few metrics. These metrics depends on projects. Find out about these metrics and how your design can fit into these metrics. Design decisions can impact these metrics like conversion rates, acquisition of new customers, average purchase value, and more.
Eg: You have seen the analytics data that the more people keep coming back the more people convert to a premium plan. Let’s say there you are designing “save for later” feature. what is the business need of this feature? This is a feature used for retention. It is designed to get people to come back and look at the saved things later. Measure whether people who have saved something come back more often. Measure whether they stay users for a longer period. Measure their engagement over time and see if this feature converts them to a premium plan.
Conclusion
Communicate your work in terms of business needs. Focus on key performance indicators (KPIs) that are both influenced by design quality and directly tied to the business.
Credits
How to estimate the ROI of design work by Invision
How to demonstrate design’s value and measure its ROI
The business value of design by McKinsey
