The Automotive Professionals Guide to Millennials
Millennials – born between 1980 and 2000 – are the nation’s largest living generation.
In this document, we’ll look at:
- The history that shaped millennials attitudes.
- the underlying economics that drive their purchasing power and habits.
- How they educate themselves before making purchasing decisions.
- The benefits and features they look for in a vehicle.
- The treatment they expect when buying.
- Their attitude toward peer opinions and how they shape loyalty.
Millennials have come of age during a time of technological change, globalization and economic disruption, unprecedented impacts that have shaped their attitudes and behaviors in ways not seen before. The first generation of digital natives, millennials’ affinity for technology is fundamental to the way they shop. They expect instant access to price comparisons, product information and peer reviews, and are frustrated when they don’t get it. Must-haves for previous generations aren’t as important for millennials.
They have a very different attitude towards ownership which is disrupting the automotive industry. It’s easy for the casual observer to assume that millennials aren’t buying, but this couldn’t be further from the truth. Millennials are buying; they’re just not following the legacy path to the sale. This is why we created this book, to help you understand this powerful, motivated generation, and to decipher the new signposts that point to their needs, wants and behaviors.
WHY AREN’T MILLENNIALS BUYING CARS
Millennials, defined as people born between 1980 and 2000 – that’s 18 to 37 years old – have a reputation (earned or unearned depending on your point of view) as a polarizing generation. But one thing auto dealerships can’t deny is that when it comes to the process of purchasing a new car, millennials have reinvented the wheel – leaving dealerships no choice but to adapt.
So, what’s stopping millennials from committing to their cars?
Millennials’ aversion to car-buying begins in their teens. A University of Michigan study discovered that only 60% of 18-year olds even have a driver’s license. That’s a far cry from how things were in the 80s, when 80% of 18-year-olds were eager enough to get a license. It’s not that teens today don’t want to drive. Their reasoning like so much of the population is economic. Millennials point to the Great Recession of 2008 and high insurance premiums as top reasons why they drag their feet.
“Cars are also expensive to own, and the ‘Great Recession Generation’ is all too familiar with job and money struggles,” says a story in the personal finance site NerdWallet. “Couple those struggles with skyrocketing student loan debt, and the cost of gas, parking, and auto insurance is just too much for some.”
Nick, a millennial residing in St. Petersburg, Florida, is one example. “I didn’t get my driver’s license until I was 21,” Nick said. “My parents went bankrupt my senior year of high school. Even though I worked full time, we couldn’t afford to buy another car. I didn’t get my license so I wouldn’t have to pay car insurance.”
“The monthly cost of a car
payment, insurance, and
maintenance is equal to
my rent payment, which
is half of my salary.”
Beyond putting off a license, millennials are waiting longer than previous generations to buy their first car. Again, it’s about money. According to a Kelley Blue Book study, 57% of millennials aren’t buying cars because they’re too expensive.
Diandra, also a St. Petersburg millennial, waited a long time before she bit the bullet and bought. “I didn’t get my license until I was 21,” she said. “I couldn’t imagine myself not driving now, even though the car payment and insurance are about $600 a month – not including gas!”
For Diandra’s friend, Jim, a car is still out of reach. “The monthly cost of a car payment, insurance, and maintenance is equal to my rent payment, which is half of my salary,” Jim said. “In other words, I don’t make enough money to buy a car.”
It’s no mystery why millennials are buying cars later in life than previous generations. Having grown up during the financial crisis, many graduate from college with considerable student loan debt and enter a job market that oftentimes looks hopeless to them. They start their post-graduate lives living hand-to-mouth while often juggling more than one job to stay above water.
“Cars are a big
commitment for an
otherwise commitment phobic
Bryan Melmed, vice president of Insight Services at Exponential, categorized millennials into 12 different types, and calls this educated group “screwed.”
“Their dreams have been canceled. They’ve done all the right things, but they’re more or less stuck in an economic purgatory,” Melmed said in 2014.
Those millennials who haven’t pursued college degrees are experiencing their own financial woes that prevent them from owning cars.
“Many can’t afford college. It will take them 10-15 years at least to recover the lost ground, and that’s if they started today,” Melmed said. “Each month of unemployment creates a wider gap in their résumé, and many economists fear they have the makings of a permanent underclass.”
