Deciphering the active evaluation phase: How to sell to Gen X and Y—Part 4

May13
by Patrick McMullen on May 13, 2013 at 7:00 am
Posted In: Relevance

In the last chapter of our “How to sell to Gen X and Y” series, we explored the phenomenon of the “initial consideration set”—the 3.8 cars (on average) that consumers include in their initial research as probable purchases.

While you can’t control whether or not one of your vehicle makes/models ends up in the initial consideration set, you still have a shot at capturing customers in the active evaluation phase—when their consideration set actually expands rather than narrows.

During this phase, consumers start exploring their options online. Our research shows that, on average, consumers add about 2.2 makes to their initial consideration set, bringing the grand total to six vehicles.

What matters to you is how they pick these additional vehicles; if your online presence is strong, you’ll have better control here. During the active evaluation phase, consumers count on Internet reviews; word-of-mouth recommendations from friends and family; in-store interactions and recollections of past experiences; product marketing/incentives; and general learning from their online experience.

Let’s revisit our two research participants, Trish and Sara, to get a better look into a typical active evaluation journey.

Sara
Search time: 54 minutes
Initial consideration set: Honda Civic sedan; Hyundai sedan; Toyota Corolla

Her expanded search started on Google:

  • Searched “Best SUV”
    • Got results from US News & World Report: top-selling cars
    • Clicked Honda Fit
  • Searched “2011 Best Used Cars”
    • Got results from Edmunds.com: 2011 Used Car Best Bets
    • Looked into Ford Fiesta and Ford Focus
  • Searched “Best Used Cars”
    • Got results from Consumer Reports about their reliability ratings

These Google searches lead to:

  • AutoTrader.com searches on the Honda Fit, Ford Fiesta Hatchback and Ford Focus

Expanded her consideration set to include:

  • Honda Fit
  • Ford Fiesta Hatchback
  • Ford Focus

Trish
Search time 41 minutes
Initial consideration set: Acura MDX; Kia sedan; Toyota sedans/crossovers

Her expanded search started on Google:

  • Searched “Carmax”
    • Spent 1 minute on Google
    • Clicked on Carmax

This Google search led to:

  • Expanded searches on Carmax:
    • 2006 Buick Lacrosse CX5 sedan
    • 2009 Chrysler Sebring sedan
    • 2010 Dodge Avenger 4D sedan
    • 2008 Kia Sorento

A 2012 Mojo Motors study reinforced our findings about expanded consideration sets. It found that:

  • Civic buyers searched 60 Honda Civics but also100 Honda Accords and 100 Nissan Altimas.
  • Consumers who purchased a Honda CR-V viewed more RAV 4s and Toyota Highlanders
  • Volkswagen Jetta buyers search more Jettas than anything else

The lesson: Consumer click-through data is useful in understanding which vehicles are considered, but misleading as a predictor of which vehicles are purchased.

So how can you get people to expand their consideration set to include one of your listings? Check back soon for the answer as we delve deeper into the consumer’s online decision journey.

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Online Strategies for Capturing Gex X and Gen X Car Shoppers—Join Us for a Free Automotive News Webinar

May06
by Keith Woodward on May 6, 2013 at 7:00 am
Posted In: Webinar

Eighty-five percent of consumers under the age of 40 use the Internet in their car-shopping efforts*—and their purchasing numbers are on the rise. Do you know how to sell to them?

Recently rated one of the top workshops at NADA 2013, Patrick McMullen, VP of Sales for MAX, will present a free Automotive News webinar on Wednesday, May 8th @ 2PM ET. Patrick will provide attendees an exclusive look into unique cutting-edge research of Gen X and Gen Y vehicle purchasing behavior. Discover how this coveted segment of buyer is using the internet and their mobile phone to help make purchasing decisions.

We hope you can join us on Wednesday! If you have not registered already you can do so by clicking here.

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Are you in their initial consideration set? How to sell to Gen X and Y—Part 3

Apr29
by Patrick McMullen on April 29, 2013 at 7:00 am
Posted In: Relevance

In the last chapter of our “How to sell to Gen X and Y” series, we talked about the death of the traditional buying funnel—and how our research has revealed a new car-shopping journey.

With car-shopping sites such as AutoTrader.com and Cars.com, the traditional buying funnel has transformed into a circular process, starting with online consumer research and an initial consideration set. Our research tells us that this initial consideration set begins with between three and four vehicles (an average of 3.8 to be exact). Brands in this set are up to three times more likely to be purchased.

