Dive Brief:
- Consumers under the age of 35 are significantly more willing to pay for premium experiences than their older peers, according to a survey of 100,000 U.S. consumers released by KPMG Monday.
- Consumers are more willing to pay extra for superior experiences when they feel optional and deliver enjoyment, with 46% willing to do so with entertainment and leisure brands, 45% with restaurant and fast food brands, and 45% with travel and hotel brands.
- Consumers aren’t as open to paying for premium experiences in less discretionary categories, with only 37% willing to pay more for a premium grocery experience, 35% for a premium public sector experience, and 23% for a premium experience with utilities providers.
Dive Insight:
The best way to determine when customers are prepared to spend more for better experiences is by identifying the right signals and acting accordingly, according to Scott Lieberman, U.S. customer advisory leader at KPMG.
Called “signal moments,” these are brief but decisive cues that brands can use to identify the customer’s intent, potential risks for the relationship or opportunities to improve their experience, according to the report.
“These are subtle cues in customer behaviors such as a life event like buying a new car or moving to a new home that signals a customer's needs,” Lieberman said in an email. “By detecting these moments, brands can deliver proactive, personalized experiences that younger consumers, in particular, value and are willing to pay more for.”
Other research also supports younger consumers’ willingness to pay a premium. Qualtrics XM Institute data from May found that 85% of people aged 18 to 34 are open to paying more for an upgraded experience compared to 49% of consumers 65 and above.
Agentic AI is a key tool for detecting signal moments, according to Lieberman. The technology can interpret consumer intent and then either suggest or autonomously take a next step like sending a tailored offer or proactively offering to resolve a problem.
Brands still need to get their fundamental experience right before they offer premium options at signal moments, according to Lieberman. The goal is to make exceptional service available for those willing to pay without making others feel like they’re receiving a suboptimal experience.
For many brands, there is still plenty that can be done to get their baseline experience up to par. The report found that 20% of consumers feel their expectations are not being met during the purchase process, and another 18% say their expectations are not being met when they need support.
