Millennials are taking over!
Okay not really…but it feels like everywhere we turn its Millennials are doing this and Millennials aren’t doing that, Millennials, Millennials, Millennials. It’s true Millennials are dominating the conversation right now. But there’s a good reason that companies and new sources can’t stop talking about them.
Millennials may only make up 30% of the population, but their buying habits majorly affect almost every major industry. And the automotive industry is no exception.
In fact, Millennials are officially the largest buying group in the automotive marketplace.
Don’t worry, Baby Boomers and Gen Xers are still buying cars. But as we move into the new decade, Millennials, now aged 25-40, are the new buying majority. According to the experts at J.D Power PIN data, Millennials made up approximately 40% of car sales in 2020. And in spite of some common misconceptions, they are definitely spending money.
In fact, the average Millennial racks up more than $47,000 in expenditures each year. As a buying group, Millennials spend $600 billion in the U.S. each year.
And now that most Millennials have become working professionals, even the youngest members of the generation are transitioning out of starter vehicles and into what may be their first major purchase. That fact alone makes the car buying process emotional and difficult for many of them.
The dealerships who understand how emotionally taxing the car buying process is for Millennials and who have systems in place to alleviate their stress have an opportunity to benefit from the influx Millennial buyers. But the challenges don’t stop there.
Unfortunately, Millennials come with more debt than any generation before them—many of them plagued with student and/or personal debt.
Millennials also come with a financial portfolio, unlike any other generation. They rely less on credit cards than the generation before them, opting more for debit car usage, leaving them with fewer opportunities to build credit. Millennials have an average FICO credit score of 668—a full 10 points lower than Gen Xers average when they were the same age.
Because their financial profiles are so different from the generations before them, they’ve also developed vastly different buying habits. And these buying habits are often accused of killing industries, like department stores and cable TV.
Millennials value trust, authenticity and choice. They are cautious about who they take advice from, and even skeptical of financial advice given by parents and professionals. They are not typically brand loyal, unless they receive a customer-centric experience (Forbes, May 2019). In fact, experience is the name of the game when it comes to winning over Millennials—70% of them will spend extra to eat at the best restaurant in town and they are more likely to spend on comfort and conveniences.
With this in mind, if traditional dealerships don’t start adapting to Millennials’ buying preferences, it won’t be long before we end up reporting that Millennials are also killing traditional dealerships.
But here’s the deal.
Millennials aren’t going to kill traditional dealerships because they prefer newer buying methods. No, millennials will kill traditional dealerships if traditional dealerships aren’t willing to adapt to the things Millennials consider important to the buying process.
The truth is, Millennials aren’t willing to overlook things like pushy salespeople and dingy showrooms that have never been updated. More than anything, Millennials seek experiences. And that includes shopping experiences.
If you don’t want Millennials to overlook you for an online experience, you need to give them a reason to choose your dealership over everyone else.
Here are just a few ways you can create buying experiences that will attract Millennials.
- Train your salespeople to have conversations that will engage Millennials. Selling through storytelling, being transparent and keeping all conversations short and sweet are all communication methods that appeal to Millennials.
- Update your showroom—consider incorporating a selfie wall into the decor.
- Start being more active on your social media accounts—try running mini engagement contests and giveaways.
- Be a contributor to the community—81% of Millennials expect companies to be committed to the public and charitable causes.
More than anything, you need to stock vehicles Millennials care about.
Remember what we said about Millennials and debt? It’s important to understand that because of the looming debt of many Millennials, most of them aren’t looking for the flashiest vehicles like the generations before them. Most Millennials are more interested in practical, reliable and affordable rides.
That means you don’t need to fight with other dealers at the auction to stock the newest models of each car from the most popular brands. Most Millennials will be happy to drive almost any vehicle that fits their situation and budget.
In fact, there are a lot of potential customers, outside the Millennial demographic, who are looking for more than a specific vehicle. These customers are looking for help. They need assistance from experts who care about them and their situation. Coaches who are willing to guide them through the car buying process. If that sounds like you, check out our free guide to attracting this unique type of customer here. It’s the secret to generating more traffic, leads and sales without killing yourself or your dealership in the process.