From Customer Data: Millennial Car-Buying Trends - Treasure Data Blog
How Millennials and Customer Data Are Changing the Car-Buying Experience

How Millennials and Customer Data Are Changing the Car-Buying Experience

How Millennials and Customer Data Are Changing the Car-Buying Experience

How different are millennials when it comes to car ownership? And are car makers wasting their time catering to this sought-after demographic? Let’s look at real customer data; the results might surprise you.

Remember how less than a decade ago, as automakers battled to recover from the Great Recession, millennials were the industry’s biggest bogeymen? At the time, many were showing little interest in getting a driver’s license or owning a car, while car- and ride-sharing services were emerging to meet their mobility needs without saddling them with more debt.

Needless to say, fears of the car industry’s imminent demise have proved vastly overstated. Today millennials are the auto industry’s single largest segment, and they are expected to lead a car ownership boom in 2021.

While much has been made of this generation’s penchant for breaking with convention, when it comes to what drives millennials to purchase cars, they’re surprisingly similar to everyone else. As they start new families, more than 50% are heading to the suburbs, so they need cars to commute. And they share the same basic beliefs that have always driven people to buy new cars, namely: cars are a necessity, your car choice enhances your image, and research is essential. The COVID pandemic might also be helping to renew interest in car buying, as many are reluctant about maintaining social distance while taking public transportation.

However when it comes to how they shop for cars—and what they’re looking for in a vehicle—millennials couldn’t be more different, according to customer data analysis. They have a whole new set of expectations, which data suggests are increasingly common amongst car buyers across generations, from Gen X to Gen Z. Millennials are, in fact, leading the way to the future of car buying. And smart marketers would do well to pay attention.

How millennials shop for cars

Digital media has become a major disruptor to almost every industry, and the automotive industry is no exception. As a result, the new automotive sales process is focused first and foremost online. Here’s a closer look at how it typically plays out with millennials.

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1. Research is a primary focus, and it’s done across a vast array of media and platforms.

More than previous generations, millennials are information seekers who are willing to commit the necessary time to research their options and make educated decisions. Today 88% start their car buying journeys online—a trend reflected across all buyers. They’re also more swayed by their findings—56% claim their automotive research has a big impact, compared to 50% of average shoppers. Unsurprisingly, all this research is more likely to be done on mobile devices.

Like most shoppers 35 and older, they look up specs and check out dealer websites. However, millennials use many more sources of digital information. Not only are they drawn to tools for price comparison, payments, warranty comparisons and car configurations, they also watch a considerable number of videos, including those that demonstrate features, consumer self-reports, test drives, and vehicle interior/exterior walk throughs. This trend only promises to increase with YouTube already the most popular online platform for Gen Z.

2.  Reviews and opinions matter; traditional advertising is typically ignored.

During a talk at L2’s Digital Leadership Academy, Scott Galloway, professor of marketing at the New York University Stern School of Business, suggests that consumers increasingly associate a lack of innovation with automotive brands that spend the most on ads. This bias is reinforced by manufacturers like Tesla Motors, a cutting-edge brand that successfully launched with zero traditional advertising. Notably, traditional advertising strategies are largely ineffective for reaching most millennials. It’s a generation that would rather ask their connections on social media for input and advice, viewing them as more trustworthy sources of information than glossy advertisements.

They’re also highly influenced by consumer reviews. In fact, millennials are more influenced by user-generated content than other generations—84% report that reviews on company websites have at least some influence. The rest of shoppers aren’t far behind with 70% also swayed by reviews more than ads (so consider this for your ad buying!).

3. Visiting a single dealership completes their search.

In the past, dealerships were an integral part of the car shopping experience with consumers visiting about five dealerships to take test drives and consult with sales staff. However, in recent years this figure has decreased dramatically with car shoppers now only visiting an average of 2.5 dealerships. And, as millennials become the dominant car buyers, 41% of all shoppers only visit one dealership.

Essentially, millennials do all their shopping online to discover exactly what they want. Then, when they’re armed with pricing details and specs, they show up at the dealership to take a test drive. This leaves no room for the typical “hard sell,” which millennials actively avoid.

Where are the biggest opportunities for marketers and retailers?

