Marketing to millennials: Make it online, fast, easy
Also important: No surprises, low pressure, no haggling
Photo credit: MARK GOLUB
Ivelisse Rosa is the new face of car-buying.
The 25-year-old social media director at Spitzer Automotive Group in Cleveland admits to doing hours of online research and having many conversations with friends and family before buying her first new car, a Chrysler 200 sedan, last October.
Like many others of her generation -- those increasingly influential millennials, or Generation Y buyers -- Rosa chose a practical car with relatively good fuel economy mileage and a 100,000-mile warranty. After all, she's still paying back student loans.
And her buying experience was the type many millennials prefer: haggle-free with plenty of input from her parents, who made sure they were present at the delivery.
"I'm one of those overparented kids of my generation who still ask their parents about everything," said Rosa, a University of Akron (Ohio) graduate who has been promoted through the ranks of the 15-store Spitzer dealership group.
Dealers had better get used to catering to Rosa and her Gen Y contemporaries. They are coming of age. And they demand a level of transparency, tech savvy and barter-free buying unseen in previous generations.
"They are the next big segment of car buyers, and they're defining the buying process," said Dale Pollak, an e-commerce pioneer who is working on his third book on automotive retailing. Pollak founded vAuto, an inventory management vendor for auto dealers that he sold to AutoTrader.com in late 2010.
Millennials are, roughly, the generation of young people born between 1980 and 1998. They grew up with computers and find communicating on them as natural as breathing.
Today they represent two of five car buyers, according to a study last year by consulting firm Deloitte. Some estimates have them purchasing 75 percent of vehicles by 2025.
Yet many dealers resist putting in place the processes and online tools to facilitate business with them, Pollak said. Those include hiring younger sales and service staffers, enabling mobile apps and communication, Web site chat and computer tablets onsite to take a shopper transparently through the buying process, he said.
Those traditional dealers still believe that a sale happens only between a customer and a salesperson in a dealership showroom.
While that's partially true, the path to a sale has changed fundamentally, Pollak said.
More than 90 percent of car shoppers begin the journey online. They visit an average of 18 sites, including Google, online shopping networks and Facebook or other social media, before showing up at a dealership, usually unannounced, industry statistics show.
Millennials though, take online shopping considerably further. They visit an average of 25 sites before buying a vehicle, according to Google, the world's dominant search engine with about two-thirds of all search-engine traffic.
They tend to have less brand loyalty than baby boomers and Gen X shoppers and are willing to switch models and brands if they see value, Stewart Easterby, TrueCar's executive vice president of operations, said at an industry conference this spring.
En route to deciding on a vehicle, 71 percent of millennials on average will seek out family members and friends for advice on the purchase, Easterby said.
Prefer dentists to dealers
Heavily armed with pricing and vehicle information, Gen Y shoppers arrive at a dealership showroom with their minds made up to buy a specific vehicle at a specific price, not negotiate a deal, said Alison Spitzer, Rosa's boss and vice president of the Spitzer group.
"These buyers aren't looking for a salesman; they're looking for a customer advocate," said Spitzer, who just turned 33.
Haggling is generally distasteful to millennials, Spitzer said. More than half of Gen Y shoppers classified negotiations with a car salesman as more painful than a trip to the dentist, Easterby said. And the Deloitte study found that half of the millennials it surveyed would never consider a car brand again if they had a bad experience with a salesperson.
Rosa said people in her generation spend a great deal of time reading reviews and researching their purchases before running them past trusted family members and acquaintances to verify their choices.
When a dealership salesperson questions the validity of the research or tries to negotiate a different price from one found online, it throws the shopper off script, Rosa said. Rather than fight, a Gen Y customer is much more likely to leave, she said.
That runs counter to the traditional up-selling in dealerships, in which salespeople sometimes try to get customers to change their minds and take more expensive vehicles or accessories once they get in the store.
"We know that millennials don't want to haggle, and that applies to most women as well," Rosa said.
Two years ago, the Spitzer group put in place no-haggle pricing on new and used vehicles to get in step with the new way of car-buying, Alison Spitzer said.
The approach is to offer a competitive price from the start, which puts the salesperson in a position to explain the amount rather than try to barter with the customer, she said.
Respecting millennials' time also is critical, said Tom Tyrrell, managing partner of Honda of Clear Lake in Texas.
They are used to getting information or making reservations on their computers with a few clicks of a button, he said. So making them pick up a phone to make a service appointment or come into the store is an easy way to lose them, Tyrrell said.
The same is true of Internet leads, said Jim Flint, Internet director for the John Eagle Automotive Group in Houston. Millennials expect to be contacted within seconds, not hours, of leaving a lead with a dealership, he said.
"Thirty seconds is a lifetime for that generation," Flint said. "They're used to getting information instantaneously."
Putting in place fast, systematic follow-up procedures is the only way to ensure sales opportunities aren't missed, he said.
Rosa, who bought her Chrysler 200 from one of Spitzer's Chrysler stores, said she did her homework on the car.
Originally, she said she had planned to buy a used import. But her practical side overrode her initial desire.
The Chrysler fit her budget better, she said. It has some sporty flair. And the manufacturer's warranty looked increasingly attractive given the difficulty of getting repair advice from her dad now that her parents are spending more and more time traveling in retirement.
Rosa's parents were present at the dealership when she took delivery.
She said: "It's not that I don't believe in my own decision-making or have a track record of bad decisions. I just wanted them there."
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