How do vehicle makes/models end up in this elite group? Typically thanks to three factors: personal experience; word-of-mouth/friends or family members that own the same vehicle; and brand reputation (e.g. Toyota and Honda = quality and reliability).

Let’s take a deeper look into these motivations with two examples from our research: Trish and Sara.

Trish

  • Lives with fiancé and three children in suburban Chicago
  • 28 years old
  • Profession: receptionist
  • Looking for a vehicle that seats five; is comfortable; must feel spacious; is safe.

Initial consideration set: Acura MDX; Kia sedan; Toyota sedans/crossovers

Reasons for initial consideration set choices: She currently has a 2003 Kia Spectra and gravitated toward Toyota and Kia because they are reliable. She won’t consider a Ford because of a bad past experience.

Sara

  • Engaged, lives with fiancé in an apartment
  • 26 years old
  • Profession: photographer
  • Looking for a vehicle that is reliable, good-looking and gets good gas mileage.

Initial consideration set: Honda Civic sedan; Hyundai sedan; Toyota Corolla

After a peek into the initial consideration sets of our survey participants, we can begin to explore online activity during this phase. During this time, we didn’t observe so-called “traditional upper funnel activity”—including reading articles and other non-specific online research. Instead, shoppers explored their initial consideration set through VIN-specific online inventory listings on sites including Carmax, Cars.com, Craigslist and AutoTrader.com. These initial searches were educational, rather than predictors of purchase, and it was rare for a shopper to visit a dealer after this initial phase.

With this in mind, what can you do to influence shoppers during this phase? Despite the fact that dealers and manufacturers have limited influence on the initial consideration set, you can control the content shoppers may see during their initial research.

Start by focusing on maintaining quality online inventory on all of the sites shoppers frequent. Your listings should be educational andpoint out your differentiators—answering important shopper questions that promote the value of your inventory.

Check back soon for insights on the next phase of the digital decision journey—active evaluation.

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The buying funnel is dead: How to sell to Gen X and Y—Part 2

Apr22
by Patrick McMullen on April 22, 2013 at 7:00 am
Posted In: Relevance

In the first installment of our “How to sell to Gen X and Y” series, we examined the dramatic shift from cars to tech as the hot interest among young people—and the resulting decline in younger drivers and car shoppers.

As we mentioned last time, effectively selling to these younger, automotive-apathetic consumers requires an understanding of the new car-shopping journey—and the “digital decisions” that surround it. Now, we’ll begin to explore some of the repercussions of this trend; specifically, the death of the traditional buying funnel.

So what exactly was the traditional buying funnel? It started with awareness of a certain product, trickled into consideration of that product, then purchase, preference and, finally, loyalty (or not) to a certain brand or business.

Through our Digital Decision Journey Research Project, we’ve unveiled the ins and outs of a new car-shopping process—one that’s been evolving since the explosion of Internet car-shopping sites such as AutoTrader.com and Cars.com. Here’s how we went about our research:

  • We focused on 25-39 year-old owners of late-model, pre-owned vehicles who were in the market for a new car—and who started the online shopping process without a commitment to a specific brand or model.
    • We performed ethnographic (“fly on the wall”) research by following buyers through the online journey.
    • We also executed a quantitative survey in November 2012 of intended buyers and purchasers.
  • In addition to our survey, we factored in secondary research in the form of:
    • New-car shopper studies from McKinsey & Company
    • November 2012 Panoramaux Research Dealership Intercept Study and Consumer Quantitative Study
  • Finally, we employed our own INCISENT Labs’ National Benchmarking Analysis

It wasn’t surprising to learn that people are less brand-loyal across all ages: 80 percent say they aren’t committed to a brand when buying a car. Still, in the end, 40 percent of consumers do end up purchasing the same make and model as a previous purchase. While the intent of loyalty isn’t necessarily there, it may prevail in the end. And dealerships have a much better chance at winning this loyalty if they understand the new shopping process upfront.

With the proliferation of car-shopping sites such as AutoTrader.com and Cars.com, consumers have a whole new world at their fingertips—and they’re taking the wheel. In fact, 49 percent of people cite the Internet as their biggest influence on their car make/model decision, according to the Panoramaux research—nearly 30 percent more than any other factor, including advice from friends and family; a mere 13 percent rank preexisting knowledge as the top influence.