Cars are a big commitment for an otherwise commitment-phobic generation, an attitude that makes leasing a vehicle a more attractive option than diving in and buying. Dealertrack data shows that the number of millennials with lease contracts increased 49% from 2012 to June 2016.
Alessandra Malito, a reporter for MarketWatch, says leasing has become so compatible with the millennial lifestyle because, “A lease, which usually translates to lower monthly payments, is similar to a subscription model, something millennials have become accustomed to in their daily lives, be it their cellphone bills or Netflix accounts.”
Still, when it comes to buying cars, don’t be so quick to count millennials out. Despite some people’s (incorrect) assumptions that they’re entitled and lazy, the millennials I know are highly motivated individuals who know what they want. Perhaps that’s why they require a bit more coaxing than the car-buying generations who came before them. Millennials approach cars the same way they approach their careers, relationships, and technology: they’ll continue to upgrade until they land on the best. It’s your dealership’s job to understand them, so you can help them discover the car and the deal that earn their loyalty.
UNDERSTANDING MILLENNIALS & WHY YOU NEED TO
In the last chapter, we examined the generalization that millennials aren’t buying cars. Now let’s make another generalization: millennials hate generalizations. Sound confusing? Let’s look deeper.
If you don’t understand millennials, then you need to.
If you’ve ever heard millennials referred to as “snowflakes,” understand it’s a derogatory term that attacks their supposed fragility and false sense of uniqueness. But despite the negative connotations attached to the term, a study by advertising network Exponential concluded from data analysis of 4 million millennials that this generation really does consist of many unique subgroups.
“Millennials as a generation are the most diverse and the most heterogeneous of any we’ve seen before. Millennials have less in common with each other than any generation before them. They’re wildly different,” said Bryan Melmed, vice president of Insight Services at Exponential.
Social media, globalization, the economy (and the consequent reaction to these factors) are at the root of each subgroup. With different groups come different needs, so the car that appeals to a Brogrammer might not necessarily hit a nerve with a Travel Enthusiast. The Brogrammer set, defined by Adweek contributor
David Griner as “fist-bumping, hardpartying male tech pros,” would probably love a car like the 2017 Chevy Volt Premier, whereas the millennial Travel Enthusiasts, who Griner described as “world-traveling (but frugal) wanderers looking to explore the more obscure parts of the globe” would probably forego purchasing a new car entirely, and instead opt for a cheap used car.
Allison, a Millennial Mom, just bought a pre-owned Scion that she loves. “We live in the city and I like driving small, fuel-efficient cars,” Allison said. “We can fit the kid’s wagon and stroller, so it shuts my husband up because he wanted a bigger vehicle. I purchased a used vehicle because the Scion is discontinued. I probably still wouldn’t have purchased a new one, just because I feel like it’s not worth it to buy new anymore. I like the Scion because I used to drive one, so I have familiarity with the brand.”
“Buying a Mercedes by the
time I reached 30 was my
idea of a status symbol for
how I define success.”
Sabrina falls into the Boss Babe category, among women who Griner called assertive (and) professionally focused,” which is why she purchased a 2012 Mercedes Benz C250.
“Buying a Mercedes by the time I reached 30 was my idea of a status symbol for how I define success,” she said. “I’ve tricked it out so it’s black-on-black, and I just bought an all black front grill, so it’s really going to set it off.”
Melmed’s analysis helps shine a light on where many businesses have gotten it wrong when it comes to marketing to millennials.
“When marketers were confronted with this cohort, many of them relied on the stereotype of the bumbling, urbanite hipster with a short attention span to formulate their campaigns,” wrote Mindy Pankoke, data product manager at Experian Marketing Services and a contributor to AdAge.
Eddie de Guia, managing director and co-founder of PubNative, also an AdAge contributor, agreed that brands have dropped the ball while marketing to millennials.
“Ad buyers have succumbed to a type of tunnel vision when it comes to the digitally savvy group driving the greatest technological and social change since the industrial revolution,” he said.