One thing is certain: traditional vehicle marketing is no longer viable. In the past, engineers designed products, and then manufacturers instructed their marketing departments to sell them. As today’s buyers increasingly focus on their own personal priorities, automotive brands need to start by asking what customers want first and then find innovative ways to deliver.

Personalized messaging that harnesses customer data 

As the effectiveness of advertising declines, it’s clear that automotive brands need to stop over-investing in generic advertising that casts a wide net. Instead, they should start focusing on the buyer’s journey, using customer data and predictive analytics to develop highly personalized customer journeys.

A great example of the effectiveness of this approach is Subaru, which uses Treasure Data’s enterprise Customer Data Platform to understand the buyer’s journey and target messages to the right shoppers. Subaru aggregated all of its first-party data and then merged it with third-party data. This generated important insights, such as a sharp increase in visits to review sites several weeks before purchase.

By knowing who was serious about buying in the short term, Subaru was able to segment those customers into a unique group and personalize its ad messaging. “Buyers who just started to consider and those who are almost decided are quite different in character, and using the same advertisement for both is not effective,” says Atsushi Yasumuro, senior manager of digital marketing at Subaru. By targeting shoppers with timely, relevant promotions, Subaru was able to increase its advertising CTR by 350%.

Subaru also gained important insights about its customers, and now uses those insights in product design, add-ons, and features. For example, it learned that most of its customers own dogs, so it designed doors and restraints that were easier to use with dogs and their pet carriers.

Innovative retail concepts that streamline shopping 

As millennials spend increasing amounts of time on research, dealerships have been relegated to the final stop on the buying journey. That makes it essential for automotive brands to find innovative ways for shoppers to connect. “Dealerships and the automotive market will begin to transition to more creative ways to reach their target audience,” predicts Laura Gonzales, manager of digital marketing at AutoNation.

Today 50% of customers are open to making a car purchase online. And car manufacturer Peugeot is already aiming to attract this segment. In 2019, it launched a website that lets customers configure a car to their exact specifications within 30 minutes. As part of the ordering process, they get a guaranteed price for their Peugeot and can personalize the financing. Customers can have their brand new car delivered to their door or pick it up at their local dealer.

Besides online ordering, automotive brands are starting to experiment with other formats. One such model is the automotive brand experience store. Pioneered by Tesla, today brands like Audi and BMW mini have also opened small city center showrooms to cater to shoppers who don’t want to travel to out-of-town dealerships.

Next generation product experiences that increase engagement

To encourage social sharing and word-of-mouth advertising, smart automotive brands are shifting towards innovative experiences to attract millennial car shoppers who crave experiences.

Another possibility is for brands to set up state-of-the-art test driving facilities in central and easy-to-reach urban locations. Test drives could be enhanced with on-board computers that generate personalized feedback and reports. On-site staff would have deep knowledge of a range of models and technology. They could also facilitate streamlined purchases in the event that shoppers were inspired to buy.

Besides in-person engagement, virtual reality (VR) is an opportunity to engage customers. For example, Volvo launched Volvo Reality to offer shoppers a fully immersive test drive experience using a smartphone and Google Cardboard headset. Also following suit: Audi, Hyundai, and Jaguar.

The future is much bigger than millennials

No one wants to be left behind. That’s why marketers are so eager to target millennials—they want to understand what shifts are happening and prepare for what’s next. While millennials are definitely leading the way toward the future of car buying, their habits aren’t exclusive to a single generation. Instead, they represent larger social trends as technology drives profound change across the retail landscape. Tomorrow’s disruptive automotive brands are capitalizing on these changes by defining a radically new marketing strategy powered by customer data. To learn more about using customer data to reinvent the car buying experience for millennials—and anyone else in your market—check out this new report from the Winterberry Group, the Drive for Data. Learn how CDP platforms can help drive a better customer experience.

Steven Tsao
Steven Tsao
Steven Tsao has led digital marketing initiatives since 2002 and has transformed customer engagement at Fortune 500 companies and start-ups alike. He has an MBA from Santa Clara University Leavey School of Business, and a fourth-degree black belt in Aikikai Aikido. With a fine balance of data analytics and creativity, Steven has spearheaded modern marketing practices in industry-leading brands. Connect with Steven on LinkedIn.
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