In this article I explain the financial value (uxequity) of a good User Experience for your business/brand.
My son, 14 years old, asked me if he could change his bank account from SNS bank to ING. He had his bank account for just over a year. So, I asked him why he wanted to change so quickly and why he particularly had chosen this bank and not ABN or Rabobank. The reason was simple: my son wanted a bank account that he could manage through a mobile app. Online research taught him that ING has a great app. They were the first to have incorporated Apple Pay and were awarded with the best user experience of all banking apps. Especially that last point was important for him to choose ING. It made me think: if user experience makes people choose a brand, it will earn them a greater volume and/or greater margins.
An excellent user experience makes people choose your brand
A great User Experience has helped brands like Apple, Tesla, Volkswagen, Uber and Airbnb turn into billion dollar companies. A study by the Design Management Institute shows that companies that embrace design perform better than companies that do not.
I could state that a great user experience is an important brand asset and besides the brand a driver for profit potential. A great user experience therefore creates equity. Brand equity can be measured in monetary and non monetary terms. Mostly it is measured by four indicators: aided brand awareness, spontaneous brand awareness, evoked set or consideration set and if the brand has already been consumed / used.
UX Equity As a great UX is a strong asset for an aided and spontaneous brand awareness, I would like to state that UX can be valued in monetary and non-monetary terms as well. Therefore I would like to introduce the term: UX Equity.
Financial effect of a great user experience
The official Marketing Science definition of Brand Equity is ‘the set of associations and behavior on the part of a brands customers, channel members and parent corporation that permits the brand to earn greater volume or greater margins than it could without the brand name (Leuthesser, 1988, the new strategic brand management JN kapferer). As a brand strategist and digital consultant I have always wondered what the financial effect of a great user experience would be. Is UX the new driver behind brand equity or is UX equity by itself a value equity?
A better user experience leads to brand loyalty, better conversion, cost reduction and therefore greater margins. The definition of Leuthesser ties greater margins to brand associations and customers’ behavior. Never is the word user experience, as defined and created by the brand, mentioned. I kept wondering whether UX equity could be a new definition that lives side by side with Brand Equity. After doing a lot of research, I am sure that’s possible. So I came up with a definition for UX equity:
UX Equity Definition UX Equity is the combination of a unique user experience design and behaviour modelling data on all client touch points, which permits the brand to earn greater volume, greater margins and/or improved user satisfaction compared to what it would without this design.
But how should we measure UX Equity?
From a bookkeeping perspective there are two ways to calculate UX Equity.
or
When I talk about UX equity, I take into consideration that the added value should be forecasted to last multiple years. This should be taken into account. By doing so, I dare to state that UX Equity is a new term that can live side by side with Brand Equity.
Conclusion
UX Equity and UX design have become a key asset for every company and could find it’s way soon to every level of the organization. From projectmanagement to the CFO.
Also read: Seven benefits and ways to calculate the value of UX
