UCD Magazine • August 2020 • The Dealer Matters

WILL YOUR DEALERSHIP BE PREFERRED BY CAR-BUYING MILLENNIALS AND GEN ZERS? HAVING THE RIGHT ATTITUDE CAN MAKE ALL THE DIFFERENCE.

They’re online all the time. They’re hyperconnected. They crowdsource for input before making decisions.

Those are some of the common assumptions about millennials – the generation now in the 25-43-year-old range – and Generation Z, which includes those 24 and younger.

Those two groups of consumers represent the future for all retailers, and they are already exerting their influence in the present.

Just look at Apple and Amazon. Both have grown exponentially in market share and profitability, and a significant part of that ongoing success is the result of incorporating those younger generations into their business strategy.

The majority of Apple users (according to Slice Intelligence) and Amazon purchasers (according to Goldman Sachs) are between 19 and 44 years old. Meanwhile, brands that fared well with baby boomers and Generation X are now closing their doors.

This year alone, Pier 1 Imports, Gap, Walgreens and Sears (to name a few) have all announced significant store closings.

EFG Companies recently surveyed more than 500 millennials and Gen Zers across the U.S. to better understand how they approach the process of purchasing vehicles and what matters to them during the process.

EFG’s 2020 Vehicle Buying Survey drilled down into the key criteria millennials and Generation Z use to determine where they will purchase a vehicle.

The objective was to understand what matters most to those car buyers – a dealer’s brand or affiliation with a manufacturer, or the level of service it provides.

It turns out that above all else, the dealership’s attitude toward the buyer is what matters most.

Taken another way, the research shows building a relationship and a connection with today’s car buyer still reigns supreme.

Just as you could count on selling a vehicle to your good friend, the baby boomer, because you had developed a strong relationship with him, the same precept holds true for the next generations.

For baby boomers, the customers invested a significant amount of time physically in your dealership, often bringing their entire family with them.

In the years to come, you might never meet that buyer until the sale is complete.

Let’s look at the path millennials and Gen Zers take when purchasing a vehicle and how independent dealers can gain those new buyers as faithful customers for the long term.

We all know vehicle availability, price and trade-in offer are the biggest components to increasing foot traffic and securing the sale.

But aside from those, how do millennials and Gen Zers narrow down their dealership selection?

We asked them for the top three influencers that impact their vehicle purchasing decision – specifically, their decision where to purchase. Their answers:

Clearly, relationships and reviews matter. If the younger generations are choosing a dealer based on advice and reviews resulting from positive interactions with a dealership, the takeaway is obvious.

Any dealership, regardless of brand affiliation, can win with millennials and Generation Z – if it focuses on building the relationship.

While you cannot control individual conversations offline about your dealership, you can control the conversation online.

That does not mean trying to take down or fight negative reviews. Rather, it’s about taking a proactive approach to responding to all reviews and working to take negative conversations offline.

Simply respond to a negative review by saying that the customer’s experience does not reflect your brand promise and you would like to know more about the experience, and provide a phone number to call.

That speaks volumes to those reading your reviews. It shows you are invested in their business.

The third criteria also speaks to how independent dealers can build that relationship with an extended warranty or vehicle service contract.

How many of your vehicles are certified preowned? How much of your inventory can be sold with a VSC?

When you acquire inventory at auction or elsewhere, select vehicles you can either certify or at least sell with a VSC. Certified pre-owned programs are not only for franchised dealers. Independents can get a piece of the CPO action through programs such as NIADA Certified.

Train your team on the benefits of your CPO program and/or your VSC, and make sure those benefits are presented to every customer.

EFG’s research drilled down even more on how the personal experience with a dealer can influence the purchasing decision. So we asked what happens when younger consumers narrow the purchase down to two dealers.

Here are their top three reasons for purchasing with one dealership over another:

• Overall positive reviews about the dealer. This response is a little more nuanced, but the relationship factor remains strong.

Quick follow-up, positive reviews and answering questions efficiently all speak to a dealership’s attitude and focus on the customer.

Responsiveness and attention to detail are not exclusive to a dealer brand or type of vehicle sold. Customer focus is the hallmark of a company that understands its customers and puts the emphasis on them.

The 2016 J.D. Power Auto Shopper Study found millennials take longer than baby boomers to decide which car to buy – 16.9 weeks vs. 15.7 weeks. And during the overall buying process, millennials invest about 4.5 hours more in research.

