Ignore the global rise of millennials and their new buying habits at your peril says CDK Global
David Green, CDK Global Vice President Sales and Marketing, discusses how the growth of millennials as a buying sector and their use of technology is reshaping the global automotive retail industry.
The influence of millennials is growing in major markets around the world. The demographic of young adults aged 18 to 34 spans the digital revolution, having grown up with the internet they are highly reliant on information from digital devices to inform purchasing decisions.
In France, Germany and the UK, millennials make up around 15% to 20% of the population1, while in the US the demographic now represents a quarter of the population, responsible for a massive $200 billion of annual spending2.
The generation game
For Generation X, who grew up in the late 1950s and early 1960s, traditional values such as retailer loyalty and customer service remain important. Millennials differ from this - they have grown up in a technological revolution and want to contact retailers via digital channels, including email, social media and instant chat services – and expect an instant, personalised response.
Unlike their predecessors, millennials are often ‘numb’ to blanket advertising. Dealerships need to acknowledge that this demographic has a different world view and way of choosing what they buy. For example, more than 60% avoid purchasing big ticket items with credit and loans, preferring flexible financing and trade-in options to pay.
Behavioural differences in the generation
Research by CDK Global shows that within the millennial demographic there are clear distinctions of behaviour. Older millennials respond to both modern and traditional marketing approaches, reacting more to lifestyle changes and possessing a higher degree of brand loyalty than their younger counterparts, of which 58% are swayed more by social status2.
For all millennials buying goods has to be easy - 93% cite convenience as their main buying criteria, with search engines (98%), independent review sites (93%) and word of mouth (88%) the biggest influences on their car buying choice.
In emerging markets, CDK Global has witnessed the growth of a ‘leapfrog’ generation. In China, India and Africa for example, consumers are now more inclined to shop online for clothes and food - and increasingly for cars. This confidence in purchasing online is fuelled by faster internet speeds and access to mobile devices, digital payments and comparison websites. In these markets, millennials are a pioneer generation – high risk takers, not relying on their instincts and traditional purchase methods.
Change the dealership approach
Millennials typically create a shortlist of three to four cars they want to buy, using information gathered from predominantly digital channels. They will then search for local dealerships to arrange a test drive, checking the online ratings for word-of-mouth recommendations for the quality of a dealership and service levels.
Younger millennials find ‘being sold to’ uncomfortable, which can work against a dealer as 85% say they prefer an advisory approach. CDK Global’s research shows that 95% of millennials are put off a purchase by a lack of knowledge of their requirements by a dealer. They are the ‘now’ generation, with 63% expecting immediate delivery, frustrated by waiting times and excessive paperwork.
The millennial is potentially a very fickle customer, so dealers need to be digitally aware and adaptable to new technologies to retain these customers for the future. As an enabler of end-to-end automotive commerce, CDK Global uses its global knowledge and local insight to map out all eventualities across the customer journey. For example, to help dealers understand more about their customers’ needs, CDK partners with certain vehicle manufacturers to integrate the DMS with online car configurators, providing a seamless transition from online to showroom. Knowing a customer’s likely preferences before they set foot in the dealership is a big step towards delivering the experience millennials demand and expect.
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2 CDK Global report: How Millennials Choose Cars & Dealerships, Sept 2017 https://www.cdkglobal.com/industryinsider/how-millennials-choose-dealerships#sm.01csjko213fpdjm10vn2i2n3wbb3u