One approach to calculating the ROI of design

Here is an articulation of the early stage work we did with a client on the answer:

Note: ROI in this context has been predefined as the incremental return
on investment by a said activity viz., design, advertising, sales
promotions etc with respect to the corresponding change in incremental
increase in sales. That is pre activity sales subtracted from post
activity sales in dollar amounts.

So, if we take the decision making process and break it down into it’s
component parts, we get:

"Need to increase sales" – "opportunity or market identification" –
"various options considered, reformulation of product, supply chain
efficiencies increased, design of package or product, sales, marketing"
and map on these activities conducted for that specific brand or product
line on to a critical path diagram viz., PERT-CPM .

What this allows you to do is see how much was spent per critical activity, and what is dependent on what happening first – you’ll note that
if you’re looking at the specific ROI of the design component of the
entire value chain you will find that the majority of expenditure in all
the other areas are due primarily to this investment in new or improved
design of some sort. If you didn’t have to redesign or put in a new design, you wouldn’t be spending on a new assembly line or supply chain vendors, or even on new product introduction and promotion activities.

Therefore, one could state that the ROI of design can be directly
correlated [with some margin for supporting functions as well as error]
to the change in sales revenue for that specific brand or product
category in the market in which the design change was released. The delta of sales revenue could conceivably be the ROI of design.

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