A new president, self-driving cars, natural disasters, Amazon buying Whole Foods, the Houston Astros winning their first World Series, Twitter expanding their character count to 280 and a total solar eclipse — 2017 was quite a year. And right alongside, the automotive retail industry was experiencing its own changes.

We'll take a look back at what we learned over the past year, and what it means for today's dealerships. Then we'll gaze into our crystal ball and share our thoughts on what the future might hold for the automotive retail industry.

The market has continued to change, presenting unique challenges for dealers. As the automotive retail space becomes more competitive, it's vital for dealers to be armed with the latest research to better understand their business, and their customers. The right data allows them to make informed decisions that keep their dealerships thriving amongst change.

In 2017, we saw the gross margin as a percent of selling price continue to fall, hovering now at less than 3 percent.1 Similarly, profitability has been flat at 2.5 percent for the past five years and total sales are flat 2016 to 2017.1 While dealerships are making less on each vehicle they sell, they're spending more on advertising — on average, dealerships are spending close to $5 billion a year on advertising — a number that rises year over year.1 So with less to work with, how are dealers staying profitable? They're getting smarter with how they do business; focusing on the customer, choosing better ways to communicate and convert, and putting more of a focus on Fixed Operations.

This year, we've learned three big lessons on how to take the changes in stride and capitalize on the opportunities you do have. We've determined that customer experience is critical, how you communicate should change and that power lies in Fixed Ops.

The old adage "the customer is always right" seems easy enough to understand, but until the past few years, companies have only begrudgingly given control over to customers. Recently though, we've seen a major shift in how companies relate to their customers. Instead of simply bending to the will of their customers when they start to cause a scene, businesses are putting the customer at the center of their business model and building an entire strategy around their wants and needs. Major brands like Amazon, Netflix, Airbnb and Uber have had success with this approach in recent years. The automotive industry is beginning to move in this direction as well, and our findings this year reinforced the importance of always putting the customer first.

Salespeople: Be a Partner

In our 2017 research studies, the importance of the salesperson continued to surface. Specifically,the preferred approach salespeople took in their interactions with customers was resoundingly consultative.

Millennials and women — two burgeoning markets that both have the ability to enormously impact the industry — consistently said that the attitude of a salesperson was a key influencer in whether or not they would do business with a dealership. In many ways, dealerships already have a long way to go to win over these groups:

  • 63 percent of millennials report an overall negative experience with the auto industry (compared to only 25 percent of baby boomers)
  • 43 percent of women distrust the industry.
So how do dealerships start to win back trust?
  • Train your staff to be helpers, providing customers with the information they don't already have.
  • Refrain from high pressure sales tactics. 88 percent of millennials are negatively influenced by them.
  • Instead, focus on the attitude your salespeople have towards customers. 85 percent of millennials were influenced by the attitude of a salesperson when choosing a dealership, both positively and negatively.

In our study of reviews written by women, the words "compassion" and "compassionate" were among the most frequently used words in positive reviews. In reviews left by both men and women, the words "fair" and "helpful" showed up most commonly in positive reviews. As car shoppers have become more empowered with the information available on the internet, they look to salespeople less for advice on which car to choose, and more to help guide them through the process.

Provide Digital and Mobile Experiences

As the world becomes increasingly digital and mobile, customers expect the same experience, no matter the industry — or the complexity. Millennials are leading the charge — and they're willing to choose their dealership based on its willingness to adopt new technology. In fact, 82 percent of millennial shoppers would recommend a dealership with digitized workflows. But what kinds of digital/mobile experiences are key? Responsive websites, chat options and texting are all features today's dealerships should incorporate. Eighty-five percent of millennials would prefer an online chat option over email or picking up the phone. Providing all of their documents digitally, including allowing them to sign the paperwork electronically, is also important. In the Service department, take advantage of technology to perform walk-throughs and complete service orders alongside the customer.

It's All About Online

Speaking of new technology, if it wasn't clear that online retailing was going to be important before, it certainly is now. In a recent study, we found that 86 percent of retail shoppers prefer a dealer that offers "buy online" capabilities, and 68 percent of in-market shoppers already expect these features to exist today. Once again, millennials are leading the charge, with 90 percent preferring to structure their deal online. Ultimately, this new experience comes down to two things: simplicity and transparency. When asked why they prefer online buying capabilities, 52 percent indicated that it provides them with more information up front, helping them feel more at ease. In addition, 79 percent said they would use the tool because it would save them time at the dealership.

