Every customer is different, but their age can tell you a lot about how they might prefer to approach buying a car. Budget, comfort with digital tools and transactions, vehicle preference, and favored mode of communication are all factors that tend to vary depending on how old someone is. Since the start of the pandemic, we’ve also noticed some key generational differences in reasons for delaying vehicle purchases and the portion of shoppers who have adjusted vehicle price range. Being aware of these generational nuances is one way to get ahead in this tight market.
Knowing more about your customer is a major advantage as customers become more accustomed to not only personalization, but the speed and convenience it affords the sales process.
Generation Z may not have a ton of spending power yet but are the generation to watch. Their top reason for delaying vehicle purchases is cost and their financial situation, although their employment did improve immediately after the reopening phase (the most of any generation). According to Cox Automotive’s COVID-19 Consumer Impact Study, with over six out of 10 Gen Z-ers having decreased their vehicle price range since the start of COVID-19, it’s fair to assume they will be eyeing your less expensive models. Being young, Gen Z-ers are specifically looking for a mentor type of relationship with a salesperson who provides knowledge and expertise to guide them through their journey. Keep this in mind as you communicate with them through their preferred channels like text and email. These digital natives don’t demand personalization — they expect it. So, it’s important to tailor your communication strategy accordingly.
Millennials will represent more than 45% of the car-buying cohort by 2025. Their top reason for delaying vehicle purchases during the pandemic is unique to the other generations and frankly surprising for a relatively young and healthy group of 25- to 40 year-olds — they prefer to stay home and social distance. So if you’re considering going back to non-digital operations, or have curtailed digital offerings since shelter in place orders were lifted, you might risk losing millennial customers to a competitor who remains digitally forward. Between their concern for safety and penchant for a personalized experience, be sure to promote your at-home options and safety measures early in their shopping process.
Generation X’s top reason for delaying vehicle purchases since the pandemic will sound familiar — concern over cost and the financial situation. However, only half of these 38- to 53-year-olds have since adjusted their budget, with seven out of 10 decreasing it. It’s safe to say that this age group feels the impact of the COVID-19 economy, with many of those whose employment was impacted only just beginning to see improvement in their personal finances. Unlike younger groups, only four out of 10 Gen X-ers are less likely to visit a dealership in person due to COVID-19. They are more likely to think that personalization technology is “creepy,” but that doesn’t mean they won’t like it if it helps improve their experience. As you review Gen X-ers data, be intentional and careful about how you incorporate what you know about them into the car-buying process.
The Baby Boomers
Baby Boomers’ shopping preferences are similar to Gen X-ers, but there are some key differences that are helpful to keep in mind. For example, they are the most concerned of any generation about the late summer spike in cases rebounding back to previous levels. Yet, interestingly, they are the most likely to visit a dealership in person. Only around 40% of Boomer employment was impacted by COVID-19, which helps explain why only a quarter of them delayed vehicle purchases and just over a third have even had to adjust their budget due to the circumstances — which is notably a smaller percentage than other age groups. With that said, they are still concerned about cost, and most have a fixed-income financial situation. They are still looking for a deal, but be prepared to complete steps in person with the utmost safety precautions in place.
While age and demographics can give you a good starting point for selling, they won’t tell you everything. At the end of the day, every customer is a person with unique interests and preferences. Today, knowing more about your customer is a major advantage as customers become more accustomed to not only personalization, but the speed and convenience it affords the sales process.
The data you need to understand your customers’ unique preferences is likely in your software and in high supply thanks to growing online usage. But you still need an artificial intelligence tool to help you pull it out. For instance, a robust AI tool can point out customers who are 10.8 times more likely to buy in the next 30 days. It can even predict the brand purchased within 30 days 84% of the time, and the model purchased within 30 days 46% of the time. Age is an important number, but just one of the many tools that can help you optimize selling the right car, to the right customer, at the right time, the right way.
Chase Abbott is vice president of sales for VinSolutions and Dealer.com.