Understanding Value Exchange: Value to Customer Equals Value to Business
Issue #24 - Written by Kim Flaherty in collaboration with The X-Mentor.
Summary
A company gains value from its customers only when it first creates value for them.
Why has UX been a cornerstone of digital business success for the past 30 years? As AI evolves and companies scale back UX investments, it’s time to revisit this question. Recent UX layoffs and debates over AI replacing product designers suggest some business leaders may be overlooking a key principle:
Perceived value drives real business returns.
UX isn’t just about aesthetics, it’s about shaping experiences that resonate emotionally with customers, reinforcing the value they see in a product, and ultimately fueling business growth.
Human Emotion Influences Perceived Value and Drives Customer Behavior
Emotions may not follow logic, but they are the most powerful predictors of human behavior, driving decisions through our subconscious mind. Because emotions shape how we perceive value, they are the #1 driver of business outcomes.
A recent personal example illustrates this perfectly. After a long, cold winter in my loungewear, I was excited to get dressed up and visit a new, highly recommended restaurant down the street.
While the food was good, two small details caused the whole experience to fall flat. My wine was served in a thick, heavy, stemless wine glass with a frosted finish. Even worse, I was seated next to drafty windows, which forced me to keep my coat on all night.
As a result, I’ve written this restaurant off now in my mind for what may seem like petty reasons. But it didn’t deliver the emotional experience I was paying for.
“Because emotions shape how we perceive value, they are the #1 driver of business outcomes.”
User Experience Research Uncovers Customer Emotions
UX research uncovers the powerful connection between customer emotions, behaviors, and business success. By understanding the emotions driving customer actions, businesses can intentionally design experiences that shape desired behaviors—behaviors that directly fuel revenue growth.
The Four Dimensions of Customer Value
For customers, value is based on their perception of what they get in contrast to what they give for it. Positive emotions enhance perceived value, while negative emotions diminish it.
Customers perceive value across four key dimensions, as outlined in Philip Kotler's "Marketing Management.”
Functional value
Economic value
Experiential value
Symbolic value
Functional Value
Functional value determines how effectively a product or service fulfills customer needs. Emotions can enhance or detract from a product or service's functional value by influencing how customers perceive its usefulness, effectiveness, and reliability.
Example:
When a financial advisor provides guidance and tools that create an investment plan matching their client's goals, they deliver clear functional value.
Economic Value
Customers evaluate economic value by weighing benefits against financial costs.
Example:
An investment plan that delivers expected returns at competitive fees compared to higher-priced alternatives demonstrates strong economic value.
Experiential Value
Experiential value is based on customers' emotional, sensory, and psychological experiences when interacting with a business.
Example:
A streamlined, transparent investment planning process creates positive experiential value, encouraging customers to maintain the relationship rather than seek competitors.
Symbolic Value
Symbolic value emerges from the meaning and identity customers derive from their choices.
Example:
When investors feel pride and confidence in securing their financial future through a respected institution, they receive symbolic value from the brand relationship.
Case Study: Energy Company
I recently read an interview given by Howard Tiersky, the bestselling author of Winning Digital Customers: The Antidote to Irrelevance. He shared an anecdote about a project he did for a large energy company. The company wanted people to sign up for their energy service, which had theoretically less expensive rates compared to their local competitor. Through customer research, they learned that some people were afraid that if they signed up for this new program and if there was a power outage, their power might not be restored as quickly because the company wouldn't care as much about them because they weren't paying as much for the electricity. People were also worried that if they were to switch services, they would have to stay home from work for a day because someone was going to have to come to their house and change the electrical wires. They were thinking, “I'll probably be waiting for a three-hour window, then they'll be late, and it'll be a whole day’s hassle. And it's not worth it for the savings.”
Neither of these assumptions were true; switching to their energy service was as simple as a few keystrokes in their system. But, despite the potential money they would save by switching, emotions (fear and worry) kept potential customers from taking the desired action.
Previously, the company didn’t address these concerns in the marketing and acquisition funnel. Why would they talk about something that would never happen?
By understanding the customer’s mindset and the emotions driving their behavior, the company adjusted its customer acquisition messaging to negate those emotions.
This resulted in removing barriers to behavior change and ultimately achieving better business outcomes.
Value Networks Shape Customer Decisions
When making purchase decisions, customers weigh more than just price against features. They assess the complete value proposition through the customer value network.
The customer-value network is comprised of the four dimensions of perceived value: functional, economic, experiential, and symbolic value, alongside other outside influences like social proof and brand reputation.
Consider that subpar restaurant dining experience: While the functional value (food quality) and economic value (fair pricing) were acceptable, the low experiential and symbolic value (missing that feeling of sophistication) diminished the overall economic value for me.
As a result, this business will no longer earn ongoing value from me because they did not convert me into a returning customer. It may even suffer further if I were to leave a negative review or share my lackluster experience with friends and family.
Business Value Networks Influence Value Proposition
Just as customers evaluate value through their networks, businesses create value through their own networks. (This is what service designers primarily focus on.)
A business value network is the system of employees, business functions, processes, messaging, digital channels, and interactions that collectively deliver a product or service to customers.
Every interaction with a brand doesn’t just influence customer emotions, it actively shapes and reshapes their perceptions. These moments create deeper awareness, transforming how customers understand and experience the brand’s value. Over time, these interactions don’t just reinforce perceptions; they evolve them, altering the way customers see, feel, and connect with the business.
The business’s value network is what creates the perceptions along the four dimensions of value to customers, which are maximized or diminished based on the effectiveness of the network that creates the experience.
