Proving the Value of Package Design
It is hard to prove the ROI of design when it is also difficult to determine exactly what is design, where does it start and where does it end? After all, everything, including communications campaigns, needs to be designed. But fear not; there have been some great progress in determining the return on investment in design.
Research and data has recently and increasingly been emerging justifying the value of design, with most studies coming from governmental councils. A few namely to mention for further reference are:
DROI: Measurable Design (FI) by the Finnish Design Business Association, with research into a model and metrics for measuring the return on invests in design.
The Beauty of Added Value (DE) by the German Design Council, conducting Germany’s biggest survey on the importance of design in corporate success.
Design Effectiveness (NL) by Bond Nederlandse Ontwerpers, a Dutch study into the different factors that influence value of design.
The Design Value Scorecard (USA) by the Design Management Institute, a project to create a scorecard to assess design’s impact on organizations. DMI has also made quite a stir since publishing the Design Value Index, showing that design led companies, meeting a set of select criteria, have outperformed the S&P Index by over 225% since its debut in 2013.
Lastly, the UK Design Council recently published the results of a research study that has identified that (for small business owners) every British Pound invested in design can deliver over £20 in increased revenue and £4 of profit. That same £1 investment turns into 5 pounds of increased exports. Quite considerable potential return on investments seeing that the UK spends 33 billion British Pounds on Design every year.
Synergistic nature of design complicates calculations
So, if there is so much “proof” that investment in design delivers value, why still the debate and ongoing struggle? In an ideal word, one could use an algorithm to input some data and out spits the metrics. The tech company SAP SE even provides an automated online resource to attempt such calculations, the role of design in this application is that of user experience software. Through this online tool, SAP claims that effectiveness, efficiency and user satisfaction can be tracked leading to extra savings for your company.
However, in the world of CPG where digitalization has become intertwined, design is still seeking to prove the value it can deliver in the form of essential tangible 3-D packaging and intangible 2-D graphics and branding. While it is well apparent that companies who “invest in design” are typically towards the top, if not leading their category or market, many executives and budget owners seek to truly know the value that design can provide before investing in it. After all, business is about risk mitigation, and who wants to invest in the unknown? Worse yet, often design is still seen as an expense, sometimes even a frivolous expense, and those budgets are subject to reduction or ceasing long before that of marketing or R&D.
While this prominent matter has been kicked around for quite some time, leading to many discussions and much frustration amongst many design professionals, there has in fact been a lot of recent progress in proving the Value of Design.
Understanding the parameters is essential to effective evaluation
Well, as mentioned before, design has many sides to it. First, one must identify the actual total design spend. And since everything that is produced must be designed, what constitutes the actual design spend? And how to equate that overall spend to what type of desired returns? And can they all be quantified? The obvious return of bottom line revenue and profit is easy to determine. But what about softer qualitative returns, such as brand awareness or brand recommendation. What about other returns across the triple bottom line, positively affecting society or environmental impact? These too are returns that nowadays affect the overall health and sustainability of a brand. Therefore, one must clearly determine what is the actual design spend (and what is not included) then determine what is returned from such an investment, and that is where things are not black and white, but many shades of grey.
Of course, if you invest into a defined design project, such as a package redesign or brand refresh, sales may show indication of the new offer. But was this due to the design or a (substantial) investment in campaigning. What about the investments made in strategy and operations?
An example case study follows including some elements and outcomes of the value of investing in design. Under the appointment of a new CEO for the healthcare division of GlaxoSmithKline (GSK), a new design director was brought in (investment in people) to support the new corporate strategy of becoming the world’s first fast moving consumer healthcare (FMCH) company.
Before then, there were no internal roles for design. The then design director, now vice president of design, first built awareness within the company of how design can add value through enhancing the customer experience. This was done through a series of executive pitches and a brazen communication campaign showcasing that GSK could win with design.
Utilizing a roadmap to showcase how design would be fulfilled, the design director built out a design management team (fixed investment) to work with selected partners (cost savings) to execute design solutions for the market (increased revenues).
