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The ROI of Design

by Marc Lefton
Monday, February 28, 2005. 09:44PM
499 Views 16 Comments

ROI is mandatory in marketing today. However, it is always difficult to measure especially for certain activities like design.



To prove the effectiveness of design, UK industry body, The Design Council did a 10-year analysis of the stock market performance of companies with strong design portfolios (the criteria used was award winning).

The finding, those companies with strong design portfolios performed 200% better than the average for the UK stock market. The data also revealed how the companies with design portfolios managed to ride out the recession better than the others.The more...

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Monday, March 7, 2005. 05:33PM by olivier
Concerning Apple, let's remind you those ROI of design are measurable on long term. Longer last the investment on design, heavier and more secure is the ROI will be. Please do not focus on Apple only. "Democracy, luxus that even richest can't afford" remember this claim. Today Users and consumers decide sooner or later. Advertising can boost the short term decision but then what? it's the company's product or service which stays in the users' hand. So communication promises still have to be hold then. If today Ads' industry is ill and sick, it's because it never supported has deep and strongly the brands' values. Let's go down to reality. If today Chipotle, own at 90% by McDonald, got so much success, it's above all because of the philosophy of the brand & product, Therefore the simple longlasting burritos campaign support no more no less the simple definition of the brand caracteristics. point. The product do not have so big difference from another good burrito, It can taste as good as any other brand but the core value of the product are definitively respected and hightlighten. Ads supported with fun because product definitively brings staisfaction. I can tell you I hate McDonalds, and i have never eaten Chipotle :-) yet, But from what I have read about, this brand sounds like cement in my consumers' minds. Steve Ells, another Steve, CEO of Chipotle, was not from McDonalds, but he brings somehow McDonalds to understand what are real brand values, and how to build on it. Look carefully the design of the corporate ID, the design of the shops, the "atmosphere design", and finally the design of the ads. Please tell me where are the mistakes? (today for sure this is the queue at the doors, the restaurants are victims of their success at pick hours) Who would believe that behind this company is hidden the investment of McDonalds :-)
Monday, March 7, 2005. 09:04AM by shaun arora
I agree. ROI in design and any creative medium is near impossible to measure accurately b/c of the variables. Color, consumer taste, placement, economics, politics, morals, ... And R&D is a briliant analogy. One of my favorite examples of finding new metrics is Harley Davidson. They actively measure their fan base by the number of people getting Harley tattoos. Food for thought.
Sunday, March 6, 2005. 02:13PM by Marc Lefton
Chris, you're right in that comparison for sure. But I think this survey is an average. I'm sure those companies factor into it. Microsoft has other reasons than design for it's success, and Apple has been successful despite some bad decision making. When we launched this site, our vision for it was a much more coherent, easy to navigate, well designed version. But we couldn't afford that, and we get by because we have a product people use, despite its shortcomings. That's the deal with Microsoft. They had zillions of programs that could run on windows, whereas you couldn' get but a handful of them on a mac.
Saturday, March 5, 2005. 05:59AM by chris young
I would never dispute the value of good design, however the metric used might be a little off. If you were to use their criteria, Steve Jobs would be a gazillionaire and Microsoft would be an also ran. There use of design awards as a metric does not reflect what marketing is about, sales. Awards are handed out by industry insiders who appreciate the aesthetic,without regard for the effectiveness of their efforts. I recently read about a firm in Toronto who is scooping up major accounts and working on the premis that under no circumstances will they submit any of their work for awards. Instead they choose to focus on building sales for the client, and it appears to be paying off in the form of a rapidly growing account list.
Friday, March 4, 2005. 06:43AM by olivier
Thank you Marc for the references. Hey ! psst! I got a secret to tell U, I am a Designer :-). An Industrial designer understanding advertising and marketing issues as well. it's RARE :-) OK I stop POLISHING myself. Please have a bite of Apple, Steve Jobs centered all his R&D on the "users experiences", on the Last cover of Fortune feb 28. Noelle, if you remember one of my previous post, I mentioned you to have a look in the designers clubs. Watch carefully,more than 15 years ago, advertising network groups started to buy or invest in design studios but without understanding their philosophy. Unfortunately or fortunately Design is still a longterm process which need advertising networks for their client portfolios and for some understandings of creative processes. So today advertising has to centered is core business on CREATIVITY. I said NOT TALKING ABOUT IT during some conferences, seminars or client presentations, or even publishing some nice hard cover luxury gifts books, but DOING CREATIVITY. Please Let's find the definition of the word DESIGN in the dictionnary and let me know what is it about ... PACKAGING IS JUST ONE OF THE TOP OF THE ICEBERG, because it's related to retail and merchandising, sales &/or promotions, something like advertising somehow. But in fact, when we do REAL Corporate ID, we are digging and building on the Core Values and the Culture of companies' brands, no more no less, expressing them just like in simple sexy underwears. Then naturally The Design Product just brings here the most direct simple expression of what a company has to stand for. Therefore advertising became your fashionable way to dress up your brand according to seasons, markets, etc ... It comes naturally with its targeted messages. So Today even included in Corporate ID guidelines, we have to build Corporate Communication Guidelines too, the real reference tool which can help clients and agencies to federate a consistant brands. And No it's not only about graphic guidelines, but BRAND VALUES, etc ... . Now, if from an advertising creative point of view, It is good or not, this is another discussion.