One example of an auto brand that missed the mark with millennials was Chevrolet. In 2016, Chevrolet released their series of commercials featuring “Real People. Not Actors.” One commercial struggled to achieve a dialogue that seemed authentic among the “real” millennials critiquing hypothetical ads in a faux focus group. Eventually, a set of double-doors is opened and the millennials “oohh” and “ahh” over the 2016 Chevy Cruze. Albizu Garcia, co-founder and CEO of GAIN, called the ad “cringe-worthy” in Adweek.
maximize the spending
potential of millennials
by recognizing the
nuances of this diverse
“A better way for Chevy to market its car to millennials would have been to create road maps of various cross country road trips for people looking for summer vacation activities. This extra touch would provide the value of a new experience to millennials all while advertising the car as the best option to take them on this experience,” Garcia said.
Dealerships can maximize the spending potential of millennials by recognizing the nuances of this diverse generation. If your dealership makes the effort to understand the different types of millennials instead of lumping them into a singular category, you’ll succeed where others have failed.
WHY YOU NEED TO APPROACH MILLENNIALS DIFFERENTLY
By now we have the good sense not to think of millennials as one group of people. But there’s one thing a lot of them do have in common: 47% of 22 to 45 year olds are “unreachable,” meaning they “aren’t tracked – and therefore can’t be targeted or measured – by today’s standards of TV and video measurement,” according to Hearts & Science, an Omnicom Media Group agency.
“It’s pretty scary. We are not reaching young audiences effectively, just overindexing on older viewers on TV,” said Hearts & Science CEO Scott Hagerdorn.
And that’s just one reason why dealerships need to approach millennials differently.
When they’re not watching TV, millennials are being marketed to on their mobile devices like their smartphones and tablets, on social media like Facebook,
Instagram, and YouTube, and on streaming services like Amazon Prime and Hulu.
Another study, Nielsen’s Millennials on Millennials report, sheds more light on how marketers are reaching out to millennials by different means than they targeted their parents.
“While the study showed that Gen X and baby boomer viewers focused their attention on the TV but changed the channel, millennials were reportedly more
likely to scroll through their phones or open new tabs on their laptops. This culture of multitasking often has 18-34 year olds switching between devices, from phones to tablets to smart TVs,” wrote Kelly Ehlers, Forbes contributor and president of Ideas that Evoke.
As a millennial who loves to multitask, I can confirm this. When I’m interested in something, I cover all my bases. While I’m watching CNN, for example, I might check my social media feeds to see what my friends and family are saying about whatever topic is in the news that day (and then regret it immediately afterward).
“If your millennial customers
love the cars you sold them
enough to generate their
own content about their
vehicles, then that’s a big win
for your dealership.”
“By dividing your brand’s ad investment into multiple platforms, you can extend your reach across channels. If your ad content is relevant to a popular TV broadcast, you can leverage that by promoting a post in real-time – across social channels – by targeting that specific audience,” Ehlers continued.
In true millennial fashion, even after I’ve bought the latest album by my favorite musician and established my opinion on it, I’m still going to eagerly read all the reviews anyway. I’ve happily wasted entire days researching hot topics, people, and products that I didn’t even care about that much. With YouTube influencers becoming bonafide celebrities, millennials are relying on each other to find out what to buy. That’s why content is so important, and if your millennial customers love the cars you sold them enough to generate their own content about their vehicles, then that’s a big win for your dealership.
User-generated content isn’t the future,
it’s the present – right now.
Embarrassingly, I can’t even remember the last time I purchased an item without reading a review. Afterward, I’ll watch a YouTube video about the item I just purchased to make sure I’m using it to its fullest potential.
Because millennials are so image-conscious and focused on establishing our personal brands, what we buy is important to us because it communicates something about ourselves to the world around us, and reinforces that ideal in our private lives. If you consider YouTube videos reviewing products as ads, then that means millennials are literally seeking out advertisements to watch on their own accord.
“In terms of openness to advertising, millennials are actually more receptive to viewing ads than other generational groups as long as the VOD (Video on Demand) content they are viewing is accessible and free. This conditional acceptance of ads aligns with the pattern of millennials responding well to an acknowledgment of their values,” concluded Ehlers. “Many millennials polled understand the necessity of ads and aren’t bothered by them.”
