The x-Factor: Why UX determines the value of any product

Reading Time: 8 minutes

If you want a product to be highly valued, UX is the value magnifier you need. It’s not what you do, but the way that you do it that matters.

 

This article answers “Why should I spend money on UX?”, “How should I spend money on UX?” and how the x-Factor is essential to understanding UX. If you are an owner or manager, you will learn the best way to get value from user experience (UX) work. If you are a UX/design pro, use these talking points to rally support for doing your job in the most effective way.

Product design is about value

Value is paramount to every product, whether digital or not. Customers will pay a lot for valuable products, but if a product becomes commoditized, margins drop as customers bargain shop based on price alone. When products are commoditized, the only differentiator becomes price. It makes your product vulnerable to high-volume competitors. How many local bookstores and shops have been run out of business by Costco, Amazon, and Walmart commoditizing their markets?

Commoditization ruins profit margins and customer loyalty for digital products too, as in “Our software has features a, b and c, but we’re losing customers to growing competition.” The problem isn’t the competition. It’s clinging to the idea that product value is based on what it does, not on how it does it. Tech companies don’t need Walmart to commoditize them, they are doing it to themselves by treating their products as just a set of functional components. Good design can stop your product from being devalued and commoditized.

Determining product value

You can charge more if your product is more valuable, so let’s start with a simple formula. We tend to think of a product’s value (v) as the sum total of features (f) it contains, as in the simple formula below:

value = features

or more simply

v = f

It seems simple enough that value should increase with each new feature, but it is not true. Adding features is NOT the best way to increase product value.

Following this logic, if you wish to increase product value, you could offer more features, as so:

  more value = more features

 

 

Experience: the x-Factor impact on value

Every product already has an experience, but is it a great one? The way your customers interact with your site, app or B2B service forms the customer experience (x). That experience determines how much they value it. I call that the x-Factor. For most products, the user interface is key to experience, but it also includes telephone support, email, face to face interactions and many other things. That makes the formula:

value = features × experience

or

v = f * x-factor

Customers will deem your features more or less valuable based on how they rate the experience of using those features. It doesn’t matter what your product does if it’s a bad experience using it.

 

An x-Factor example

Let’s use dinner as a real world example. You tell your spouse you’re surprising them with a romantic dinner. You could make the insane choice of taking them to McDonald’s (option A).  For option B, you could take your spouse to their favorite classy restaurant, arranging to sit at their favorite table by the sea just as the sun is setting. Nobody would flinch at the idea of paying more for option B because it’s obviously so much better, but what are you really paying for? You go out, eat chicken and come home. Unless your spouse finds fast food romantic, what you’re paying for is the superior experience of Option B.

 

Obviously there are choices between these two extremes, but the extremes point out something important about experience design. Surprising your spouse with a trip to a middling restaurant like Denny’s or TGI Fridays won’t improve much. It’s still a pedestrian, boring choice. At best, it will be unmemorable. At worst, they will be disappointed. Most digital products are commodities (it’s all about price) or pedestrian offerings (utilitarian, with window dressing). In both cases, the customer won’t value your product highly or rave to their friends to use it.

People used to get fast food from mom & pop diners. Fast food chains have run them all out of business. If you think your digital products are valuable only because of what they do, you are vulnerable to cheaper and faster competitors on the low end and sophisticated competitors on the high end doing what you do with a much better experience. For example, Stripe became the #1 online payments company in a few short years based on better experience. Even in a dull category like payments, experience is king. Just as it is absurd for McDonald’s or Denny’s to compete with fine dining, it is absurd to ignore the experience x-Factor in your products.

 

Digital experience value

All products are affected by the x-factor. The ways a customer interacts with the product forms an experience that dictates how much they value it. If you have two features, it looks like:

  v = (f1 + f2) * x-factor

value = features × experience

 

The dictionary definition of x-factor matches our use of it:

 

x-factor: “a variable in a given situation that could have the most significant impact on the outcome.

The interface to digital products is usually a web site or app. If you hire front-end developers to make the interface, it should be serviceable, meaning that it’s possible for users to do things. McDonald’s and Subway are serviceable. Serviceable isn’t great, so it only rates an experience (x-factor) between 20% and 50%.  Therefore, most digital products are only worth 20-50% of their inherent value to customers because the experience is merely serviceable.

The x-Factor has the most significant impact on business success.

