Analyst Note March
2
February 14, 2011 J.D. Power and Associates does not guarantee the accuracy, adequacy, or completeness of any information contained in this publication and is not responsible for any errors or omissions or for the results obtained from use of such information. Advertising claims cannot be based on information published in this publication. Reproduction of any material contained in this publication, including photocopying in part or in whole, is prohibited without the express written permission of J.D. Power and Associates. Any material quoted from this publication must be attributed to J.D. Power and Associates. © 2013 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved. 1 [email protected] (416) 507-3254 Behind the Numbers CANADA CANADA March 11, 2013 The Advocacy Imperative Source: J.D. Power and Associates 2012 Consumer Retail Experience Study The Importance of Advocacy Among Millennials No 29% 35% 32% 22% At corporate retreats and conferences around Canada, Millennials —the generation currently between 18 and 34 years old— are often both praised and maligned. They are applauded for their inherent tech-savviness and increasing economic gravitas, while also being described as fickle and entitled. Regardless of labels or descriptors, the Canadian automotive industry must learn how to more effectively cater to this demographic, the leading edges of which are entering their prime vehicle buying years. According to the 2012 Consumer Retail Experience Study, a critical step in attracting more business from these young buyers is increasing advocacy among current customers. • Among recent vehicle buyers, who have also purchased at least one new vehicle in the past, previous experience with the dealer from whom they purchased plays an important role in terms of influencing the new purchase decision. However, when focusing on age groups, the data tells a very different story. Past experience with the selling dealer is a much stronger influencer among older buyers (46%) than among Millennials (29%). • This relationship is reversed when the various age groups are asked about the importance of recommendations from friends and family in their decision to purchase from a particular dealer. This component was sited as less important by older buyers (19%), while it was the most influential component cited by Millennials, with 32% agreeing that recommendations had impacted their decision. • Far from being just advice aggregators, Millennials also share the most comments about their purchase experience, be they positive or negative. On average, they share seven positive comments with others, versus two negative ones. • These advocacy imperatives come into sharp focus when considering that Millennials are the least likely demographic to definitively declare forward intended service loyalty (48% of new- vehicle purchasing Millennials vs. 64% of older purchasers). Given their penchant for exhaustively researching automotive purchases online, they’re also less likely to be “delighted” with the dealership sales experience. • When it comes to measuring sales and service satisfaction, dealers must genuinely “delight” their customers. Customers who rate their dealership sales experience as 10 (on a10 point scale) share an average of nine positive recommendations, compared with three positive recommendations when sales satisfaction is rated 7. • Similarly on the service side, 49% of customers who rated their experience as a 10 say they “definitely will” recommend their service facility, compared with 2% of those who rated their service experience as a 7.
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JD Power Analyst Note for March 2013
Transcript of Analyst Note March
February 14, 2011
J.D. Power and Associates does not guarantee the accuracy, adequacy, or completeness of any information contained in this publication and is not responsible for any
errors or omissions or for the results obtained from use of such information. Advertising claims cannot be based on information published in this publication. Reproduction
of any material contained in this publication, including photocopying in part or in whole, is prohibited without the express written permission of J.D. Power and Associates.
Any material quoted from this publication must be attributed to J.D. Power and Associates.
© 2013 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved.
1
(416) 507-3254
Behind the Numbers
CANADA CANADA March 11, 2013
The Advocacy Imperative
Source: J.D. Power and Associates 2012 Consumer Retail Experience Study
The Importance of Advocacy Among Millennials
No
29%
35%
32%
22%
At corporate retreats and conferences around
Canada, Millennials —the generation currently
between 18 and 34 years old— are often both praised
and maligned. They are applauded for their inherent
tech-savviness and increasing economic gravitas,
while also being described as fickle and entitled.
Regardless of labels or descriptors, the Canadian
automotive industry must learn how to more
effectively cater to this demographic, the leading
edges of which are entering their prime vehicle buying
years. According to the 2012 Consumer Retail
Experience Study, a critical step in attracting more
business from these young buyers is increasing
advocacy among current customers.
• Among recent vehicle buyers, who have also
purchased at least one new vehicle in the past,
previous experience with the dealer from whom
they purchased plays an important role in terms of
influencing the new purchase decision. However,
when focusing on age groups, the data tells a very
different story. Past experience with the selling
dealer is a much stronger influencer among older
buyers (46%) than among Millennials (29%).
• This relationship is reversed when the various age
groups are asked about the importance of
recommendations from friends and family in their
decision to purchase from a particular dealer. This
component was sited as less important by older
buyers (19%), while it was the most influential
component cited by Millennials, with 32% agreeing
that recommendations had impacted their decision.
• Far from being just advice aggregators, Millennials
also share the most comments about their
purchase experience, be they positive or negative.
On average, they share seven positive comments
with others, versus two negative ones.
• These advocacy imperatives come into sharp
focus when considering that Millennials are the
least likely demographic to definitively declare
forward intended service loyalty (48% of new-
vehicle purchasing Millennials vs. 64% of older
purchasers). Given their penchant for exhaustively
researching automotive purchases online, they’re
also less likely to be “delighted” with the dealership
sales experience.
• When it comes to measuring sales and service
satisfaction, dealers must genuinely “delight” their
customers. Customers who rate their dealership
sales experience as 10 (on a10 point scale) share
an average of nine positive recommendations,
compared with three positive recommendations
when sales satisfaction is rated 7.
• Similarly on the service side, 49% of customers
who rated their experience as a 10 say they
“definitely will” recommend their service facility,
compared with 2% of those who rated their service
experience as a 7.
February 14, 2011
J.D. Power and Associates does not guarantee the accuracy, adequacy, or completeness of any information contained in this publication and is not responsible for any
errors or omissions or for the results obtained from use of such information. Advertising claims cannot be based on information published in this publication. Reproduction
of any material contained in this publication, including photocopying in part or in whole, is prohibited without the express written permission of J.D. Power and Associates.
Any material quoted from this publication must be attributed to J.D. Power and Associates.
© 2013 J.D. Power and Associates, The McGraw-Hill Companies, Inc. All Rights Reserved.
2
Vehicle Purchase Type Percent of Total Transactions (Last 12 Months)
New Vehicles Used Vehicles
61
18
21
Cash Lease Loan
4750
3
Days to Turn
Monthly Payments Average per Customer
Brian Murphy ▪ 416-507-3253 ▪ [email protected]
$27,000
$28,000
$29,000
$30,000
$31,000
$32,000
Feb-1
2
Mar-
12
Apr-
12
May-1
2
Jun-1
2
Jul-12
Aug-1
2
Sep-1
2
Oct-
12
Nov-1
2
Dec-1
2
Jan-1
3
Feb-1
3
Vehicle Price Transaction Price
Vehicle Price versus Customer Facing Vehicle Price* *Data from JDPA PIN Incentive Spending Report (ISR)
Percent Negative Equity + Trade-In Percentage of negative equity vehicles at trade-in
Percent New-Vehicle Loan Term 72 Months and Greater
March 11, 2013
