Return on Investment (ROI)

Your constantly-updated definition of Return on Investment (ROI) and collection of topical content and literature

What is Return on Investment (ROI)?

Return on investment (ROI) is a financial metric used to analyze the efficiency of an investment. ROI = profit from an investment / investment cost, and is usually expressed as a percentage. For instance, if you invest $1,000 in creating a website and it increases your sales by $1,500, then the ROI = (1,500 - 1,000)/1,000 = 50%.

ROI is used more broadly in design to describe the effect of an investment in a design-related area—e.g., investments in design, usability, or user research. When used in this way, ROI cannot be calculated as simply as in finance, because the investment is not always measured in the same unit as the benefit, and the effect is not always direct. In design projects, an investment is often money or time, but the benefit could be increased user satisfaction, improved user efficiency, or the reduction of user error—all of which will probably lead to an indirect increase in profits.

While calculating the ROI of design efforts is difficult, some organizations have attempted to do so by analyzing the net effect that a focus on design has on the overall profitability of a company. The Design Management Institute, for instance, has found that design-centric companies (such as Apple, Coca-Cola, and IBM) outperformed the S&P index (which indicates the industry’s average performance) by 228% over a 10-year period from 2003 to 2013. Thus, having a solid grasp of ROI and an appreciation for how they can translate the dynamics involved to the user experience will give designers a powerful advantage. With an enhanced scope when determining what features a design needs versus those which may be superfluous, a designer can concentrate on how the value of convenience the user will place on it will reflect the financial health of the work after rollout.

Literature on Return on Investment (ROI)

Here’s the entire UX literature on Return on Investment (ROI) by the Interaction Design Foundation, collated in one place:

Learn more about Return on Investment (ROI)

Take a deep dive into Return on Investment (ROI) with our course User Experience: The Beginner’s Guide .

User experience, or UX, has been a buzzword since about 2005, and according to tech research firm Gartner, the focus on digital experience is no longer limited to digital-born companies anymore. Chances are, you’ve heard of the term, or even have it on your portfolio. But, like most of us, there’s also a good chance that you sometimes feel unsure of what the term “user experience” actually covers.

[User experience] is used by people to say, Im a user experience designer, I design websites, or I design apps. [] and they think the experience is that simple device, the website, or the app, or who knows what. No! Its everythingits the way you experience the world, its the way you experience your life, its the way you experience the service. Or, yeah, an app or a computer system. But its a system thats everything.

Don Norman, pioneer and inventor of the term user experience”, in an interview with NNGroup

As indicated by Don Norman, User Experience is an umbrella term that covers a number of different areas. When you work with user experience, it’s crucial to have a good understanding of what those areas are so that you know what tools are available to you.

Throughout this course, you will gain a thorough understanding of the various design principles that come together to create a user’s experience when using a product or service. As you proceed, you’ll learn the value user experience design brings to a project, and what areas you must consider when you want to design great user experiences. Because user experience is an evolving term, we can’t give you a definition of ‘user experience’ to end all discussions, but we will provide you with a solid understanding of the different aspects of user experience, so it becomes clear in your mind what is involved in creating great UX designs.

If you are new to the Interaction Design Foundation, this course is a great place to start because it brings together materials from many of our other courses. This provides you with both an excellent introduction to user experience and with a preview of the courses we have to offer to help you develop your future career. After each lesson, we will introduce you to the courses you can take if a specific topic has caught your attention. That way, you’ll find it easy to continue your learning journey.

All Literature

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