 

 

Pretty isn’t UX, but UX can be beautiful

Status quo thinking:

Most users are bouncing from our site or abandoning purchases they start! What should we do?
Apple makes a lot of money. Everyone says they do good design. Let’s get somebody to make our site pretty and we’ll be successful like Apple.

This never works, and it isn’t what made Apple successful. Design for users.

Many companies recognize that good experience is important, but try to improve it in ineffective ways.

If a web site has a lousy experience (ie. x-factor of 20%), many companies put effort into making it pretty. Prettying it up often ignores the root problem.  Similarly, a prettied-up McDonald’s is a bit better than an ugly one, but it is still just a fast food joint, a low value offering.

UX design is a lot more than just graphics or UI design. UX is a strategic and tactical approach so that design effort translates into results. Good graphics design and front end coding can make powerful contributions to product value, but only within the framework of a strategic UX plan.

 

 

When I am working on a problem,

I never think about beauty but when I have finished,

if the solution is not beautiful, I know it is wrong.

-Buckminister Fuller

UX design is about the whole product

If UX design is not graphics design, then what is it? Users are the focus of “user experience (UX)”. Graphics design is one of many elements of UX, but it is sometimes wasted without context. Who’s it for, what actions are we trying to drive? Why will they care? Design is wasted when these questions are unasked and unanswered, but they are at the core of UX. UX designers always aim to achieve specific goals for specific audiences. Great UX design is a holistic approach to overall product value.

Designing for users expands the experience x-factor

to become the more powerful ux-factor.

 

UX design has improved over the last 30 years to be more science than art with established processes for user-centered design (UCD) and human-computer interfaces (HCI). Good UX creates a better product experience x-factor, which leads to tangible superior results.

For example, a cup of coffee contains only 2 cents of coffee beans. Go to a grocer and you pay about 25 cents for the same beans in a package. Go to a diner and you’ll pay a little over $1 for the same beans brewed in a cup. Yet people wait in line to buy fancy lattes at Starbucks for $5. It’s the same 2 cents of coffee, but the x-factor and profit margins are enormous. It’s not the coffee. It’s the experience.

UX design is strategic

UX design is a strategic approach to designing products and services for users. By understanding user needs and motivations, UX guides how things look, feel and work to be of most value to those users.

Who are you selling to the most? Who do you want to sell to the most? What’s important to them? What would make the experience better? What would ruin it? User personas define your most important customer segments.  When you focus your effort on the needs of your most important customers, it is a lot easier to produce successful results.

But wait, what if I want to sell my products to *everyone*. Isn’t that what Apple does? No, they don’t. Trying to make all possible customers equally happy is a way to make nobody happy. Successful companies focus product design on a few key personas.

The UX-Factor

Detailed user personas streamline your effort to target the most important features for the most important customers. Every feature takes work to design, implement, document, maintain, and support.  Personas give you the focus needed to get more value from less work.

Get more product value from less developer/marketing/support time.

 

“ux” is more valuable than just “x” because your product can be a perfect fit for your top customer personas as opposed to being serviceable for “whoever”. UX also gives your product a strategic focus for content, features and setting key performance indicators (KPIs).  We’ll call this the ux-factor:

value = features × user experience (ux-factor)

 

ux VS UX: Authenticity is valuable

Unfortunately, many organizations limit their gains from UX by refusing to talk to real users. I can’t tell you how many times a manager or founder has told me, “You don’t need to talk to users. I can tell you who uses our product and what’s most important. I am the target market.

If you work at a company making a product,

you are NOT the target market.

 

When companies don’t talk to users because they *think* they already know what customers want and need, they are sabotaging the gains they could get from good design. Using the product yourself doesn’t mean you understand real customers. Everyone at your company knows too much about the product to be in the mindset of a real customer, an outsider who doesn’t care what it does or how it’s supposed to work. Customers only care about how using your product helps them get something done. User research allows us to empathize and design for people who aren’t us.

I refer to design based on stakeholder opinions and hypotheticals as “ux”, whereas design based on authentic user research and analysis is “UX”. Authentic personas, context and task lists lead to vastly superior designs with superior results. Authentic designs help attract users, encourages them to tell others to use your product and prevents them from leaving for the competition. It’s a small investment for a big return. It costs 7 times as much to gain a customer as to keep one.

The question is then simply “How valuable do you want your products to be?”

 

How should I spend money on UX?

