How to make the business case for Service Design?

You and I know that service design creates lots of value. But often, it’s not easy to “prove” that upfront to our clients, especially clients with a focus on short-term results.

This can significantly slow down the pace at which you make an impact.

In order to design these awesome services, we need clients who want to invest in them. Sometimes, this proves to be quite an interesting challenge.

A growing number of studies by renowned companies like Forrester Research, McKinsey & Company, and the Design Management Institute prove businesses employing design outperformed the ones that don’t. This doesn’t mean that all of a sudden our clients are convinced of the value of service design, however.

We still find ourselves justifying investment in our projects using old metrics that aren’t necessarily the best way to express the value of service design. Let’s get one thing straight right away—I think that we service designers need to connect with business even more!

We need to become more business savvy.

Just like Jess McMullin said in his Service Design Show episode, we need to develop our business fluency. Period. This also means that we need to be able to make a convincing business case for service design. I consider this to be a vital part of our job.

Let’s look at a few ways to help you talk about, and maybe even prove, the value of service design.

First, ask what the current indicators for success or KPIs are and how they are measured. You’ll be surprised how often clients don’t really have a good answer for this. This isn’t a bad thing per se, because it opens up space for a conversation about when the project will be a success.

Good follow-up questions are,

  • “What would happen if this project got cancelled or delayed by a year?
  • What would happen if we didn’t move forward, or
  • if you didn’t invest your budget in this service design project? Where would you otherwise invest?
  • Do you think that would render a higher return on investment?”

Our goal here is to figure out how much is at stake for our client as early as possible.

What if your client has clear KPIs and actually measures them, for instance, the net promoter score? That’s great, too, because now you can have the conversation about how high to set the bar. In other words, how much do we want to impact the net promoter score? What are we willing to invest in order to achieve that?

Knowing the costs associated with delivering a service in its current state provides you one of the easiest opportunities to make a business case for service design. For example, that cost could be the number of phone calls a support center gets related to a specific part of a service. Let’s say it’s the number of calls they get regarding something trivial, like requests to change the postal address.

In this case, you just have to show the potential cost reduction for improving the service on this specific point, and that it reduces the number of phone calls. This is the type of business case where you focus on fixing the leaking bucket. This works pretty well if the number of leaks isn’t too big. Or, in service design terms, if you just focus on fixing one or two touchpoints at the same time.

Wait a second! I hear you thinking. In many services or projects, KPIs are really hard to quantify or express in financial terms. You’re much more likely to express the value of service design in terms like increased stakeholder engagement, deeper customer insights, or maybe even faster innovation cycles. And, unless your client is collecting the right metrics (almost never the case), it’s really hard to put a price tag on these outcomes. But, this doesn’t make them less important or valuable.

Frame your service design work as an investment in something larger than just your project—an investment that is going to significantly increase the chance for a successful overall outcome. This is where a lot of us get stuck, because we know for sure that we are creating value. But, we have a hard time expressing this in metrics that are actually measured by an organization. This is a challenge when you’re sitting down with your client and justifying the investment in your project versus its benefits.

So, how can you deal with this situation, where it’s really hard to quantify the value of a work?

It all depends on your project and your clients. One approach I use is to have a very specific conversation with my clients before we even ever talk about pricing.

The conversation starts something like this:

You’re investing a million dollars to develop a new service that expands your current offering into a new market. Which percentage of debt budget would be smart to invest in making sure the service addresses customer needs in this new market? Or, think about it this way: if you’re going to build a house, how much are you willing to spend on the architect creating the artistic impression of your house, giving you your first sense of the end result?

You can even take this conversation one organizational level up. For instance, what percentage of yearly revenue is currently invested in innovation? In ensuring the company stays in touch with customers’ needs (and can translate those needs into profitable offerings)? On this level, you’re positioning service design as a core activity of the organization, rather than a one-off project.

Think of service design as organizational fitness, rather than short-term medicine. By investing in service design, companies are investing in a healthy organization that is close to its customers, where employees feel involved. Companies are also investing in the ability to quickly respond to changes in the markets.

Just like keeping yourself fit and healthy, it’s not something that you have to do, it’s something you consciously choose to do. You might not notice the benefits right away. But, at some point, you’ll be running a marathon while others around you have a hard time motivating their cells to even get off the couch.

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