Measure Business Value (ROI) of Design in 4 steps

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.

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:

4 steps to measure Design ROI (Value)

Step 1: Business Goals

Step 2: Design Outcomes

  • Outcome: Friction-less experience for renewal and payment of annual/ monthly premiums
  • Output: Improved usability of confusing features

Step 3: Measurable CX/UX metrics

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:

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.

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