By Marc Spizzirri, GlassRatner
Intimidating, contentious, exhausting, demeaning, depressing, anxiety-producing, hateful and overwhelming. These are the adjectives most commonly associated with the car buying experience. Some equate it to a notch below a trip to the dentist. It’s time for dealers to stop giving lip service to changing the showroom experience and begin the process of change. Some 87% of Americans polled dislike something about the car buying experience.
Truth be told, this isn’t news. Most dealers recognize the need for change. For that reason, the most common ad message employed by dealers is “we’re different.” How many times have we heard claims like “no pesky, pushy salespeople” or we are the “no hassle dealership.”
Technology and a generation of millennials are going to make the long overdue change, whether the industry is ready or not. A generation of buyers who don’t remember a world without the internet will make buying a new car like ordering a pizza. Convenience and control will rule the day.
Unfortunately, those are two things that are currently not part of the predominant showroom experience. Before the digital age, dealerships were a necessary evil. Consumers needed to come to the dealership for information or questions about price, availability, comparative product information, factory incentives and basically everything they needed to know about buying a new car. That information can now be sourced on your mobile device while drinking a triple-venti, non-fat, soy milk caramel macchiato in a safe space in the back of a coffee shop.
America’s love affair with the automobile may be lost on the next generation of car buyers. Possibly as a result of growing up in an era of exposed corporate greed. The ride-share generation has a more practical perspective regarding spending. They prefer to invest their money on experiences instead of on their car and the gas, insurance and the maintenance that goes along with it. Crushed under a staggering amount of student loan debt, millennials have reprioritized their spending. According to a Forbes poll, 59% would rather rent than buy a home.
Dealers must re-tool for change as the spending habits of millennials will determine how automobiles will be sold. Millennials are currently the largest segment of the U.S. population and soon will age into the largest share of buying power. As soon as 2020, this group is estimated to spend $1.4 trillion on consumer products.
Here are some compelling statistics regarding the largest demographic of our current population. Their spending habits include:
- US Census Bureau reports that millennials account for 83.1 million of the US population
- Millennials are not responsive to traditional advertising and most consult blogs for reviews and testimonials before making a buying decision and their wish is to have contact with sellers through social media [Source: Millennial Marketing]
- 94% of Millennials use coupons and have a preference towards digital formats [Source: UPS]
- 87% use a mobile device [Source: UPS]
- 83% use online content to make a purchasing decision.
- 63% of Millennials complete transactions on their smartphones [Source: UPS]
- 60% of Millennials remain loyal to brands they purchase. [Source: Forbes]
- 74% of Millennials would switch to a different retailer or brand if they had a negative customer service experience. [Source: ICSC]
- They prefer brands that represent value, exceptional customer service, and community responsibility. 81% expect businesses to make a public commitment to charity. [Source: Horizon Media]
- Unlike previous generations, they are more likely to share a positive customer experience. [Source: American Express]
- They have been trained to stay loyal to a brand vis a vis loyalty programs that provide incentives to retain customers. [Source: Forbes]
- They will inherit $30 billion from their baby boomer parents
- They have been consistent trend setters
Millennials may become the major disruptive force in redefining the car buying experience for the better. There has been a great deal written about how to adapt our business practices to reach this millennial world-changing force. None of the statistics listed above should be new information for any dealer or anyone in business.
It has become mainstream knowledge that to reach this group we will need intelligent, perceptive social media content, offer flexibility in handling transactions on mobile devices and authenticate a socially-responsible business. They want convenience and control. Time to give them what they want.
The difference between success and failure will not be measured through marketing efforts but through the customer experience. This imminent, overriding cultural change is ironically the best news that the retail automotive industry had had in years.
Through the many resources providing information, the consumer interaction will no longer be focused on price and value. The adversarial relationship between dealership and consumer can finally be put to rest. Those dealers that can embrace transformation and evolve along with the reconstruction of the showroom experience will see the greatest benefit. This powerful, game-changing force of new buyers may give dealers the opportunity to change the adjectives forever.
Marc Spizzirri is Senior Managing Director for GlassRatner Advisory & Capital Group, LLC, a specialty financial advisory services firm and wholly-owned subsidiary of B. Riley Financial, Inc. (NASDAQ: RILY). He has 35 years of retail automotive experience. He has owned and operated seven franchised automotive dealerships, two motorcycle franchises and an internationally recognized classic car dealership with total annual sales reaching $400 million.. He can be reached at 949.922.1006 or MSpizzirri@glassratner.com.