Ah, Millennials. They are a much maligned – yet coveted – consumer. I truly believe this demographic will single-handedly change how goods and services are bought and sold. So, who are they and how should a powersports dealer capture their sale?
The Millennial generation was born between 1980 and 2000. They are the biggest in history, even bigger than the Baby Boomers. Financially, this group won’t reach their peak earning age until 2020. However, Millennials already control a large chunk of liquid assets, an amount that is forecast to grow to $7 trillion by 2020. By 2025, they are expected to generate 46 percent of all U.S. income.
This generation spends money very differently than their Baby Boomer elders. According to a Goldman Sachs Research report issued this year, Millennials are far less likely to purchase something because it’s convenient. Quite the opposite. They will delay a purchase in search of a lower price or a better deal. While they do spend money – they focus on value rather than impulse.
Millennials are the first completely digital generation, living almost entirely on their smartphones. They are research obsessed and will quickly become the expert on an item before they purchase. With this information in hand, how do you tackle this knowledgeable, value-driven customer?
Focus on “need” vs. “want”
Millennials focus on value for a reason. The average worker in the 24-36 age group earns $10,000 less than their parents’ generation did at the same age, which equates to roughly 20 percent less purchasing power. Meanwhile, the average student debt for a Millennial is double that of the previous generation. Outstanding student loan debt stands at $1.31 trillion, spread out over 44.2 million Americans. The average monthly student loan payment is $351. While a Baby Boomer customer might have paid cash or purchased a bike with a credit card, the Millennial customer is looking for financing.
Selling on value is never a bad proposition. Owning a bike for the daily commute has more appeal to those Millennials who do not live in an urban core, or have limited access to public transit. But the bike they will prefer must communicate value much more than status. With their reliance on the internet, expect this customer to have done their research before ever entering your dealership. In fact, they may only enter your store to finalize the sale. Does your team have a digital communication strategy?
Reliability will also be a key selling point. Offering VSCs, tire protection or a CPO program are important tools which can lock down a sale. Make sure your team knows how to clearly communicate the value of these items.
Just as they shopped for value in a bike, they also demand value in their loan provider. Are your lender partners available during your store hours to discuss various options, or structure a loan to meet the Millennial’s needs? Make sure you work with your lender partners to understand how they can support these buyers.
And speaking of lender partners, many credit institutions are also challenged to meet the needs of the Millennial and are concerned with providing financing to this debt-ridden generation. By including consumer protection products in the deal package and explaining how they can protect loans from default and delinquency, you can better position your dealership with lenders operating within the space.
Millennials will soon become the dominant consumer demographic. And, their pursuit of value is unlikely to change. Become a value-added resource – and you’ll be in a better position to significantly augment your bottom line.