Although millennials divide their attention between a handful of social networking apps – like Instagram, Snapchat, and Tumblr – Facebook comes out on top as “the number one destination for sharing content on millennials,” according to Business Insider contributor Kevin Gallagher. For this reason alone, your dealership should consider investing in Facebook ads – especially since Facebook makes businesses pay for visibility. Gone are the days when people can advertise their businesses for free (organically) on Facebook, but it pays big to put up. “Millennials are more likely to share on Facebook than Gen Xers and baby boomers,” said Gallagher.
When curating content for your social media pages, don’t just stick to pictures of your showroom. Go so far as to reach out to your past customers – particularly the younger set. Ask for a picture of them in the car they purchased from your dealership. Ask them how the car you sold them has enhanced the quality of their lives. That’s the kind of content millennials want to see from you, and it will allow your dealership to connect with millennials in a
more meaningful way.
WHAT KIND OF CARS ARE MILLENNIALS BUYING
By now you should have a much better understanding of millennials. You know what’s stopping them from throwing down for a car, you’re aware of some of the different types of millennials, and you know they need to be approached in ways their baby boomer parents were not.
So, what cars are millennials buying?
Economical small and mid-size options like the Honda Accord and Honda Civic reign supreme, according to an AutoList.com survey. And millennials find environmentally-friendly vehicles with technological fixings appealing.
Even so, dealerships can market larger cars to millennials by catering to their individual lifestyles and needs, as we discussed in Chapter 2 of this book.
Meagan Thomas, a 25-year-old millennial interviewed by the Chicago Tribune, sheds an enlightening perspective on the appeal of larger cars, and their ability to
accommodate both short and long-term goals.
“I chose (a 2015 Jeep Renegade Sport) that fit my lifestyle and didn’t cost too much money,” said Thomas. “In 10 years I hope to have kids and there’s room to put stuff in my car. Because I work three jobs, there’s probably three outfits, water bottles, and workout equipment in there right now.”
Alena, a 27-year-old residing in Colorado, loves her 2013 Hyundai Elantra, which she purchased new. “I chose my Elantra because I liked the sleek sports trim
package and thought it was the most spacious ‘small sedan’ on the market. I also love the extra features, like heated seats for my back-seat passengers,” she explained.
can come up with
many reasons to justify
purchasing the cars
they’ve chosen, and those
reasons can change
on a dime.
My dream car, the Mazda CX-3, cracked Autobytel’s “10 Cars for Millennials” list. “When it comes to hot trends in the automotive world, subcompact crossovers are perched at the very top of the ‘it’ list. As millennials exceed baby boomers in population, it makes sense that these affordable, stylish vehicles are doing so
well,” wrote Miles Branman, an editor for Autobytel. “Millennials who love to pile friends into their cars will also appreciate the added legroom and utility of a subcompact crossover.”
In addition to the convenience of having a car double as a tiny house, modest brands like Mazda and Chevrolet have really been stepping up their aesthetics. For some of us in Florida, our vehicular needs changed in September 2017 when Hurricane Irma was supposed to hit the state as a category 5 hurricane. When it seemed like the entire state was evacuating, many of us would’ve loved to own larger cars we could stuff with supplies.
“One in every six millennials
purchasing new vehicles
plan to drive for ride-sharing
services like Lyft or Uber.”
Christina, a Floridian with her sights set on a larger car, weighed in:
“When my husband and I were getting ready for Hurricane Irma, we realized that our cars were not big enough to
transport plywood to our house to cover our windows. We also had to make several trips to fill up sand bags because we couldn’t fit all the bags we needed in our cars at one time. Before the hurricane, we thought we would never want a large SUV and that we didn’t really have a need for one. But that experience made us realize how much easier it would have been to pack and move everything with a larger vehicle.”
Basically, millennials can come up with many reasons to justify purchasing the cars they’ve chosen, and those reasons can change on a dime. One common denominator among millennials on the market for new (or used) cars? Ride-sharing apps.
If millennials didn’t coin the term side hustle, they’re at least the group most familiar with the concept. According to a report by Mintel, one in every six millennials purchasing new vehicles plan to drive for ride-sharing services like Lyft or Uber. Millennials buying a car to drive for ridesharing apps are weighing both new and used options – and in some states, 10-year-old cars
are qualified enough to pick up Uber-using passengers.
As you can tell by now, there’s something out there for every millennial. Consider your dealership: What kind of millennial would want to buy from your dealership and why? Knowing your audience is the first step in selling to a millennial, and possibly even establishing brand loyalty. Your location, as well as the types of millennials you’ve spotted within the miles surrounding your dealership, will give you clues as to how you can market your vehicles to millennials.