One of GSK’s design team’s first focus was on the brand Sensodyne. Before design leadership was brought in house, design was perceived as a logo on a box. Nothing more. The real product was the toothpaste itself, with most investments dollars going into product research and development. Design created a holistic approach to the user experience, looking at all the touchpoints, and how improving and connecting them through design could improve the overall customer experience, thus positively impacting the brand awareness, usage, loyalty and recommendation.
While this took time to develop and implement since appointing the design director in early 2013, allocating significant “additional” funds in the meantime, the return can be seen in the marketplace within a relatively short time. Sensodyne saw an increase of 44% in turnover in 2015. Key global brand Sensodyne saw double digit growth in all three regions (USA, Europe and International) with overall sales up 13% in 2015 with overall annual sales topping more than $1 billion.
The value of design is most impactful, hence return on investment, when design reaches as many consumer touchpoints, positively impacting their overall brand experience.
“I believe that great design is commercially successful design,” Andrew Barraclough, vice president of design at GSK Consumer Health remarks, “and that like all functions in an organization it is imperative that as a design leader you show the value of your team and its deliver towards business goals and objectives. In order to do this, you need to look at several measures for example: Design to value, cost saving, equity growth, creative awards, innovation, business success and growth. I do not believe there is one magic bullet or a single measure but a combination of factors that add up to a clear rational as to the power or leveraging design thinking in an organization.”
Sensodyne saw an increase of 44% in turnover in 2015. Key global brand Sensodyne saw double digit growth in all three regions (U.S., Europe and International) with overall sales up 13% in 2015 with overall annual sales topping over $1 billion. While product research and development still remains important to this GlaxoSmithKline, as evidenced by the recent launch of Sensodyne’s ProNamel Strong & Bright, package design and brand identity now also play a strong role in the brand holding its position as the number one dentist recommended brand for strengthening and protecting enamel.
A simple tool to forecasting package design’s value
While most all studies conducted have tried to correlate investments in design to success in the marketplace and financial gains, most all have been done so in retrospect. There has been little focus on predicting the value of design, including qualitative attributes, while justifying any requested or required investments.
Grow, the organization that I’m part of, has a different approach on Design Value. (First a disclosure, Grow is partners with Brand Experience on educational programs in design management and design leadership. These programs and one day courses in select topics including Design Value aim to help the CPG industry master leading and managing design in their companies and agencies. If you would like to learn how to better understand the robust topic of design value and how to apply the design value canvas in your own organization, check out www.grow-bxp.com.) Grow’s approach identifies design investments and forecasts the value such design initiative can deliver, along with directly highlighting benefits and courses of action. Grow’s Design Value Canvas is a simple tool to be used to identify and iterate possibilities in investing in design and the value it can bring. Those benefits investments in design can bring include: better customer experience, stronger differentiation from competitors, reduced cost price, more brand awareness, stronger brand loyalty, more and better opportunities, more new perspectives on doing business (Business Design), more efficient processes, higher level of employee collaboration and engagement, and more positive Social Impact. [Readers can download their own canvases at www.valuecanvas.design]
Grow has also recently conducted a global study to amongst leading design professionals to better understand what are the main roadblocks and reservations in overcoming investing in design in their organizations. Answers ranged depending on type of Industry, location, culture, etc., as expected, but a few commonalities that were prevalent include statements such as: getting away from the need for short term (financial) results and investing for the mid-long term, and proving that a more holistic approach will deliver more value in the end. Therefore, it is apparent that some traditional mindsets and rewards systems must also change for design to break away from historic constraints.
In closing, the next time you are confronted with the pressing question and uncomfortable position of justifying any investment in design, it may be wise to 1) identify what are the desired results, (both qualitative and quantitative) then 2) create success metrics of how you will track and prove those results, 3) decide what general design benefits will help to deliver those results, then 4) determinespecific design actions, these would be your investments, needed to deliver those results. And until you can prove your own internal successes, it may be beneficial to use some mentioned case studies or resources to help you in your justification.
Jay Peters is the managing director of Park USA, a world leading design & innovation management consulting firm, and Managing Director of Grow USA, a world leading professional education provider in Design Management & Design Leadership. Grow’s mission is to train future design leaders. [Disclosure: In partnership with BXP, Grow is offering training programs in design leadership and one-day courses in select topics including design value to help the CPG industry master leading and managing design in their companies and agencies.]