There’s been a lot of talk lately about the value of design. Yet, despite supporting data, such as the Design Value Index Study, which shows consistent, off-the-chart returns for design-centric organizations, design is still often considered an unessential business function.
As someone who integrates design thinking into digital strategies as part of the solutions we deliver at Big Thinkers Society, I find that, more often than not, organizations aren’t clear on the value of design thinking approaches.
Just a few months ago, I was met with skepticism when presenting personas, an essential design thinking tool to understand and deliver on audience needs. By the end of the meeting, our client understood how using a persona could help the team develop messages that resonated with their audience, but their initial reaction is not uncommon.
It could be that design thinking artifacts—personas, journeys, mental maps, user scenarios, and the like — seem too creative. They’re not a P&L or a spreadsheet, or anything that most business professionals are likely to have in their repertoire. But whether developing marketing plans, content strategies, social media campaigns, products, or service offerings, the data that design thinking artifacts delivers is essential, and the way that data is conveyed creates empathy for the user as well as alignment across the business.
But in addition to the resistance of design thinking artifacts based on their presentation, the most often excuses we hear are, “they take too long” or “they cost too much.”
When I hear responses like this, all I can think is this: What is the cost of not doing this work? Design thinking is an essential element of business strategy in a digital world. If you skip it, you’re making a mistake.
The cost of ignoring design thinking approaches is too big
Here’s why. If design thinking helps you…
- Define your audience … what is the cost of not clearly defining and targeting the people who matter most to your business?
- Identify key pain points … what is the cost of not creating messaging or products that solve your audience’s most pressing challenges?
- Understand audience motivations … what is the cost of misreading your audience’s reasons for taking action and connecting those motivations to your product or service?
- Employ the best channels to reach your audience … what is the cost of running campaigns and programs in the wrong channels?
- Know which messages, products, or services best resonate … what is the cost of of delivering the wrong message, product, or service to the wrong customer at the wrong time?
It would seem as though the optimal — and easiest — path would be to allocate the time and resources required to create a foundation that delivers results, a solution grounded in your audience’s true needs, desires, and motivations.
Let’s look at the value design thinking can deliver by walking through two ways it can help and organization.
Increasing share of market depends on understand your customer
Share of market simply means this: Of all of the people interested in your product or service, what percent of those people are your customers?
Of course that requires sizing your audience, which we are not going into here, but let’s use a basic example. Let’s say your product is for public school teachers and we know that there are three million public school teachers in the U.S. If you currently sell to 300,000 teacher customers annually, then your share of the market is 10 percent. If your product costs $50, you are generating $15 million in revenue annually.
But what if your share of market has stagnated? To grow your audience you are going to need to either better target those teachers who would purchase your product or refine your messaging, product, or pricing to meet the needs of more teachers.
If we assume you want to grow your share of market from 10 percent to 12 percent, adding an additional 60,000 customers each year (which would result in an additional $3 million in annual revenue), how could you do that? Would you spent time and money guessing what your customers want or how you could better reach them? Sure you can — many organizations use what we often refer to as “genius deign” meaning they think up ideas based on their best opinion of the situation. But guessing is a risky game — you’ll probably lose time and you won’t gain revenue unless you guess right.
The better way to solve this problem is to approach the solution in a data-driven and strategic way, especially in our digital world where your audience has so many choices and so many touch points.
It includes an approach to truly understand you user, through quantitative and/or qualitative data, to understand their pain points, motivations, and desires. It includes mapping out their journey to and beyond purchase including on-boarding of your product and advocacy of it to their community. And it includes creating strategic, deign-thinking artifacts that help your teams work collaboratively and with the customer always top of mind.
If $3 million is at stake, allocating time and budget to approach this challenge correctly, seems like a very good use of resources.
Lowering cost of acquisition can be solved through design thinking
Let’s take another example, cost of acquisition. There is always a cost associated with acquiring a new customer, specifically related to sales and advertising. For example, if you spend $10,000 in social ads and acquire 100 customers then your cost of acquisition is $100.
One way to optimize your bottom line is to reduce the cost of acquisition. But to do so you need to understand if your message, product, or service resonates with your potential customer. You also need to make sure you are meeting people where they are at. For example, if you are selling services to new home buyers, you’ll need to know what their pain points are, what their digital behavior is, and where they are online. Having worked in the real estate space, I can tell you that there are many types of home buyers, with different pain points, needs, and motivations. To get your cost of acquisition down, you need to be sure you are reaching them with the right message at the right time and in the right channel.
Alternately, if you are developing a product or service, you need to make sure that that product or service is right for your customer. Let’s look at the numbers. There are six million homes sold each year in the U.S. Let’s say you serve 10 percent of the market, or 600,000 users with an annual growth rate of three percent. That’s an additional 18,000 new customers a year. Let’s also assume that your cost of acquisition is $1,000. What if you could get that cost of acquisition down by 10 percent to $900? You would be saving $100 to acquire each new customer. Multiply that by 18,000 and your potential savings are $1.8 million. I can tell you that engaging in a strategy to reduce your cost of acquisition and developing a host of supporting design-thinking artifacts costs less than the money you will save.
You can see in these two examples that understanding your customer in today’s digital world delivers enormous benefits. But you have to get beyond basic demographics and assumptions and you have to stop guessing. Really understanding who your customer is and what they want and need, knowing how they have throughout a digital ecosystem, and understanding how to leverage various methods connecting them take a new approach.
So the question you should be asking yourself is not whether or not you have the time or money to pursue effective and proven strategic approaches to solve your most important business challenges. The question is, how can you afford not to?