Auto Service World
Feature   February 1, 2013   by Andrew Brooks

Generation “Why?”

The "Millennials" are looking for good reasons to bring you their business

The research is in. Generation Y, also known as the Millennials, are financially constrained and thus less likely to take on the expense of car ownership. They’re well connected online and through social media, very information-oriented, and aware of the importance of getting value for money. They do lots of research online before they even come in with a problem, finding out whatever they can about what needs to be done to their car — and scoping out service operations and prices in detail.

They don’t sound like an ideal target demographic for the automotive aftermarket. In fact, there’s a lot of potential new business out there for shops who are prepared to make changes now to the way they’ve done business in the past.

That at least is the view of Bob Greenwood, president of the Automotive Aftermarket E-Learning Centre. “There’s more opportunity in the aftermarket right now than I’ve seen in the last ten years,” he says. “But shops have to understand how the market is evolving and have the self-discipline to change how they do business.”

One major factor in the change that Greenwood is talking about is the anticipated arrival of telematics in the aftermarket in the fall of this year. This development plays right to one of the major differentiators of Generation Y — their ready grasp of any kind of technology that keeps them connected.

The advent of telematics in the aftermarket is part of a larger shift in the overall aftermarket service model — the move from the preventive maintenance approach to a service-on-need paradigm. “This is a complete change in how things are done,” Greenwood says. “Onboard telematics are now informing the car owner and the shop at the same time when service is required, so the service-on-need model is now becoming a reality.”

Greenwood says this shift will bring more change to the market in the next three years than has occurred over the previous five — and the last five years haven’t exactly been calm, quiet ones in the aftermarket.

Telematics not only addresses the love Millennials have for technology. By making service easier to target, telematics technology will enable them to keep older cars on the road longer; and it’s already been noted that with their restricted incomes, Millennials have shown far less inclination that previous generations to jump into new car ownership.

They also have what could be called a “fleet mentality,” says Jim Dykstra, CEO of Dykstra’s Auto Service in Grand Rapids, Michigan. “They aren’t showy. They want something that will get them from A to B efficiently, and they don’t care as much about appearance, make and model as previous generations did,” he says. He’s observed that a few customers from this demographic do demonstrate a strong brand preference, but their numbers aren’t large from what he’s seen.

Due diligence

For Dykstra, the big difference that shop owners should bear in mind is the degree of preparation Generation Y customers bring to a service transaction, and a correspondingly high level of expectations. They do a lot of research online before coming in, not only to find what looks like the best shop, but to delve a little more closely into what needs to be done to their vehicle — and what an appropriate cost should be. They’re willing to pay for good service — but the operation offering the work had better know its business.

“As customers, this generation isn’t quite as faithful as the older generations have been,” Dykstra says. “Many of them have moved from where they grew up, so they don’t have the old family shop on the corner to service them.”

In fact, Dykstra has come to feel that this new market segment may actually be averse to the old corner-shop model in the first place. “They want to see the signs of professionalism when they come into the shop. They want to see that you’re serious, that you’ve invested in the technology and training needed to do the work,” he says.

Dykstra acknowledges the importance of engaging this new demographic through websites, Facebook pages, Twitter accounts and via mobile apps, but he’s not one to push for spending huge amounts on these channels. “We have a good website and I will say it’s important to update it and keep it fresh if you want people to go there, but it’s not the driving factor for us,” he says.

Keeping content new is a good way to keep your website closer to the top of the search rankings, he says — and it sure beats the alternative of going out and paying a web service provider to get you a higher ranking. It’s also good to have a Facebook page and likewise keep the content fresh, he adds, “but I wouldn’t spend a lot of time and money on it.”

In an online age, sometimes the tangibles still count for something extra. Dykstra says he’s gotten a good response to having loaner vehicles on hand when a Generation Y customer’s car has to stay in the shop for more than a few hours, as these customers do not tolerate inconvenience well.

“These are fairly value-oriented customers,” says David Portalatin, director of industry analysis for NPD Group. “They’re not necessarily about getting the absolute lowest price, but they want to feel they’re getting a good deal for their money. Their definition of ‘value’ might well have more to do with keeping a ten-year-old car going — this might be a ‘value’ to them.”

In Portalatin’s research, he’s found some things about Generation Y that go against the conventional notion that this demographic don’t want to go under the hood. “There are a lot of people in this segment who are looking for ways to DIY — not necessarily the kind of skill that they grew up with,” he says. “In our latest research, they over-index for saying that they plan to try at least some DIY work on their vehicle in the coming year. In fact they’re almost 40 per cent more likely to.”

Portalatin concludes by saying that the automotive aftermarket so far has done a less than stellar job in reaching out to these new customers. “We’ve done a poor job with Generation Y,” he says. The aftermarket doesn’t pay enough attention to the channels where these new arrivals can be reached, and has been behind in understanding the technological changes that are taking place within the vehicles themselves, he says.

“I’m shocked at the fact that the aftermarket isn’t even talking about telematics and what that brings to the table,” he says. “Shops that don’t get on board now will lose customers, and when they do they’ll probably think they lost out on price — but that isn’t the problem at all.”

The key is understanding how these new attitudes differ from those of other customers, and then making the necessary changes in one’s thinking. There’s opportunity out there — but the market is changing fast.

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