In the case of the energy company, switching to a cheaper energy utility would bring economic value, but customers had determined that the tradeoffs in experiential and functional value would outweigh the value from additional cost savings. Knowing this, the energy company made slight adjustments to its messaging to reassure customers that the experiential and functional value of switching services would be worth the switch.
To achieve measurable business outcomes, organizations must deeply understand how customer emotions shape perceptions of their products and services across all four value dimensions. By optimizing their value network, businesses can continuously refine and elevate the customer experience, maximizing the perceived value they deliver. This isn’t just about winning customers; it’s about keeping them, evolving their understanding of the brand, and strengthening relationships through added products and services that enhance and transform their perception of value over time.
Business Must Remain Focused on Creating Value for Customers
Value exchange refers to the reciprocal relationship between customers and businesses, where both parties benefit from their interactions.
“To continue gaining value from customers, we must continue creating value for them.”
To continue gaining value from customers, we must continue creating value for them. This means we must keep the customer, the human, at the center of what we do.
So, to answer the question I posed at the beginning of this article, why was UX established, and why has it played such a large role in the digital business landscape of the last 30 years?
The answer is twofold:
UX drives business success by strategically designing for emotions, shaping perceptions, and creating value across all dimensions, especially the experiential and symbolic ones.
By crafting interactions that deepen customer awareness and transform how they perceive value, UX not only helps sell products and services but also strengthens long-term relationships, ensuring sustained business growth.
Yet, in today's fast-changing business landscape, this mission is increasingly overlooked. AI offers leaders new ways to enhance efficiency and drive revenue through data-driven optimization. However, amid the excitement, I fear they may underestimate the enduring importance of the human element.
Look Beyond Isolated Moments Toward Connected Experiences
Customers no longer engage with brands through isolated interactions; they experience ongoing, interconnected journeys through emails, notifications, and multi-platform engagements.
This all reminds me of a documentary I watched about Walt Disney. If product-centric UX design was the animated short, we should be evolving our craft toward making animated feature films.
Disney had early success making animated shorts like Steamboat Willie and Silly Symphonies, laying the groundwork for more ambitious projects. A mix of technological advancements, economic factors, audience demand, and creative ambition drove the transition from animated shorts to feature-length animated films. He then transitioned to feature-length films driven by his ambition and belief in its potential for emotional storytelling. Audiences' growing appetite for sophisticated narratives encouraged him to take risks. This culminated in Snow White and the Seven Dwarfs (1937), the first feature-length animated film, which revolutionized the industry.
Today, I see a similar transition in the landscape of digital business services.
Back at the forefront of personal computing the value of UX was pretty obvious. People weren’t going to adopt personal computing if they couldn’t use the systems. UX was critical for creating digital solutions that run our entire world.
Now that digital ecosystems are mature with established design systems, many leaders assume the work is done and user-centered design is no longer needed. This is a shortsighted view.
Like Disney, We Should Be Navigating the Paradigm Shift
Before mobile computing, designing product interactions was enough. But people are now much more immersed in their brand relationships. However, they’re experiencing a lot of friction and frustration engaging with brands whose digital service experiences aren’t built for today’s world.
Like Disney's transition from animated shorts to feature films, UX must evolve from designing singular moments to crafting holistic, emotionally resonant brand narratives that drive customer loyalty.
Thanks to AI technology, companies are now better equipped to create more connected brand experiences, weaving narratives that evoke positive customer emotions and drive desirable behaviors.
“To stay competitive, businesses must refocus on UX as a strategic driver.”
To stay competitive, businesses must refocus on UX as a strategic driver—one that shapes perceptions, fosters emotional connections, and continuously elevates the value customers see in their products and services. Now more than ever, businesses must reassert UX as a core pillar of growth, not an afterthought.
Upgrade Business Operations for CX and AI
For businesses to compete, they must upgrade their business value network, integrating CX, UX, and AI-driven solutions to:
Unlock greater design innovation for stronger business outcomes.
Align UX and CX strategically for unified and seamless service delivery.
Leverage advanced analytics to measure design’s ROI.
Use AI to personalize and enhance customer experience.
AI alone won’t drive meaningful results if applied within an outdated operational model. To maximize AI’s potential, businesses must first modernize their approach to experience design, journey management, and value exchange—ensuring customer perceptions and emotions remain at the heart of their strategy.
Conclusion
“The underlying driver has to be people.”
-Jakob Nielsen.
Technology should adapt to humans, not the other way around. UX is about people, and UX professionals are best equipped to tackle the challenges of the AI era.
To sustain long-term success, businesses must prioritize value creation for customers, ensuring that every interaction strengthens emotional connections and enhances perceived value. UX has been a driving force in digital business for decades, not just for usability but for shaping experiences that influence customer perceptions and behaviors. As AI transforms operations, companies must resist the urge to deprioritize UX, recognizing it as a strategic necessity rather than an expendable cost. Like Disney’s shift from animated shorts to feature films, UX must evolve beyond isolated interactions to holistic, emotionally resonant brand experiences. By integrating AI with a modernized UX and CX approach, businesses can craft seamless, high-value customer journeys that drive loyalty, satisfaction, and sustained growth.
ABOUT THE AUTHORS
Kim Flaherty is an independent experience design consultant at Resonant XD, specializing in omnichannel customer experiences and customer journey management.
Greg Parrott is The X-Mentor, helping businesses accelerate growth at The X-Mentor and publisher of The X-Mentor on Substack.