Rather than reacting to an outside stimulus (a radio commercial about a certain dealership or make/model of car, for example) and then visiting the lot to consider the purchase, shoppers are starting online—without loyalty to a specific brand or dealership. The buying funnel has become a circular process, starting with online consumer research and an initial consideration set that leads to active evaluation.

In the next several parts of this blog series, we’ll dive deeper into this new digital decision journey—and how you can take advantage of it. Stay tuned.

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iPads are the new cars: How to sell to Gen X and Y—Part I

Apr15
by Patrick McMullen on April 15, 2013 at 7:07 pm
Posted In: Relevance

When it comes to younger generations, are cars going the way of the dinosaur? Not quite—but there are some very interesting trends in driving/car purchases, technology use, city living and the correlation between them all.

Let’s start this story by travelling back to the days of the carhop and the drive-in movie theater, when young people’s social worlds were tethered to their automobiles. Learning to drive and getting your first car was one of the most important rites of passage. Plus, with the Internet and mobile phones still decades away, a quick car ride was the most logical way to stay in touch with friends and family. As such an important part of teenage and young-adult life, it’s no wonder previous generations took such great pride in their cars—and still maintain anappreciation for automotive craftsmanship.

Today, technology has taken over, causing a paradigm shift in industries from music to publishing—and everywhere in between. Theautomotive industry is not immune, and although the tech link may not be asclear-cut, it’s undeniable.

Shift to tech
In 1978, nearly half of American 16-year-olds and three-quarters of 17-year-olds had their driver’s licenses, according to data from the Department of Transportation. In 2008, the percentages were 31 percent and 49 percent, respectively. Of course, harsher driver’s license restrictions are a contributing factor, but the decline in the number of drivers continues among those well into their 20s.

To industry experts and technology analysts, it comes as no surprise that this decline accelerated starting in 1998—about the same time AOL chat rooms, email and mobile phones began to make their mark. With massive strides in technology over the last decade, young people now worship their iPads, laptops and every other sleekly designed, Web-connected device.

In fact, an international University of Michigan study found that in countries where Internet usage is high amongst young people, fewer have driver’s licenses. The reason? A notable number of 18- to 24-year-olds said socializing online is a substitute for some car trips.

Social networking isn’t the only online phenomenon making the car obsolete to some younger people: The explosion in online commerce has decreased the need to take a car trip to the mall.

Other factors
While the number of U.S. miles driven has recovered with the economy, fuel prices, insurance cost and unemployment among younger generations have all put a damper on owning a car—and certainly on buying new. In fact, the share of new cars bought by 18- to 34-year-olds dropped from 16 percent in 2007 to 12 percent in 2012. Some of those buyers switched to used cars—but others aren’t buying at all.

On the contrary, public transportation among 16- to 34-year olds with incomes higher than $70,000 has doubled, thanks to booming urban populations. Today, more young people are living in cities where a car is obsolete (an often undesirable) thanks to high parking costs, traffic and highly efficient public transportation systems. Suburban commuters are forgoing their cars for these reasons—and to make the most of their workday. After all, they can connect wirelessly and get an extra 2 to 3 hours of work done on the train.

Car sharing is another emerging trend. Zipcar—the world’s largest car-sharing service—owns various parking spots throughout cities and suburbs where users can pick up and drop off cars at their leisure. Members of this “club” reserve cars online, unlock them with special cards and use the keys already inside to get going. Members pay an annual fee to take advantage of the service, as well as hourly/daily to use a Zipcar. Members must have had a valid driver’s license for at least a year, and need to be at least 21 (or 18 if affiliated with a university).

A Northeastern University study shows that there may be more to Zipcar’s popularity than just convenience. Respondents said they liked that Zipcar let them try out different cars—and, by extension, different lifestyles and identities. By contrast, owning a car made them feel “tied down,” as if they were in a marriage.

Connecting the dots
What do these changes mean for dealerships? How can they more effectively sell to these younger, automotive-apathetic consumers? The answers lie in understanding the new car-shopping journey—and the “digital decisions” that surround it.

In the next several parts of this blog series, we’ll learn why the traditional buying funnel is dead, and the new way to succeed when selling to Gen X and Gen Y. We’ll share our cutting-edge research on how younger consumers make their vehicle purchasing decisions—and provide the keys to a developing a successful online strategy for them. Stay tuned for Part II!

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