1. Direct Revenue Impact
- Approach: Calculate how much revenue the design has helped generate. For example, if a website redesign increases conversions, track the increase in sales or sign-ups post-launch.
- Formula: Revenue Increase=(New Conversion Rate−Old Conversion Rate)×Average Transaction Value×Total Traffic\text{Revenue Increase} = (\text{New Conversion Rate} – \text{Old Conversion Rate}) \times \text{Average Transaction Value} \times \text{Total Traffic}Revenue Increase=(New Conversion Rate−Old Conversion Rate)×Average Transaction Value×Total Traffic
- Example: If the conversion rate goes from 2% to 3% on a site with 100,000 monthly visitors and an average transaction of $50, the revenue impact is significant.
2. Cost Savings
- Approach: Good design can lead to operational savings, like reducing customer service inquiries by making information easier to find, or lowering the need for paid advertising through enhanced organic engagement.
- Formula: Cost Savings=Amount of Reduction in Expenses\text{Cost Savings} = \text{Amount of Reduction in Expenses}Cost Savings=Amount of Reduction in Expenses
- Example: If a redesigned user interface reduces customer service calls by 20%, saving the company on average $2,000 per month, this cost-saving attribute adds value to the design.
3. Customer Retention and Loyalty
- Approach: Evaluate how the design impacts customer retention, measured by the repeat purchase rate or customer lifetime value (CLV).
- Formula: Customer Lifetime Value (CLV)=Average Purchase Value×Purchase Frequency×Customer Lifespan\text{Customer Lifetime Value (CLV)} = \text{Average Purchase Value} \times \text{Purchase Frequency} \times \text{Customer Lifespan}Customer Lifetime Value (CLV)=Average Purchase Value×Purchase Frequency×Customer Lifespan
- Example: A design that increases the user experience (like a loyalty program or a visually engaging app) can boost the average customer’s lifetime value by making users more likely to return.
4. Increased Brand Value and Perception
- Approach: This is harder to measure but can be observed through brand perception surveys, social media mentions, and brand equity scores. Good design strengthens the brand identity, making it more recognizable and respected.
- Formula: Use brand sentiment analysis or perception surveys to quantify impact.
- Example: If brand favorability improves by a notable percentage, the design’s long-term effect can be calculated based on increased engagement or brand loyalty over time.
5. Time Savings for the Company or Clients
- Approach: Calculate how the design improves efficiency, either internally or for end-users. This can include a simplified interface, faster navigation, or workflow improvements.
- Formula: Time Savings=(Old Time−New Time)×Hourly Rate or Value of Time Saved\text{Time Savings} = (\text{Old Time} – \text{New Time}) \times \text{Hourly Rate or Value of Time Saved}Time Savings=(Old Time−New Time)×Hourly Rate or Value of Time Saved
- Example: If a dashboard design improvement allows staff to perform tasks 25% faster, the time savings multiplied by the cost of labor shows the design’s value.
6. Increased User Engagement
- Approach: Track changes in key engagement metrics like session duration, pages per session, or social shares.
- Formula: Engagement Increase=New Engagement Metric−Old Engagement Metric\text{Engagement Increase} = \text{New Engagement Metric} – \text{Old Engagement Metric}Engagement Increase=New Engagement Metric−Old Engagement Metric
- Example: A design that results in users spending 50% more time on the site could imply greater value by keeping users connected longer.
7. Market Differentiation
- Approach: If the design helps a company stand out from competitors, assess its value by how much more attractive it makes the product or service compared to others. You can gauge this through user research, customer feedback, and industry benchmarking.
- Example: If a design relaunch positions the company as more premium or innovative, the long-term value can reflect in increased market share or perceived value.
Combined Formula for Calculating Design ROI
You can create a simplified formula by combining the factors that apply most to your specific project:
Design ROI=Revenue Impact + Cost Savings + CLV Increase + Brand Value Increase + Engagement GainsDesign Costs\text{Design ROI} = \frac{\text{Revenue Impact + Cost Savings + CLV Increase + Brand Value Increase + Engagement Gains}}{\text{Design Costs}}Design ROI=Design CostsRevenue Impact + Cost Savings + CLV Increase + Brand Value Increase + Engagement Gains
This approach provides a holistic view of the design’s return on investment.
Tips to Demonstrate Design Value
- Track Metrics Before and After: Keep records of key performance indicators (KPIs) before implementing the design to show measurable impact.
- Collect Testimonials and Feedback: Customer testimonials, team feedback, or user testing reports can validate the design’s value.
- Use Case Studies: Document the design process, challenges solved, and quantitative results in a case study to illustrate the design’s impact.
Assessing a design’s value requires a mix of quantitative data and qualitative insights. This approach highlights not only direct revenue but also the broader impact on user experience, brand strength, and operational efficiency.
