ROI and Design: The Tangible Value of Good Design


By Daniel Holbourn
Posted on 7/06/24

Many entrepreneurs overlook investing in quality design because they don’t immediately see its value. Yet, good design—strategic, problem-solving design—is crucial to business success. Whether you’re looking to build brand awareness or launch a new product, good design can be a game-changer.

Running a business, no matter the size, is demanding. Entrepreneurs juggle numerous roles, and excelling in every area, including design and marketing, can seem impossible. Naturally, the focus often shifts to immediate priorities like sales.

However, recent studies highlight that good design is more than just aesthetics; it’s a fundamental element of a solid business strategy. It lays the groundwork for effective marketing and acts as the bridge between your product or service and your customer. In today’s cluttered marketplace, clear communication of your value through strong design is key to increasing sales. Don’t underestimate its impact.

The Impact of Design on Business

We all know first impressions matter. But why. It’s because as a species we seek order and meaning, without it, we turn away out of confusion and frustration. A well-designed product, website, or brand creates an immediate positive impression. This initial impact is crucial, as it can influence how potential customers perceive the quality and professionalism of your business. 

“Consistent branding across all channels can increase brand recognition by up to 80%.”

The best brands understand the profound impact of design on business success. Consider the iconic example of Apple. They have built their entire business on the foundation of exceptional design, recognising its ability to captivate and resonate with consumers.

Apple excels in creating a compelling and consistent brand image that reflects their values and resonates with their target audience. They anticipate and address the evolving needs of their customers through innovative products and user-centric design. By elevating the user experience across all touchpoints, from product packaging to digital interfaces, they foster deep connections and loyalty among their customer base.

Apple’s success underscores the transformative power of design in shaping brand perception, driving customer engagement, and ultimately, fueling business growth.

Measuring the ROI of Design

Understanding the impact of design on your business requires more than just qualitative assessments; it demands a structured approach to measurement. Here’s a breakdown of four essential steps to help you evaluate the effectiveness, or Return on Investment (ROI), of your design initiatives:

  1. Define Clear Objectives: Start by establishing specific and measurable goals that align with your business objectives. Whether it’s enhancing user experience, increasing conversion rates, or improving brand perception, clarity on your objectives is crucial for meaningful evaluation.
  2. Collect Relevant Data: Gather both quantitative and qualitative data to assess the impact of your design efforts comprehensively. Quantitative data, such as website analytics and sales metrics, offers numerical insights into user behaviour and business performance. Meanwhile, qualitative data, including user feedback and usability testing results, provides deeper insights into user perceptions and experiences.
  3. Analyse and Interpret: With data in hand, analyse the results to identify patterns, trends, and correlations. Look for areas of improvement and opportunities for optimisation. By interpreting the data within the context of your objectives, you can gauge the effectiveness of your design interventions and make informed decisions for refinement.
  4. Measure ROI: Calculate the Return on Investment (ROI) of your design initiatives by comparing the net benefits or profits generated against the costs incurred. Consider both tangible outcomes, such as increased sales or reduced operational expenses, and intangible benefits, such as enhanced brand loyalty or improved user satisfaction. A positive ROI indicates that your design efforts are contributing positively to your business’s bottom line.

By following these steps, you can establish a robust framework for evaluating the impact of good design on your business outcomes. Remember, measurement is not a one-time activity but an ongoing process of continuous improvement and optimisation.

How to Calculate Return on Investment (ROI)

To calculate ROI, particularly in terms of quantitative data, you can utilise the following formula:

ROI = Net Profit / Cost of Investment x 100

For example:

Let’s apply this formula to an eCommerce scenario:

Suppose your business objective is to drive more sales on your eCommerce site. Your design goal could be to increase the current 20% conversion rate to 25%. With 1000 checkout visits per month at a 20% conversion rate, you currently have 200 checkouts, resulting in $40,000 in revenue (at an average sale value of $200).

Now, if you invest $4,000 in a new checkout process and manage to increase the conversion rate to 25%, your revenue would be $50,000, representing a $10,000 increase.

Using the formula:

ROI = $10,000 / $4,000 x 100 = 250%

Your return on investment (ROI) would be 250%.

This example vividly demonstrates how good design can significantly enhance a business’s financial performance, often with just minor adjustments to user experiences. It’s a formula I’ve relied on for over two decades.

You can also use our ROI Calculator here.

In Conclusion: 

It’s time to start taking design seriously. I mean it. Yes, we are in an economic downturn, and unfortunately, the first budget to go is often the marketing budget. Counterintuitively, when times are tough, you need to increase your design and marketing budgets.

As a rule of thumb, your marketing budget should be 10% of your yearly revenue when business is good. When business is slow, it needs to be between 15-20%.