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AutoPoint Blog

Servicing Millennials - Car Biz Today March 2015

Posted by Manuel Soto Thursday, March 19, 2015

Dealership and fixed operations retention has always been a vital ingredient in the health of a dealership. While huge budgets are spent on the acquisition of new sales customers, the service department is in the background ensuring that the dealership has a solid foundation and can sustain it during economic downturns. Keeping the service bays full and customers lining the drive is imperative to profitability. However, dealerships are facing a twofold challenge. First, consumers inherently distrust dealers. Second, the service market is highly competitive - independents dominate consumer service business with vehicles outside warranty. And for new vehicles, dealers have 2-3 years to build that trust before they risk losing that consumer to an independent, should they fail.

Many dealers have settled into a predictable retention marketing strategy – service reminders, coupons, etc. – to keep service customers coming back to the dealership and entice those who have gone missing. Past generations are accustomed to these more traditional forms of communication – phone calls and direct mail pieces – strategies that have been working, until now.

Times have changed. With new technologies arriving seemingly every day, things will continue to change at an increasingly rapid pace.

Today’s car shopper grew up in a much different world filled with smart phones, iPads, blazing-fast Internet and instant information at their fingertips. These consumers are used to fast, constant connectivity. Retailers have long been buying their attention, and consequently their business with digital interactions and incentives. These consumers don’t know a world requires effort to shop different dealers for the best price or service. Meet the Millennials.

In a recent article in Time Magazine, industry expert Dale Pollack stated that Millennials will account for 75 percent of all vehicles purchased by 2025. Dealers would be wise to understand this quickly-growing consumer segment and analyze how to adapt to entice – and keep – this new customer base. Those that adapt will likely be clear frontrunners for winning sales and service business over the next few decades.

What exactly do Millennials want from a service experience?

Millennials are accustomed to a world in which they can buy a refrigerator online in seconds and have it delivered almost immediately. Retailers are continuously transforming their business models to accommodate the instant gratification desire of these younger consumers. Millennials are impatient. They want information when, where and how they want it. They are price shoppers to a degree, but will pay more for quality and convenience.

Because they favor consistency and reliability, Millennials have their vehicle serviced at a franchised dealer over an independent – at least while their vehicle is under warranty. They pay for convenience and peace of mind – seen in the increased popularity of service contracts. This trend could be an advantage: more time to build trust and value in dealership service.

So what does a dealership need to do to build loyalty and retain Millennials?

  1. Build trust Building trust is the single most important thing to create a loyal Millennial. In service, this translates to consistent inspections and service recommendations. It only takes one visit with contradictory service recommendations to lose that trust. Enable these customers to validate any recommended service through third parties, and in a manner that they can understand. Be sure to reinforce a consistent process. If your service advisor recommended something on their last visit, which the customer declined, it’d be wise to ensure it’s also recommended on their next visit.Millennials are very visual. They are used to using electronic devices to access information that includes pictures and video. Simply advising the need for a new air filter is no longer enough. It is advantageous to build trust through visual education. Show them their old filter and teach them the benefits of changing it through photos and video.
  2. Provide information – Millennials expect access to information. You can be sure they have heavily researched the vehicle – price-checking, understanding warranties, and looking out for any recalls. In many cases they come armed with more information than the dealer. Transparent information is a crucial element to winning their business. Dealerships must strive to provide any and all information; whether that is about pricing or recommended repairs. Failure to provide information is a critical reason why Millennials switch to independents once their warranty has expired. Independents advertise their pricing and make it easy for Millennials to access. There’s no doubt that the independents’ price transparency contributes to the perception that dealer service is, in general, more expensive.
  3. Communicate Better – Millennials are the most digitally connected generation in history. Technology has provided myriad ways for them to communicate. The lynchpin to their trust: communicate with these customers in the way in which they prefer. We can no longer rely solely on phone calls and direct mail. Many Millennials don’t listen to voicemails, and ignore calls from unknown numbers. They will, however, respond to a text message in seconds and read their e-mails. You will find faster response times to service recommendations and spend less time tracking these customers down. The ability to communicate with Millennials in their preferred method can increase shop efficiency and provide a better customer experience.

Additionally, electronic tools can make all the difference when presenting recommendations. In our research, we found the use of tablets to present inspection results and service recommendations led to an increased acceptance of those recommendations. And, even more interesting, the customer was willing to pay more when they received the estimate and recommendations electronically.

Millennials are changing the way business is done by seeking better experiences. Innovative businesses capitalize on this and use technology to better service this demanding new generation. Domino’s Pizza provides real-time status updates on the progress of any pizza order; while Amazon sends tracking updates for packages via texts. As new technology transforms retail, Millennials will increasingly demand similar experiences from dealerships. Consumers used to be satisfied with the ability to gain access to information – tracking, order status updates, etc., - by visiting a retailers website. Now, simply providing the information isn’t enough. Millennials are expecting that businesses deliver that information to them, instead of having to retrieve it themselves.

Building trust, providing information, and communicating better are key to winning – and keeping – Millennials’ service business. This can only be accomplished through concerted effort that incorporates consistency, transparency and technology to provide the experience they demand. Technology will always continue to guide Millennials’ actions. Adopt these changes and cement your place in this new world of technology.

About the Author:

Rich Holland is Managing Director of AutoPoint, a leading platform that drives improvement in auto dealer fixed operations. As a frequent speaker on the future of automotive dealership service, Rich believes in adapt or die theory of innovation. He is a recognized expert in information technologies and the creation of customer loyalty through digital excellence. He brings over thirty years of diverse experience to AutoPoint.

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