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ROI on experience

For the past few years many agencies and clients have struggled with equating their online and offline activities to return on investment. The natural inclination in a business is to try and equate specific value to specific executions. How much did that banner ad return to the business? Will redesigning our site be worth the money?

While the intent of these questions is great, often they are unanswerable or destined for disappointing results.

At Core 77′s Design 2.0 conference in New York, Jeneanne Rae of Peer Insight presented a set of 10 criteria to evaluate companies that delivered excellent customer experience (CX). Peer Insight created a portfolio of companies that met these criteria (e.g. Starwood Hotels, Apple, Target, Progressive Insurance). They plotted a $5,000 investment in these companies and compared the portfolio’s performance versus the S&P 500. The CX portfolio outperformed the S&P(4x revenue growth and 2x profit growth). This is backed up by another study by the Design Council in the UK that found:

The share prices of companies which invest in design performed up to three times better than the FTSE 100 Index over nearly two years in the run-up to December 2004.

ROI of user experience or customer experience is a macro business issue, not a micro one. As a customer you are influenced by many aspects of your communication or interactions with a brand. Trying to determine ROI based on specific tactics may cause you to lose the forest for the trees.

Geoff Teehan More posts by Geoff Teehan