HOW MILLENNIALS RESEARCH & SHOP FOR CARS
Let’s re-cap on what we know so far. We know why some millennials aren’t buying cars. We know what motivates several different types of millennials and what cars appeal to them. And we know why your marketing team needs to approach millennials differently.
Let’s get more specific. How are millennials researching and shopping for cars?
It’s no mystery that millennials are a mobile generation. A Facebook study on auto intenders determined that 45% of millennials do most of their research on their mobile devices before buying their cars, and an eMarketer article states that a whopping 80% of millennials use their mobile devices for at least one task on their car-buying journeys. Before even setting foot in your dealership, 65% of millennials will have used their smartphones to look up your brand, according to the 2015 Millennial Outlook e-book provided by cars.com.
“Still, only 26% of millennials plan to shop online at car-specific websites for their next car,” wrote Lauren Lyons Cole, a Business Insider contributor.
That means millennials are less brand-loyal and more open to considering many brands, which could come in handy for your dealership when trying to seal the deal.
Consider the mobile experience your dealership provides. If you’re blasting out e-mail ads, are those ads legible on mobile devices? And how long does it take for your website to load once a prospective millennial buyer clicks on a link in that ad? Inc. cited that if your website takes longer than 3 seconds to load, 40% of those interested shoppers will get frustrated and go elsewhere – or “bounce” in internet terminology.
“Millennials are 247%
more likely to be
influenced by blogs or
social networking sites.”
Maybe it’s because millennials are spoiled with so much of it, but we’re fiends for user-generated content and will happily spend hours doing research if it benefits our interests and makes us more informed buyers (as discussed in Chapter 3 of this guide). Naturally, this would make our buying habits more drawn-out than those of our baby boomer parents. J.D. Power statistics concluded that millennials spend an average of 16.9 weeks (in comparison to baby boomers’ 15.7 weeks) researching, shopping, and finally deciding on what car to purchase – investing almost 4.5 hours more than our parents do overall.
Put the power of user-generated content into perspective: Millennials are 247% more likely to be influenced by blogs or social networking sites, according to millennial speaker and generations expert Ryan Jenkins. A lot of this research is done on our mobile devices, which allows us to educate ourselves whenever and wherever we choose.
“Millennials leverage mobile in the car buying process for getting pricing, finding classified listings, locating a dealer, looking up specs, and reading reviews,” confirmed Jenkins in an article for Inc. “On-demand info gathering and mobility throughout the sales cycle is a millennial expectation.
Millennials grew up in a response rich, mobile environment and now expect prompt responses and mobile friendly communications at every crossroad.” If your dealership’s online presence is lacking and your mobile experience inefficient, then what are you waiting for? You can’t afford to be invisible online or have a lagging, unresponsive, slow-loading website if you want to draw in the generation with the most buying power, especially once you take advantage of the marketing gold mine that is social media – and that includes social media paid advertising, not just organic postings, which are losing their effectiveness more every day.
HOW TO MARKET CARS TO MILLENNIALS
Are you still thinking of using traditional methods of advertising to market to millennials? Well, think again.
Instead, try following in Ford’s footsteps. In 2011, Ford introduced their new spokesperson, Doug – an irreverent orange puppet. What made this ad campaign unique was that it was exclusive to social media. Ford didn’t take the traditional route.
“Our market share with millennials has increased significantly,” said Ford Motor Co. executive Amy Marentic in 2011. “We’re now the top selling brand to all millennials.” “77% of people who saw the 48 Focus Doug videos to date said their favorability toward Focus has risen, and Doug’s adventures have prompted
a 61% increase in Focus consideration. We’ve even had a handful of people say they bought a Focus just because of Doug,” seconded Scott Monty, the Ford exec who oversaw the campaign.
Corny? Sure. Stupid? Hardly! Ford invented (and was in on) the joke, and as a millennial with questionable moral character, I think Doug the orange puppet is hilarious. This attempt to relate to millennials was at least cooler than the disastrous Chevy ad we discussed earlier.
Skip the traditional route and meet millennials where they are, which is on social media.
