How Do You Measure ROI in Design in Just 4 Steps
The business value of UX design
McKinsey tracked 300 companies for more than five years. Measuring design actions and collecting massive amounts of financial data showed the most remarkable correlation between design actions to financial gain. Meaning it offers the business value of design. They found that best design performers increase their revenues and shareholder returns at nearly twice their industry counterparts.
The key to developing a successful and compelling business case for design thinking is rooted in finding and socializing metrics that stakeholders care about, and that set the team up for success—articulating the quantifiable benefits of design thinking in a language familiar to the finance team (such as labor cost savings), or the marketing team (such as conversion rates) aids in securing their support.
Designers consistently cite the need for a tool to help measure and communicate design ROI. The ability to champion the discipline and establish its value lets them build trust with executives, win resources, make the right speed over quality tradeoffs, and decide how design gets involved in processes.
Design Thinking Can Deliver An ROI of 85% or Greater
The design needs the language of business to succeed. The ability to justify support for a design team paves the way for new initiatives and gives the design a vital role in the ongoing pursuit of organizational objectives.
Four steps to calculate design ROI:
Step 1: Business Goals
“Increase online sales by 20% this year”
“Increase customer retention to 85%”
The above statements exemplify how clear and well-structured your business goals must be to achieve desired outcomes. These statements are typically the business goals that leaders set for their teams.
Business goals are specific, measurable, achievable, and time-bound. Defining target business goals allows identifying metrics to measure success.
Step 2: Design Outcomes
Design Outcomes are the user behaviors that drive business results. When teams are working with well-defined outcomes, tracking progress becomes simpler — they can review their progress towards the outcomes they’re seeking and look at a concrete measure: are users’ behaviors changing?
For example, a leader may want to increase customer retention by 85%. That’s an impact. An execution team may understand that to retain customers; they must experience a frictionless experience for renewal and payment of annual/ monthly premiums. That’s the outcome. They think they can increase customer retention by fixing confusing product features. That’s the output. So, in this case, a simple logic model would look like this:
- Impact: Increase customer retention
- Outcome: Friction-less experience for renewal and payment of annual/ monthly premiums
- Output: Improved usability of confusing features
Step 3: Measurable CX/UX metrics
CX/UX metrics are quantitative data points set to measure, compare, and track the user experience of a product or service.
KPIs (Key Performance Indicators) reflect your business’s overall goals, such as revenue growth, retention, or increased user numbers. Metrics are all the measurements that go towards quantifying these higher goals.
But what metrics are most valuable? What should you be measuring? Few examples of different metrics to calculate a goal or an outcome –
UX metric doesn’t have to be a tangible metric. There are many ways to prove the value of UX research.
To measure this, you might want to capture these attitudinal metrics:
-
- Loyalty (using scores such as SUS or NPS)
- Usability (or ease of use)
- Credibility (taking things like trust, value, into account)
- Appearance (“oh pretty!” or “WOW MY EYES!!!” etc.)
Step 4: RoI Measurement
If you need to demonstrate the value of your design efforts, one of the most effective methods is to calculate your return on investment (ROI). Essentially, you need to show how your design changes impact the bottom line — revenue, cost savings, or another key performance indicator (KPI).
For example, in the above case of increased user retention, we can calculate the ROI through this simple formula –
ROI = After customer retention metric — Before customer retention metric x cost of new customer acquisition
It’s important to remember: ROI calculations are strategic exercises to help you conceptualize the relative value of design projects. They are not financial projections. As a result, they don’t have to be perfect. They can be estimates — as detailed as you want them to be. The critical thing is to be transparent in your reporting. Make sure your audience understands where your numbers came from. That’ll be useful in setting expectations but also in backing up your calculation’s credibility.
There are lots of popular metrics that would work well for ROI. Many of these will come from one of four sources:
- Surveys or questionnaires distributed during testing (NPS)
- Analytics
- Quantitative usability testing
- Customer satisfaction (CSAT)
To measure your impact, you’ll need to collect your UX metric through a benchmarking study — before and after your design change. With these simple yet significant steps, you’ll be able to calculate the ROI of design activities.
Conclusion
At Cubyts, we recommend the ROI measurement of every design intervention. Cubyts connects business goals to CX/UX metrics & ROI calculation. Design Leaders can create robust case studies with data and complex numbers to tell powerful stories to the Executive Management.
FAQs
ROI is a financial metric used to analyze the scope of investment and figuring out the scope of improvements. In UX design, these metrics could be described as measures that calculate the effect of an investment in design. ROI measures also help to achieve design goals from a business point of view.
We can easily calculate the short-term ROI of a UX research and design project by dividing the new revenue by the cost of the project. Cubyts will enable organizations to align design outcomes to business goals. To calculate ROIs, these design outcomes will be measured for the relevant CX/UX metrics before and after the design intervention.
Solving users problems in a empathetic way is the key to great working and best seller design, it will automatically create the impact on market with word of mouth about the design without lot of marketing efforts. Focusing on User Needs can lead to the best ever usability of the product.