During that research phase, the dealership that is responsive and efficient in its responses will score points in the “relationship” bucket.

The responses reflecting an extended warranty/VSC and money-saving add-ons like oil changes and car washes speak directly to the younger generations’ focus on finances.

According to a 2020 Bank of America survey of millennials, debt is a serious financial obstacle, with 76 percent carrying debt of some kind.

A dealership that can offer some value-added options – including an extended warranty – will score points.

Now that we know what millennials and Generation Z want – personal relationships and value for their money – the next question is what they don’t want.

According to EFG Companies’ research, the top two reasons for not purchasing or leasing from a dealer are an unfriendly/unhelpful sales team and a general feeling of distrust.

Imagine having a potential customer leave your location – either physically or virtually – with a feeling of distrust. Or that potential customer not even giving your dealership a chance because the sales staff was unfriendly or not helpful.

The responses reveal that a helpful and consultative attitude matters most when the younger generations decide which dealer to choose.

While your sales team might be excellent at engaging with customers in person, how are they online?

Do you have a policy of requiring customers to physically come to your dealership to get their questions answered? If so, you might be leaving money on the table.

Train your team on how to extend their customer service attitude to the digital realm.

Simply answering a customer’s question using her preferred method of communication – whether that’s text, online chat, email or phone – puts you miles ahead of the competition when it comes to building trust with your customers.

What are the perceptions of millennials and Generation Z when it comes to purchasing from a franchise dealership versus an independent dealership?

The good news is both types of dealerships are equal in the eyes of these consumers. The better news is there’s a lot of room for improvement when it comes to customer service, with low-hanging fruit to differentiate your business model from the dealer next door.

• 62 percent didn’t believe the dealership provided them the ability to handle most of the purchase process online.

• 75 percent believed franchise dealerships would require them to handle most of the purchase process in person.

• 80 percent believed franchise dealers have expert knowledge about the vehicle they want.

• 81 percent said they perceive franchise dealers as having high quality pre-owned vehicles.

• 55 percent didn’t believe the dealership provided them the ability to handle most of the purchase process online.

• 67 percent believed independent dealerships would require them to handle most of the purchase process in person.

• 67 percent said independent dealers do not have their best interest in mind.

• 53 percent believed independent dealers have expert knowledge about the vehicle they want.

• 67 percent said they perceive independent dealers as having high quality pre-owned vehicles.

Regardless of type of dealership, millennials and Gen Zers believe the purchase process takes too long and dealers don’t give them the ability to handle most of the purchase process online.

But 45 percent believed they could handle most of the process online at an independent dealership compared to only 38 percent at a franchise dealer.

By focusing on widening that gap, you can positively affect your perception across almost all the other perception categories.

The more information you put online and the more control over the purchase process you give to consumers, the more transparent and trustworthy your operation becomes.

Online retailing can also drastically reduce the time it takes to purchase a vehicle. The more up front your team is about answering consumer questions using their preferred method of communication, the more personalized your service becomes. That also helps demonstrate your team’s expert knowledge of your inventory.

Franchise dealers have an edge on independents when it comes to quality vehicles. But if you invest in CPO-quality vehicles and only purchase vehicles that can be sold with a VSC, that perception can easily be addressed.

The one area in which both franchise and independents struggle is the perception that they do not have the customer’s best interest in mind.

Have you ever heard the phrase, “underpromise and overdeliver”? Consumers have set the bar so low with their misconceptions of the industry that simply providing great customer service is overdelivering on their expectations.

If you focus on providing excellent customer service, you have the potential to set your dealership up as their preferred dealership.

At least at this point, most consumers, regardless of age, plan to purchase at a dealership. Whether the dealership they choose is a franchise or an independent is up to you and the level of service you provide.

It’s not about brand, dealership name or types of vehicles sold. What matters to millennials and Generation Z is having the right attitude toward them as customers.

The survey responses provide a clear road map to becoming a preferred dealer – and earning that valuable positive review or word-of-mouth referral.

When taken at face value, those selling traits are no different than for any generation.

The difference is the delivery mechanism. Once independent dealers master their online footprint and dedicate knowledgeable staff to supporting those potential customers online, the rest comes down to basic sales.

Treat others as you would like to be treated yourself. Because with millennials – and all of your customers – attitude matters.

Gary Biskup is vice president of independent services for EFG Companies, a provider of F&I products, services, administration and training to independent dealers nationwide. He can be reached at gbiskup@efgusa.com or (214) 470-6859.