What is Return on Design and Why Should You Care?
Return on Design (ROD) is a metric that reveals how much value you're getting for your design investment. Whether it's product design, service design, or branding, ROD is a powerful indicator of value that helps you align design efforts with tangible business goals.
Understanding ROD helps you refine your design strategies, boost customer satisfaction, and ultimately elevate your bottom line. Caring about ROD means you're committed to smart investments and ongoing improvement.
How to Calculate Return on Design
Calculating Return on Design requires two pieces of information: the increase in sales generated due to design and the total amount spent on design.
Formula
[\text{ROD} = \left( \frac{\text{Increase in Sales Generated from Design}}{\text{Total Spent on Design}} \right) \times 100]
Where:
- Increase in Sales Generated from Design is the extra revenue brought in due to your design efforts
- Total Spent on Design is the total investment you made in design, including initial and ongoing costs
Calculation Example
Suppose you recently launched a new product design that increased your sales by $450. The total amount you spent on this design project was $1,000.
Plug these numbers into the formula:
[\text{ROD} = \left( \frac{450}{1000} \right) \times 100]
Now, let's do the math:
[\text{ROD} = 0.45 \times 100 = 45%]
Your Return on Design is 45%. This means for every dollar you spent on design, you generated 45 cents in increased sales.
Factors Influencing Return on Design
Several factors can affect ROD:
- Effectiveness of Design Strategy: A well-thought-out strategy can significantly boost your ROD
- Market Conditions: Economic or market factors can either uplift or undermine your design efforts
- Quality of Execution: Excellence in execution ensures you get the most out of your design investment
- Alignment with Consumer Preferences: Designs that resonate well with the target audience often yield better returns
How to Boost Your Return on Design
Want to maximize your ROD? Here are some tips:
- User-Centered Design: Always keep your customers at the center of your design process
- Market Research: Align your design efforts with actual consumer needs through thorough research
- Optimize Costs: Streamline your design processes to cut down unnecessary expenses
- Iterate and Evaluate: Continuously improve your design based on feedback and data