Now that I’ve convinced you to invest in UX, let’s look at the best UX activities for a return on investment (ROI).  Since UX is an approach to design to achieve specific goals, the more specific your goals, the more effective UX can be. The following steps overlap in time.

  1. Goals
    Define your goals as business outcomes, ideally following Peter Drucker’s SMART (Specific, Measurable, Achievable, Relevant, Timely) principles. If you don’t know what you want, you won’t get it.
  2. Research
    Part of being specific is understanding and segmenting your customers. User research will yield authentic personas, prioritized task lists and context.
  3. Analysis
    Analysis of the research produces a strategic design plan including user journeys, KPIs, navigation structures and wireframes.
  4. Implementation & Detail
    As developers plan and implement code, designers work out a style guide, micro-interactions and visuals to make it look awesome.
  5. Ongoing Testing & Iteration
    Repeat steps 1-4 to go from bad to good or good to awesome. Ongoing testing and iteration allows your product to stay in tune with customer needs and increase in value over time.

These user-centered design activities can vastly improve the value of any product.

Specific gains from investing in your product’s experience x-factor:

  • gain new customers
  • raise profit margins
  • satisfy existing customers
  • retain customers
  • offer and sell new services
  • have good word of mouth/ viral growth

How not to spend money on UX

Let’s deal with what you should not do.

  1. Don’t skip research. Really.
    The essence is research is simply finding out if your assumptions make sense. Even a little inexpensive research is very valuable.
  2. Don’t treat design as a step.
    UX is an iterative process, not a step. Involve UX early as a strategic approach to product design. Don’t set everything in stone and then try to “UX it”. UX helps determine what a product does, how it does it and yes, how it looks. Most of the time, UX is brought in to redesign existing sites and apps to perform better. Even for legacy waterfall projects, the design can be done iteratively.
  3. Don’t be penny-wise and pound-foolish. 
    UX is about about making you money by adding value to your product, and saving you money by shortening the required development time. It’s worth the cost of doing it right. Don’t ruin it by trying to hire one person fantastic at a) coding b) graphics design AND c) user-centered UX design. It never works. If money is tight on an MVP, use specialists on short term contracts.
  4. Don’t accept substitutes.
    If possible, don’t let anyone lead UX who isn’t qualified. It isn’t about degrees and job titles. It’s about dedicated years following a good UX process. Product owners, psychologists, developers and graphics designers can’t do good UX without dedicated training and experience.  For example, carpentry and bricklaying for 20 years might inspire you to become an architect, but it doesn’t make you one.  UX is similarly a specialty different but related to graphics design, coding and product management.

Anyone who tells you they can “do UX intuitively” without research

doesn’t know how effective UX works.

 

UX isn’t a silo. A true professional helps everyone incorporate user experience into their work by sharing their understanding of users and evangelizing for the needs of customers. UX should help customer support, marketing, sales, developers and graphic designers be more effective by giving them a clearer view of who uses your products and the needs you are serving.

Summary – Improve customer relationships

Every product is a value proposition. Value directly tracks with the experience x-Factor your product delivers. Doing authentic UX will yield the best return on investment. Do it before you get sandbagged by competitors who do it first or do it better.

Increasing the value of your products puts you in a strong position to gain more customers, keep them satisfied, spread the word and ward off low-end and high-end competition. Even highly technical B2B businesses need good UX because every product has customer touch points. When those touchpoints are painful, the experience suffers. When those touch points are perfectly tuned for your customers, value increases and your strong customer relationship protects your business.

Take action

Ask yourself this: How in tune are your company’s products with the specific needs of the people who actually use it? In short, what’s your products’ x-Factor? If you don’t know, you are vulnerable to competitors who do. If you like this article, share it with someone. In upcoming articles, I will be discussing how to calculate x-Factor, create a battle plan and measure results. See uxfactor.ca (UX Factor Design) for more UX articles or to contact me about design consulting.

 


Also published on Medium.

About Bill Stewart

Bill Stewart is the founder and Senior UX Architect/Designer of UX Factor Design. His views on UX are informed by 30 years of experience in product strategy, development, visual design and team leadership. He’s designed products used by more than 450M people and his inventions are currently used by more than 1 billion users.

Whether he’s redesigning products, lindy hop dancing, or teaching kung fu, he dives deep to maximize the value in every experience.

Contact him at UX Factor Design (uxfactor.ca) for UX design consultation.

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