Tracy Monson is Senior Vice President of Product at Onbe, where she leverages her vast experience in digital payments and customer experiences to drive client solutions and growth.
68% of Millennials Are Ready to Buy a Car, And They Expect Digital Incentives.
When it comes to buying cars, millennials were slow to start their engines, but this generation is now investing in new vehicles like never before. According to findings from J.D. Power, millennials bought 32% of new cars in 2020, surpassing Baby Boomers for the first time. In addition, Onbe’s 2021 automotive payments study found that 68% of under-30 consumers— younger millennials—plan to purchase or lease a vehicle in the next 18 months. That presents an opportunity for automotive companies to win sales and loyalty from the generation that’s now steadily gaining purchasing power.
Our study found that to do the best job of reaching millennials, automotive businesses must design an incentive program that meets their preferences for instant gratification and smooth digital experiences. It’s no secret that millennials prefer to shop online and that when they buy in person, they prefer a seamless omnichannel experience. Whether it’s offering a test drive incentive or motivating new car owners to come back for their next oil change, digital incentives do a great job of encouraging millennials—and their parents and younger siblings, who also prefer digital experiences—to engage with brands online, via mobile, and at the dealership.
Yes, it’s a seller’s market, which has led some automotive companies to believe incentives aren’t as important. Nothing could be further from the truth, and in fact, incentives can help smooth over a difficulty dealerships are currently facing: low vehicle selection. Recent supply-chain challenges caused by the COVID-19 pandemic means fewer cars on the lot. Fortunately, younger millennials are flexible, typically buying based on value before brand loyalty. Our study found that 88% of buyers under 30 would consider purchasing a different make or model if the one they want is unavailable. By offering attractive incentives, manufacturers and dealerships can influence shoppers to switch from preferred brands, winning not just the immediate sale but the potential long-term customer relationship that comes with it.
The investment doesn’t need to be as large as you think. In our study, 54% of under-30 respondents said they would choose a $25 test drive incentive, such as a digital prepaid card, gift card code or fuel card, over a much larger reward ($750-$1,000) that required a vehicle purchase. In addition, around half of younger millennials would prefer to receive a $700 prepaid card at the time of signing instead of a lower monthly payment, which points to this generation’s preference for immediate rewards.
And by shifting incentives to digital modalities like virtual prepaid cards, automotive companies gain more value with every dollar they spend. For instance, a big benefit of digital rewards is the ability to drive spend-back at the dealership for parts and accessories. (It’s simple to encourage spend-back by accompanying digital incentives with personalized communications and promotions.) Dealerships can also use digital incentives to build ongoing customer relationships instead of one-and-done sales. In fact, 86% of younger millennial buyers in our study said they would be motivated to return to the dealership to service their auto for a $15 digital reward for each scheduled maintenance service. Finally, automotive manufacturers can quickly bring new digital incentive offers to market—and pivot quickly as needs change—because these programs are fast to launch.
In short, incentives remain a powerful tool for driving sales and customer loyalty, and with digital payments, automotive brands now have so much more to gain: the opportunity to share targeted promotions with their customers and encourage them to keep coming back for parts, service, and future trade-ins. And as millennials continue upgrading their rides and trading in for family cars, automotive companies need to deliver on the digital experiences that are most likely to get this generation moving.
For more insights from Onbe’s 2021 automotive payments study, download our whitepaper. You can also learn more about Onbe’s digital disbursement products for automotive brands here.