Think back to the most important retail moments of the last 50 years. What would you put on your list of the top ten?
The Great Recession of 2007 would surely make it, and perhaps the introduction of SUVs, along with other models. Most likely, the emergence of the Internet would be right at the top â€“ along with the major technological advances (mobile, Wi-Fi, etc.) of the past two decades.
You should also add Millennials to that list.
Why? Because as technology has enabled consumers, these young car buyers â€“ this first true â€œdigital native generationâ€ â€“ are using it to drive change throughout the retail industry.
What makes millennials so special?
Millennials are the biggest group to come around since Baby Boomers. The Pew Research Center estimates that there are 75.4 million people identified as Millennials,* and other experts put that number even higher. Itâ€™s a large group, and they have a strong digital bias that translates into key changes in their consumer behavior. Changes like broader consideration sets, for example, and an extended time shopping online for just the right car (127 days, on average, with 64% of that time spent online).** This type of shift in activity arguably creates differing perceptions and expectations at the showroom. So if youâ€™re reading this and youâ€™re a sales manager or GM, it would be very wise to make sure your digital showroom (aka your website) is as optimized and engaging as your physical showroom.
Online and in-store reality
The bottom line is that Millennials want to use mobile and digital means to make car shopping fast, simple and friendly. They seem to be most comfortable when technology is at their fingertips, and while the concept of online shopping and in-store deal making may predate them, theyâ€™re among the first to insist on it as the default process.
Now add to that preference a low tolerance for idle time: Cox Automotiveâ€™s 2017 Car Buyer Journey found that Millennials are the first generation to break the three-hour time barrier â€“ a trend that reflects their overwhelming desire to shorten the time spent doing the deal. More specifically, 51% cite negotiations and F&I as their top pain point, primarily because the process takes around an hour or more to complete.***
With Millennials, a key step is in adjusting your approach to match up with the way they use technology. That means a more flexible and consultative experience, one that leverages mobile technology, is personalized, and welcomes up-front research. Itâ€™s not rocket science to figure out that the dealership team that leverages technology to create that kind of experience will reap the benefits.
Millennials Flex Their Purchase Power
Millennials have become major players with specific expectations and needs, something not too surprising when you consider their emerging clout. Today, Millennials spend around $600 billion a year, and itâ€™s expected to grow to $1.4 trillion annually by 2020 â€“ or 30% of total retail sales.*Â When it comes to buying new cars, their emerging influence is increasing: Millennials purchased nearly 1 out of 3 new cars in 2016, and in California, Millennials outpaced Baby Boomers for the first time.**
Those stats arenâ€™t empty rhetoric. While itâ€™s well-known that Millennials are a force in the Sub Prime market, Dealertrack Credit Data shows that they are increasing their share of the Super Prime and Prime segments, based on unique credit apps submitted on the Dealertrack Credit Application Network in 2016. Itâ€™s the kind of movement that arguably comes with getting more established in careers and credit scores. Add this fact of life to increasing interest in leasing, longer loan terms, flat down payment amounts, and steady trade-in equity, and this generation of car buyers are wielding their considerable purchase power with a careful eye to the future.
Keep that in mind when working with Millennials, and remember these three tips:
- Monthly payment matters most: 83% say that monthly payment is critical when selecting a lender to finance a vehicle.***
- Millennials like to be prepared: 54% prefer to research finance options online.***
- Efficiency is critical: 51% cite negotiations and F&I as their top pain point, primarily because the process takes around an hour, on average, to complete.****
Hereâ€™s the point: Millennials are building wealth and power to go with lives that are expanding, and the financing they choose will be a major factor in their car-buying decision. In other words, buckle up â€“ thereâ€™s a new buyer, with more buying options, in town.
Sell millennials on the dealership experience
Thereâ€™s a generation of digitally-savvy people getting ready to buy cars. That sounds like a pleasure cruise of sales opportunities, right? But thereâ€™s a catch: theyâ€™re a demanding bunch with specific ideas about how the transaction should unfold.
So whatâ€™s a sales person to do? How does a dealership adjust their business to take advantage of this watershed opportunity in automotive retail? They sell Millennials on the experience of buying a car.
Itâ€™s more than an online order. More than buying a washing machine, or a book. Clearly, Millennials appreciate the significance of what amounts to a significant financial commitment, and as such they take their time researching â€“ four months, give or take. They want more information about F&I products before going to the dealership*, a clear sign that they see value in the additional purchase but want to be more educated. According to Cox Automotiveâ€™s research, 63% of all shoppers â€“ including Millennials â€“ are more likely to purchase F&I products if they can learn about them on their own time.**
Trouble is they are absolutely, positively frustrated with the in-dealership F&I process. Among Millennials, 25% of their pain is felt during the paperwork and F&I part of the deal.*** Thatâ€™s from the moment they step into the dealership. A key point to remember, then, is that they have a very low tolerance for idle time, delays, and inefficiencies â€“ and they arenâ€™t afraid to throw up their hands and walk out of the dealership. Make sure you create an experience that combines being smart, fast and efficient:
1. Leverage technology at the right points in the process, so key sales moments get the luxury of quality time with an engaged and interested buyer.
2. Empower self-directed research through the use of mobile technology, before and during the sale.
3. Remember that the current trend in financial technology is at least in part driven by Millennial preference. They expect rates and terms that reflect their unique credit story.
4. Create a personalized experience that meet their needs and builds a comfortable and engaging environment. For example, many are more at home with a tablet versus a printed contract. To that end, use technology to make the final steps simple, easy and user-friendly.
Hereâ€™s the point: What Millennials want today is what everyone will demand tomorrow. The digital habits of this â€œdigital native generationâ€ are changing how all consumers go through the car buying experience. They want the dealership experience, but itâ€™s up to you to deliver the kind of experience that sells them a car.
Do that by changing your approach into a more flexible and consultative experience, one that leverages mobile technology, is personalized, and welcomes up-front research. Position the deal as more of a conversation, one thatâ€™s built around the monthly payment, with an eye to the future. After all, the future is bright for businesses that learn how to sell the experience to Millennials.