Consider your dealership’s Facebook page. At the very least, you probably have a free, generic business page on the site (and if you don’t, stop reading this right now and make one). If you’re hesitating to plunk down money on targeted Facebook ads, however, this might be the motivation you need to finally invest: 66% of car buyers and owners who have seen a Facebook ad say they have clicked on it, according to a blog post on V12 Data, and 84% of prospective buyers are on Facebook. 24% use Facebook as a resource on their buyer’s journey.
“Place ads to reach people who have indicated they are in the market for a car. You can narrow down these selects to geographic areas near your dealership, by vehicle type, gender, consumer interests, and more,” the article states. “The investment is well worth it. Research by Unified shows that auto ads have 2 times higher click-through rates than the average Facebook ad.”
“Out of all the social media
platforms available to you,
Instagram is perhaps the
most aspirational because
it’s so visual.”
Don’t count Twitter out, either. Marketshare research determined that Twitter drove $716 million in car sales in just 2013 alone. That’s pretty impressive! “With over 65,000 daily tweets about purchasing or researching a new car, Twitter gives auto brands the unique opportunity to connect with an audience of in-market shoppers who have expressed intent to buy a car,” said Rob Pietsch, head of Twitter’s auto vertical.
Out of all the social media platforms available to you, Instagram is perhaps the most aspirational because it’s so visual. V12 Data helps dealerships get the picture:
“Instagram provides a great platform to creatively share your brand’s story. For example, share pictures that allow consumers to imagine themselves in the moment – a picture of one of your vehicles at the beach, tailgating at a sporting event, camping, near a lake, or any creative way you can imagine to showcase the
lifestyle your vehicle represents.”
I should probably mention that Instagram is a social media platform used solely on mobile devices, which once again emphasizes the potential selling power of mobile advertising.
It’s not like it hurts to double-down on your marketing efforts. If you’re going to go the traditional route and air commercials locally, consider uploading those commercials to YouTube as well. Potential buyers might miss your commercials on TV (after all, millennials are moving further and further toward subscription
services like Netflix, Hulu and Amazon, to mention just a few), but they will certainly consult YouTube about your brand once their interest is piqued.
Finally, reach out to your satisfied customers and politely request that they leave a review for your dealership on Facebook, Google+, or Yelp. In our digital age, most people will happily share their two cents, and it’s a great way to nudge prospective buyers into your dealership. Marketing trends may come and go, but word-of-mouth advertising never goes out of style.
Once the millennials flock to your dealership, that leads you to the last step: closing the deal.
HOW TO CLOSE THE DEAL WITH MILLENNIALS
A millennial walking into your dealership for the first time needs your help.
Despite the myriad differences between millennials, one thing a lot of us have in common is that we require our shopping experiences to be simultaneously convenient and independent. We’re so turned off by pushy salespeople at department stores that we’ll opt for online shopping instead and skip malls altogether. I can confidently make up the statistic that 90% of us don’t need help deciding what to spend our money on, and while we appreciate recommendations tailored to our tastes, we find it insulting when salespeople claim to know what we need better than we do. Just because our smartphones are firmly attached to our hands doesn’t necessarily mean we like talking on the phone much, either.
“A millennial hates calling customer service representatives – one study found that 34% would rather have their teeth cleaned, and 26% would rather go to the DMV than call customer service,” wrote millennial Penina Rothner, a content
marketing writer at AutoLeadStar.
Amen to that!
Much to our chagrin, when it comes to buying cars, we really do need your help. Because a car is such a big-ticket item, and many millennials are just now buying their first cars, we can’t trust ourselves as much to know exactly what we want.
So do more helping and less selling.
Research by Auto Trader determined that millennials will spend upwards of 17 hours exploring their options before finally settling on a car, and despite their affinity for online shopping, an MSN poll revealed that 62% of American millennials plan on going to a dealership when the time comes to purchase. If you want millennials to drive off your lot in vehicles you’ve put them in, then provide as much information about your vehicles on your website as possible, as well as recommendations. “We’ve been spoiled by websites like Amazon and Netflix that always recommend just the right thing,” Rothner continued. “These services are so successful that 35% of Amazon’s revenue is said to come from recommended products. Your website can give me a similar type of experience… I’m definitely more likely to visit your dealership if I feel like I have all of the information I need before I walk in the door.”