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Defining Premium For A New Era

Value comes down to how consumers feel 7/13/2017 01:15:00 PM

For tech retailers and manufacturers, “premium” is best defined as the promise or expectation of an experience being somehow better than the typical experience — and that such privilege will cost extra.

It is anything but formulaic; one company’s or brand’s premium offering can be markedly different from even a direct competitor’s. The value of premium chiefly comes down to how consumers feel, and the benefits they perceive when using the product.

While a standardized definition of premium can be elusive, consumers are signaling what they want from their experiences in an overarching way: personalization. “Let me make it uniquely mine and I’ll assign more value to it, and feel better about who provided it.”

Time savings is one strong perceived value point powered by personalization. “Serve me the right products from the start, based on my past choices — in turn, minimizing or completely eliminating the browsing, the searching, even the decision making, unless I want that power — and you’ve made my life infinitely easier. And I’ll come back for more.”

Case in point: Amazon ships an estimated 1.6 million packages every day. If you’re an Amazon Prime consumer, you know exactly why.

Technology-powered personalization also drives value by creating a perceived VIP experience. Imagine entering a boutique on Rodeo Drive and being immediately whisked to the back of the store, where a collection of items all in your size awaits. It’s hard to not feel flattered by this kind of treatment, even when in the market for something not quite as glamorous as what Rodeo Drive has to offer.

Much of the innovation we are pursuing at Avis is aimed at delivering premium experiences through personalization, knowing full well we need to get it right on the first try. Our ongoing research and co-creation process with our customers has uncovered numerous touchpoints that can benefit from personalization, serving as the guiding principle in our reengineering of our app. 

The rewards to businesses that get it right are meaningful from both a brand and financial perspective. According to Forrester Research, 77 percent of consumers have chosen, recommended, or paid more for a brand that provides a personalized service or experience. At the same time, it is wise to recognize personalization’s limits and responsibilities. Ever-savvier consumers have come to understand that a personalized experience requires data, which they are willing to give to companies that have earned their trust.

Those same consumers are also becoming quicker to disengage with brands that serve up irrelevant or extraneous offers and choices. That’s why we give our Preferred customers an experience that is about balance—from digital tools like our app that anticipates your every need and preference without ever having to interact with a representative, to tried and true, hands-on “we try harder” customer service if and when you need it.  

Larry De Shon is CEO of Avis Budget Group.

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