What this means for your dealership

Staffing matters! Successful dealerships hire personable, empathetic people, and they train them to take a consultative approach — viewing customers as peers. One dealership fully embraced this new, customer-focused approach, going so far as to call their salespeople "Vehicle Consultants." Salespeople should ask more questions in order to get to know each individual, providing helpful information throughout the journey and continually listening to their customer's needs. They need to move away from the traditional "sales" role, and act as more of an "expert."

Dealers should focus on a transparent and collaborative price discovery experience, not negotiations. And this process should begin well before customers ever step foot on the lot, allowing them to find the price on their own online. Ensure that their positive experience continues when they walk in the dealership by integrating online pricing with in-showroom tools. In addition, the use of technology to fill out paperwork and sign forms can be quicker and less stressful for the customer. Finally, to help them feel included in the decisions about their vehicles, use tablets to demonstrate features, or show which parts need service.

When technology changes, how we communicate changes too. Updates to Google's algorithms, new product integrations, and insights from our research unveil a host of different opportunities to better connect with — and influence — customers.

Key Changes to SEO and Social

SEO and social media are two ever-changing channels that require constant adjustments to your strategy. Colleen Harris, our own "Google Whisperer," summed up a few of the biggest changes in the past year that will affect dealerships.

Social is Now a Selling Tool

In the United States, one of every five internet page views occur on Facebook. Given how important Facebook is for any business, Facebook Marketplace is the new spot to be selling products. In 2016, Facebook rolled out their marketplace, and now Facebook Marketplace sees more than 550 million visitors globally. This past October, Facebook took it one step further and rolled out the automotive section of Marketplace. Now, customers have the ability to browse inventories from Edmunds, Cars.com, Auction123, Social Dealer and dealers who have the CDK Inventory solutions. Customers can see KBB prices for cars, and can even start to message a dealership directly from Facebook Messenger. Given how many of your customers are already browsing through Facebook (and starting to buy from Facebook), it's a key addition to your sales strategy.

Google My Business is Sharing

When Google Plus was first rolled out, they connected every Google business listing to a Google Plus page, which allowed a dealership to share relevant and localinformation in their knowledge graph.

Google Plus never took off, so Google removed that sharing capability for businesses back in 2015. The function was gone, but never forgotten, and this July, Google made posts available again to any business with a verified "Google My Business" listing. Now done through the listing dashboard, this allows a business to share timely information visible to potential customers. In a CDK Study on Google posts this year, we saw that the average dealer received an increase of 222 views to the post by just posting once a week.

Questions Not Keywords

The biggest change to search has been how people are searching. With more than half of all searches happening on mobile, the intent behind a search is changing. Out of that mobile search, 20 percent is voice search, and it's thought that by 2020, over half of mobile searches will be voice searches. Now, nearly 50 percent of people are using voice search when researching products, using technology like Siri and Alexa. Your content focus should no longer be about focusing on a single keyword but on the types of questions people may have about models. It's a chance to establish your website as the local authority based on actual questions, as opposed to the most-searched keywords.

How to Respond to Email

When customers email dealerships, how does a good sales team respond? Thoughtful responses take time – but slow responses can mean losing a lead. So how do dealers strike the balance? Our Language of Closers research used sentiment analysis and natural language processing to determine which words are more likely to drive the customers toward action. We found that customers want to be guided through the process; words like "test drive" in emails were high converting because they provided the customer with a logical next step. When customers are reaching out to a dealership, they're often looking for information, so words like "provide" were key for driving action. Provide vehicle descriptions, details about the buying process and "quotes" (another key closer) and avoid using industry jargon. The biggest mistake when responding to a customer's email? Asking them to call back. If a customer wanted to speak over the phone, they would have called. Try to keep your communication in the channel they selected.

The Importance of Reviews

It's no secret that online reviews are important for dealers to focus on, but you should be paying attention to more than just your overall reputation rating on sites like Yelp and Google. While that's certainly important, it's the content within the reviews that can really give a dealership an advantage. This direct customer feedback helps identify what's working well and what needs improvement. Additionally, when used correctly, reviews can be used in messaging to help attract and convert other customers. Over the past year, we've looked at the different ways reviews impact various audiences.

