Research + Insights

Premiumization: key to capturing one of the most rapidly growing markets


The growth of the global middle-classes is astonishing. Over the past 30 years, global incomes have more than tripled, which means more than 3.6 billion people can now be classified as middle-class. And, by 2030, the ranks of the middle-classes are set to swell to 5.4 billion – or nearly two-thirds of the global population.

By far the biggest proportion of this growth is coming from the world’s most rapidly developing economies, located in regions like the Middle East, North Africa, and Sub-Saharan Africa. And, as they become more well-to-do, and their financial needs become more diverse and sophisticated, the middle-classes represent a clear growth opportunity for financial institutions operating in such economies.

But what’s the best way to capture this opportunity?

What we should not do is treat the middle-class as one amorphous market. That’s because the label obscures a dynamic mix of sub-segments. Their characteristics can vary dramatically – according to culture, for example, or geography, or income, or occupation, or education, or family background.

Instead, the key is premiumization: the act of making a brand or product appeal to consumers by personalizing it to meet their needs, and emphasizing its superior quality or exclusivity. And, by pursuing the path of premiumization, your customers are much more likely to:

·       Buy more from you than you competitors

·       Remain loyal as you understand their needs

·       Become an advocate of your business

In the world of payments, preferences and needs vary vastly from customer-to-customer. Some people may be attracted by digital payment capabilities - like contactless, or the ability to easily pay online, while others may be more motivated by offers and discounts on their everyday purchases. And then there will be another segment that seeks travel-related services, and so on.

So, in the pursuit of premiumization, we should:

1.       Be truly customer driven

Put customer needs before anything, and everything, else. See things through the customer’s eyes and ensure that your entire organization is geared-up to play their part in delivering the best service. Customer first should not just be a strategy – it should sit at the heart of your company culture.

2.       Understand your customers’ priorities

Your customers like to be understood and want you to use the data and knowledge you have about them to deliver what they want. If you hold your customer’s main financial relationship, the level of insight you have gives you a significant competitive edge. Make sure you use it.

3.       Personalize your offering

Translate your customer knowledge into propositions that are authentic and aligned your customers’ values. Intelligent interrogation of transactional data should allow you to surprise and delight them through the relevancy of your offering. Many customers may also expect to co-create and customize their product as their needs evolve.

4.       Deliver excellent experiences, every time

Consistently delivering a market-leading customer experience will give you a long-lasting advantage that’s hard to replicate. In customer experience, the whole needs to be greater than the sum of its parts, with all touchpoints aligned and moving to the same beat. A tailored product, combined with consistently excellent service, is a winning combination.

To find out more about the art and the science of premiumization, speak to your Visa representation, or reach out directly to Visa Consulting and Analytics. To download the entire paper, please click here.

Tag: Visa Research