A Look Ahead At Selling Tomorrow’s New/Used Vehicle Buyers
Consider the following research findings about the up-and-coming generation of car buyers, known as Milennials or Generation Y:
- Theirs is a “kinship economy,” according to J. Walker Smith, chairman of The Futures Company, a marketing research firm. As Millennials engage retailers, a positive experience is paramount. “It’s all about how we resonate with people,” Smith says. “They don’t want a relationship with your brand, they want relationships with other people.
- They expect to “co-create” retail experiences, says Sheralyn Hartwell, executive director of Frank N. Magid Associates, which specializes in business strategy research and development. “They expect to have their own custom experience, and they expect to be co-creaters,” Hartwell says.
- They believe they are a generation of “creators” who are part of a group that will “change outdated systems,” says Dannielle Paponetti, director of ad sales research for Viacom Media Networks, which owns MTV and VH1.
- They view cars as “appliances” that offer the ability to “explore and control” their destiny. They are less likely to get driver’s licenses when they reach driving age, and vehicle purchases often coincide with life events, such as a new job or relocation.
- They use technology (smart phones, in particular) to research shopping decisions, and they “expect you to know more than they do” about the products/purchases under consideration, Hartwell says.
- They are less than satisfied with the in-store experiences dealers offer, says Isabelle Helms, vice president, research and market intelligence for Cox Automotive. In particular, negotiation and paperwork are among the chief complaints they cite about buying vehicles, she says.
I gleaned these insights from a recent Cox Automotive-sponsored research summit in Atlanta. To me, the individual findings were not all that surprising—they ran consistent with what I’ve read and seen in the past. However, taken as a group, the insights got me thinking about three specific things dealers will need to do to remain relevant and satisfying retailers as they increasingly serve a new generation of smart, technology-astute buyers.
1. Align your sales process and strategy to emerging expectations: It shouldn’t surprise any dealer that tomorrow’s generation of vehicle buyers doesn’t like a purchase process that requires negotiation and up to four hours in the showroom to complete a deal. In fact, these are key drivers behind the growing number of dealers who have re-engineered their sales strategy toward a model that moves cars with little or no negotiation. Some are pressing the in-showroom sales timeline to 90 minutes and less.
This model requires two steps many dealers are still reluctant to undertake—putting “first pencil”-like prices on new/used vehicles online, and standing firmly behind their market-validated asking prices in the showroom.
To be sure, this sales strategy re-alignment isn’t easy. It’s really a cultural shift that requires payplan and process changes to advance a business model where transparency leads to trust and, in turn, trust leads to more cost- and time-efficient sales and improved profitability. Currently, dealers who have adopted the limited/no-negotiation models report positive early pay-offs, and greater satisfaction from Millennial/other buyers who are delighted to share their experiences with friends.
2. Embrace Technology: If anything, the findings listed above suggest that the speed of technological change for dealers will only increase. Millennial buyers like photos, but they love videos. They get frustrated when they can’t easily find prices or vehicles using mobile devices. More and more, they’ll also want to complete a greater share of their vehicle purchases online.
In her research findings, Hartwell shared that Millennials want to engage retailers who “get them.” This means dealers will need to know more about each customer before the first phone call or showroom visit—a level of understanding that is only possible with new technologies. In the end, dealers will need to make sure every customer engagement picks up where the last one left off.
3. Let go of the Gen Y stereotypes: Paponetti’s research reminds Baby Boomers like me that we can be dismissive of the positive traits Millennials can bring to a business. They consider themselves creative innovators who thrive in collaborative environments and question the “whys” behind processes that strike them as inefficient or outmoded. They’re technology “natives” for whom adapting to new technologies is relatively easy. They have a willingness to take risks and learn from mistakes. They are loyal and hard workers when they receive the near-constant level of feedback they need to shine and feel happy.
As dealers prepare for future buyers, they will be challenged yet again to let go of some of the traditional ways of retailing new/used vehicles. The good news: Based on the size of the Millennial demographic, there will be a lot of up-and-coming professionals entering the work force to help take their businesses where they’ll need to be.