In the coming years, your youngest customers might become your best…if they’re not already there.
According to a recent analysis by the Power Information Network® (PIN) from J.D. Power & Associates®, Millennials (also known as Gen Y, or the 60+ million Americans, born in 1981-2000)1 are becoming an increasingly powerful purchasing group. Accounting for 26% of new-vehicle retail sales in 2014 alone, Millennials are now out-buying Gen X (born 1965-1976) who purchased 24% of new-vehicle retail.2
However, Millennials don’t yet hold first place in the race for most new-vehicle dollars spent. That title still belongs to the Baby Boomers (those born 1946-1964), who purchased 38% of new vehicles sold during the first half of 2014. But these numbers have changed since 2013, when Millennials made up 23% of sales and Boomers 40%.
Millennials show no signs of slowing down, with sales volume expected to increase 17% by the end of 2014. Gen X is also expected to increase sales volume by 6%, while Boomers numbers are expected to remain steady.
It’s not all just about how much they’re spending, either, but how often. A recent DMEautomotive survey of 1,000 automotive customers found that Millennials intend to purchase a new or new-to-them vehicle every 5.5 years as opposed to an average 7.2 years for non-Millennials. This translates to 9.1 vehicles purchased throughout the Millennial’s lifetime, which is roughly two more vehicles purchased than the average Boomer.
There are a variety of explanations for these changes, much of which could be attributed to Millennials coming of age to purchase vehicles to suit their changing lifestyle needs. In order to meet those needs, dealers must understand how to reach this maturing consumer base to further sales.
But, who are these Millennials?
Millennials are those individuals born in 1981-2000, who came of age at the turn of the millennium.3 Don’t let their youth fool you, they pack a mighty financial punch. It is estimated4 that Millennials will have a combined worldwide purchasing power of $2.45 trillion by 2015.
As a generation, they are beholden to their smartphones and various forms of mobile technology; 80% own a smartphone5. This constant technological connection presents an incredible opportunity for advertising products and services through mobile apps and mobile-optimized websites. In fact, Millennials use 20% more lifestyle, shopping, social and photo-sharing apps than other generations6 and two out of every three Millennials use mobile apps while shopping in the store7.
They’re also incredibly savvy shoppers, being twice as likely to search through a dealer’s inventory before purchase and three times more likely to search financing options than shoppers over 358. Additionally, 30% of customers under 35 who are researching on their mobile device while on a dealer’s lot are searching inventory of competing dealers9.
What Can Dealers Do Now?
Now that you understand who they are, let’s discuss how to you reach them. So how do you bring their mobile tech-loving, new-car-buying selves into your dealership? What advertisements can you use to grab their eyes and never let go?
Let’s review the data.
In a recent consumer study10, both consumers over 35 and under 35 were shown to prefer advertisements that are “To the Point,” “Simple,” and “Realistic.” However, the kind of advertising they prefer differs: millennial consumers appreciate “Clean,” “Funny,” and “Colorful” advertising much more than their Gen X and Boomer counterparts.
In order to grab the attention of your millennial customers and bring them in to the showroom to purchase, dealers must evaluate their current communications strategy and ask some probing questions:
- Are you reaching your customers where they live? (Literally and figuratively.)
Take advantage of all the information at your disposal. Customize and optimize your strategies to bring in sales revenue. If it’s Millennials you’re aiming for, don’t forget to create clean, funny, colorful ads.
- Do you use a dealer-branded mobile app?
Close the app gap! Mobile apps increase customer likelihood to purchase by 73%. Customers with an app also spend 7% more on vehicle purchases and make 25% more dealership service appointments.
- Are you utilizing a mobile-optimized website?
75% of consumers under 35 said they would stop their online search if a website wasn’t optimized for mobile.
- Are you making the best of every outlet available to you?
Mobile’s not the only way to go – Direct mail, email, point-of-purchase materials, phone calls, text messages (if given express written consent, per FTC regulations), also play a vital role in Millennial marketing.
1. [Pew Research Center, 2014]↩
2. [J.D. Power, 2014]↩
3. [Pew Research Center, 2014]↩
4. [Center for Marketing Research- University of Massachusetts Dartmouth, 2013]↩
5. [Flurry.com, 2014]↩
7. [CFI Group, 2014]↩
8. [DMEautomotive, 2012]↩
10. [DMEautomotive, 2014]↩