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Millennials (and soon, Generation Z) may already be the largest vehicle-buying generation in the marketplace. Though there are many reports about millennials being less interested in owning a car, from a business standpoint, automotive companies are working hard to know what really motivates and dictates their behavior and usage patterns. To ensure continued growth and to improve profitability, automakers need to understand this emerging demographic group that will hold the most spending power among different generations in the customer base.
Clearly, millennials present a significant departure from the traditional way the car has been bought and used since the Baby Boomer generation came of age, obtained their driving licenses and sought to buy a car. Thus, automakersâ€™ marketing initiatives today require to be developed based on the nuanced insights into these new demographic groups to ensure they address millennialsâ€™ needs.
Through discussions with our original equipment manufacturer (OEM) clients in the automotive industry, we designed the Automotive Millennial Project, a focused research study to deepen our understanding of millennial's behaviors, especially in buying, engaging with dealerships, and post purchase of a vehicle.
Tip 1: Millennials respond well to omnichannel engagement
Across generations, while millennials are 10 percent more likely influenced by social media, automotive manufacturers need to monitor, engage and respond to them across different digital channels. Millennials are interacting across different channels but some things donâ€™t change â€” they want honesty and respect in every interaction.
Millennials also want to engage with the dealership. They expect communication across a multitude of channels: surface, email, social and digital. Not surprisingly, all the generations surveyed wanted service offers. Where this differs for the millennials is that they are okay to receive offers and coupons across digital channels, including the dealership website. Interestingly, they also want to be informed about their vehicle and itâ€™s important for them to understand the what and why of the vehicle lifecycle.
Tip 2: Millennials prefer personalised services and offers
Millennials appreciate personalised service much more than older generations, perhaps because of fewer years of vehicle ownership and experience in managing their vehicleâ€™s service. But there is also greater acceptance among this generation to receive/know about various offers. Interestingly, millennials also preferred receiving a physical offer packet over a digital packet nearly 3 to 1. Similarly, they are most interested in being notified about tyre events, though Generation X owners are most interested in being notified about service sales events and Baby Boomer owners are most interested in free car washes.
Millennials consider information a key aspect of vehicle ownership. The initial impression after a purchase is important in driving owner engagement and usage. Millennials appreciate all vehicle maintenance information regardless of severity of condition. They like to be educated on how to use a vehicleâ€™s features. While the how-to take better care of their vehicle is appealing to most car owners across generations, the younger generations wanted to know more. Coupons or discounts are top â€śbuyingâ€ť factors for all generations, when deciding where to service their vehicles, coupons are slightly less appealing to millennials compared with boomers or Gen X owners.
Tip 3: Trust matters and a simple oil change could win you loyalty
While older generations value discounts and coupons for different types of service, other perks too appeal to millennials. For example, the ability to make dealer appointments online or by text will convince 43 percent of millennials to bring their vehicle back to the dealership for service. Nearly one-third of millennials will return if the dealership schedules the next appointment before they leave. Clear explanations of how their vehicle works or can be kept in good shape will absolutely convince 58 percent of millennials to return to the dealership.
Most owners say when they receive in-vehicle alerts/reminders about vehicle maintenance, they would most likely return to the dealership to have it serviced. This is especially true for boomers and older millennials but if your millennial customers don't trust your service department, you wonâ€™t see them again. And just as service warranties build trust, a process of difficult, complicated or time-consuming scheduling is a huge turn-off and will drive away about half of your millennial owners.
Tip 4: Millennials share experiences, so donâ€™t rub them wrong
Happy dealership customers share their experiences with friends and family. Though true across generations, millennials who are treated well and feel they got a good deal on their purchase will pass along a recommendation. They are also inspired by other factors to give dealership recommendations, several of them directly tied to technology, such as how easy the dealership website is to use, or how the salespeople or staff use technology at the dealership.
Our survey shows us that good service results in about 50 percent of owners sharing the experience with friends and family. Trust and timely service are important for recommendations, but smaller details inspire millennials to share recommendations. For example, services like a comfortable waiting area, a rewards program, a user-friendly website, or a free Uber ride win them over, and the overall experience may lead them to actually return for another vehicle purchase. These â€śotherâ€ť factors influence millennials much more than boomers.
Nurturing millennials only looks tough, but it isnâ€™t
As a demographic cohort, millennials present new challenges to the automotive industry. The tried-and-tested methods that attracted their parents may no longer hold good for them. According to the new requirements, dealers also need to evolve, prepare and execute out-of-the-box strategies to retain this group as long-term customers. Our research tells us that millennials will not hesitate to switch brands and dealerships irrespective of brand reputation!
So, what do you do? An overhaul in customer engagement and business conduct is clearly called for to serve the millennial segment. While one-way marketing is coming to an end, the digital omnichannel ecosystem that is in place today is also a great opportunity.
One way to look at this new normal is to approach millennials as your co-creators of the new automotive business model. If the automotive OEMs and dealerships see themselves as co-creators, they can still participate with these young customers in fine-tuning the 4Ps (right product, price, place, and process). They are a new generation, will be your customers, and will do business with you for a long time.
Shantanu Chakraborthy, Global Director â€“ Marketing & Client Engagement