Wednesday, March 2, 2005. 12:18AM by Oz Goonewardene
Great post! I would love to see a study like this done... Heck, I'll do it if someone funds me...
Tuesday, March 1, 2005. 08:31PM by Kim S
I've been reading this post and find it quite fascinating. When it comes to packaging, when a consumer wants to return something, especially electronic equipment, are they not supposed to bring it in it's "original packaging?" Thus, getting something packed up back into the box would be a benefit to consumers (of course this has nothing to do with packaging "design" in it's creative form). There's a whole "return" angle that could play a role. Although, Marc, I'm not so sure anyone would take back a half full soda can... ;)
Tuesday, March 1, 2005. 05:01PM by Christopher Cowan
Packaging is not irrlevant after a sale, it reinforces the fact that a QUALITY product has been purchased and this instills brand loyalty and will probably lead to futures sales which will make a better ROI. This accountant thinks as far ahead as the next quarter and doesn't see a ROI in that time frame, so a brown box that is difficult to unpack and repack is of no consequence. The Apple products are expected to last for a few years so it makes sense that you want to protect your product moving house so you bring design into making this easy and stylish as well. Xerox are another company who think like this, they even have instructions on repackaging their printers supplied with the user documentation. BTW the Apple corporate font was Apple Garamond a custom version of ITC Garamond, but since 2002 Apple has increasingly been using Apple Myriad. I'm a typesetter by trade these things interest me :)
Tuesday, March 1, 2005. 12:32PM by Alexis Adauto Ferguson
I agree with Marc. There is just something about good design that sets it apart and makes it sought after.
Tuesday, March 1, 2005. 11:45AM by Kaza Razat
You're right on target Marc. Successful companies know this. Although I don't have any documentation to support this I believe from my discussions with companies Apple included (Hey Marc you were at BBDO when they had Apple breifly) that well designed products will be snatched up by trendsetters and celebs and ultimately will make their way into the hands of the masses, that is the folks that still wear waist pouches.
Tuesday, March 1, 2005. 10:27AM by Marc Lefton
Christopher, in this instance the consumer has likely ALREADY purchased the computer, so packaging at this point is irrelevant. Do you think someone is going to really say "Gee, I spent all this money on a computer and all I got for packaging was this lousy brown box, I guess I'll buy a PC next time." The point about the ROI of design has more to do with brand identity and the comfort level people have with a logo–although good packaging does work as well. I'm willing to try a product (such as a soda) once based on packaging. Apple is a cherished brand not just because they make computers that we like to use, but largely through design and award winning advertising. They use clean, white ads with a classic font (garamond) and when they speak, people listen. Because its' not typed out in Arial Black on someone's PC with a rainbow background behind it.
Tuesday, March 1, 2005. 10:14AM by Christopher Cowan
For this to work you need to have a commitment from top management otherwise it is bound to fail. Secondly it is debatable whether people will spend the extra money to buy a well designed product. A couple of examples will illustrate this. Apple is a leader when it comes to design, whether this is industrial design by Jonathon Ives, or the people producing the packaging. Dell ship everything in brown boxes, Apple have full colour boxes designed to be easy to pack and re-pack. I have struggled to re-pack a Dell LCD monitor when moving house recently. My Apple LCD monitor box even has a carrying handle. Steve Jobs appreciates and demands well designed products, with the iPod people are willing to spend a little extra for a lovely packaged and produced product but with a G5 Power Mac they aren't. The other side of the coin is a company where the senior management are more interested in the stock price than customer awe. Take MetaTools, the software company best known for Kai's Power Tools and Bryce. Their Chief Design Officer was Kai Krause, you can't get much better than that, but when the suits took over they didn't want full colour user guides with commisioned artwork and questioned why a printed manual needed to be supplied at all. Why did there have to be spot colours on the packaging? Once the accountants take over there is no going back, look at Microsoft, they were the first to print on 52g paper then to stop shipping printed documentation. It didn't hurt their bottom line.
Tuesday, March 1, 2005. 08:54AM by M W
rob wallace (of wallace church design agency in ny) has written an article on it for packaging and identity work. i tried to download it, but i could only get the first page (http://wallacechurch.com/html/artic... if you want to try to grab it. also, interbrand does its annual ranking of the most valuable brands and they try to spin it as a design issue.
Tuesday, March 1, 2005. 08:22AM by Alexis Adauto Ferguson
PS. I'd love it if they did a study here, but I think the UK study is great amo for us to use now.
Tuesday, March 1, 2005. 08:22AM by Alexis Adauto Ferguson
I believe that companies who understand marketing in general realize the value of great design. They'll seek great design shops and/or ad agencies because they know that what they'll get is something that will build equity (branding, etc)... or so I try to train those I come in contact with. "Design (as a language of communication) is a component that has been part of every successful enterprise...While the messages are as varied as makers and markets, clear content driven communication, knows no equal." I'm quoting from fellow AdHole Marc English's book - Designing Identity Graphic Design as a Business Strategy. It's a great book and tells the tale of the importance of great design and how it will make a difference to the bottom line.
Monday, February 28, 2005. 10:26PM by Liam Strain
I would love to have a similar study done on the US stock market, and have that printed out nicely to hand clients from time to time. Granted often companies willing to spend time and money on good design already have something going for them (which would indicate future success) but it's nice to have anyway.