My wife and I have been shopping for a new car recently, and I feel like we've taken a trip back in time. Salespeople can't quote a price without running to the manager. We keep getting low-balled on the trade-in. Each model comes with a seemingly random assortment of features, and few dealers have exactly the configuration we want.
It's a ridiculous process that seems designed to confuse people. At the root of the problem is that dealers are competing against each other to sell the same product, ensuring that no two people will pay the same price for the same car. It's as if all the Apple Stores in the region were selling the iPhone 10 at different prices.
The result is a chaotic shopping experience that not only makes individual dealerships look bad, it reflects negatively on the car brands themselves. (While there are some new sales models out there, including Carvana and Roadster, these businesses ironically add additional middlemen to the process, creating more distance from car brands.)
The generation that has grown up with Apple and Amazon has little patience for this kind of buying experience, so the auto industry--like many others--needs a fresh approach. Here are three important factors to remember if you to want to attract and keep millennial customers.
1. Buyers value transparency and simplicity.
Today's buyers do not like gimmicks; they want to deal with a brand that is upfront. In recent discussion that I had with Nicholas Rellas, founder of the fast-growing alcohol delivery service Drizly, he shared that price transparency was more important to his buyers than convenience.
Remember what happened to the mattress industry? The top brands applied different names to identical products, leveraged resellers to capitalize on this lack of transparency, and made big bucks. Then, almost overnight, the industry was disrupted by folks like Casper and Helix Sleep offering direct-to-consumer products without the middlemen. The newcomers made shopping simple and price comparison easy, transforming the industry and leading to dark days for traditional mattress retailers.
2. Buyers want a fair and consistent price--even if it's not the lowest.
Amazon does not always have the lowest price, but most people I know don't even look elsewhere when they buy online. They trust that Amazon will not overcharge them, and they value the convenience, familiarity, customer service and benefits that come with Amazon Prime.
In the auto industry, Saturn pioneered fixed pricing but suffered because it offered a low-quality product. Now electric car company Tesla might finally be getting it right. The company has avoided third-party dealers and adopted a fixed pricing model for each car based on its specifications; there is no haggling. For the company's soon-to-be-released Model 3, 400,000 customers put down $1,000 ($400 million in deposits) to reserve cars almost two years in advance of the first shipment. This kind of advance buying is unheard-of in the auto industry. Clearly customers like both the product and the pricing model.
In other industries, many companies match low prices offered by their competitors. This policy reassures customers they are getting the best deal. I haven't seen price-matching on offer at any of the car dealerships I've visited, but maybe someone should try it.
3. Millennials prefer to ditch the middlemen.
Salespeople and dealers today often know less about products than their customers do. The model car we are considering was completely redesigned for 2018, yet one salesperson told my wife that there were no changes this year. Unless salespeople add value with in-depth knowledge about their products, millennials aren't going to want to buy through them. Since online research is easy to do, businesses have to be ready to market to very savvy buyers.
Today's consumer products are bought, not sold. That means companies have to make it easy for customers to find what they want at the best price point without a lot of hassles. Those who forget this critical feature of marketing to millennials may also soon find themselves disrupted right out of business.