Millennials are particularly influenced by reviews. When deciding on a vehicle, 93 percent of millennials used independent review sites to help narrow down their choices, compared to only 35 percent of baby boomers. Dealers can capitalize on this by promoting third-party vehicle reviews on their website and showroom. Eighty-five percent of millennials also turn to reviews to help decide which dealership to visit. This is where cultivating that star rating is particularly important. Make sure to monitor reviews to address problems and save positive reviews to promote. Dealers should also have a plan to solicit more reviews like offering a service coupon in exchange for a review.

We also examined how men and women communicate differently in dealership reviews. Men were more product focused, and commonly used words in their reviews were centered on specific aspects and features of the vehicle. To attract these customers, dealers can promote the expertise and knowledge of their staff. Women were much more concerned about the customer service experience at the dealership. One key takeaway: environment matters. Women often noted the dealership's appearance and amenities. Dealers should show off their facilities in customer communications; items like pristine showroom floors, customer lounges, and children's areas are great to feature. Men and women check reviews at an equally high rate and dealers can use reviews to attract both.

But it's not just dealership reviews that matter. Our study on vehicle reviews found keywords that are more likely to convert customers shopping for specific vehicle types. These words can be used by dealers in their vehicle descriptions to increase appeal to customers. For mid-size sedan shoppers, customers are attracted to a quiet, luxury-like experience, though not necessarily at luxury prices. Sedan shoppers are more utilitarian. They want comfort, climate control and easy passing on the roads. Truck shoppers want a reliable vehicle that can do the work, like towing a trailer, without sacrificing ride quality or gas mileage. Using these insights, dealers can adjust their messaging for different types of vehicles and convert more customers.

What this means for your dealership

Start by taking a hard look at your SEO and social strategy. Talk to your SEO strategist about incorporating question-based searches. If you're doing it yourself, start with a tool like Answer the Public to see what questions people might be searching for that would drive them to you. In addition, start posting updates to Google, even if it's just once a week.

Next, do a deep dive into your reviews. Pick a few key positive reviews to feature on your site, alternating reviews that would appeal to men and women. If you haven't already, develop a strategy to get more customer reviews – whether that simply means sending a follow-up email asking for a review or building a whole campaign with incentives to motivate customers to share a review.

  • Talk to your SEO specialists about adding questions to your SEO strategy
  • Put your inventory on Facebook
  • Start posting updates on Google
  • Take a look at your emails and make sure you're using "top words" and avoiding "low words"
  • Ask for reviews after customers complete a purchase/get service
  • Make sure your vehicle reviews use key language
  • Highlight your dealership's environment and place key positive reviews prominently on your site

With profit margins remaining stable, dealerships are turning to Fixed Ops to bring in more revenue. This year, aftermarket sales increased to $54 billion in the United States.1 Not only are they selling more, but in regards to profitability, gross profit for the Service and Parts department is greater than 1.5 million per dealership per year! But as dealerships rely more on Service to buoy their business, they're still failing to take full advantage of the opportunity.

According to a 2017 CDK Dealer Service Study, more than 80 percent of dealers are concerned about losing their service customers to independent service providers (ISPs). And they have reason to be. Dealers reported 40 percent of their service customers defected to an ISP within a year of their warranty ending.

Why are service customers leaving so quickly? Eighty percent of dealers thought customers defected because ISPs offered lower prices. Price isn't the only thing that matters to Service department customers; their confidence in the service provider has significant influence. Millennials said the perception of trustworthiness and overall service experience is important when choosing a service provider over cost. More important than price, customers want convenience, trust and value from their service providers.


Time is money, especially when customers need to take time out of their work day to take their car to the shop for a repair. Make it easy for customers to get their vehicle serviced — provide them options for when to drop off and pick up their vehicle. It can be as simple as texting them when their vehicle is ready for pickup, or having an online portal for booking services, with a variety of times to choose from. A dealership's website is one of the main resources that customers will use to decide on service and make an appointment— make sure it's easy for them.


According to a 2016 AAA Repair Customer Survey, 49 percent of drivers worry that their service won’t be done correctly. One way to show expertise among employees is through “about me” Service employee features. Showcase certificates, degrees or awards in their bios to demonstrate their qualifications. Along with staff expertise, make sure positive service reviews are easy to find, and distinct from sales reviews. According to our service study, independents are three times as likely to have service bios on their site as dealerships. This is an easy step dealerships can take to keep customers coming back, and preventing potential customers from looking to another service provider.


Value is the final priority that customers want in their service provider. Seventy-six percent of customers are worried about being recommended unnecessary services and getting overcharged. Dealerships should invite customers to participate in their walk-through to evaluate any repairs, and explain why they’re needed. Being transparent with customers can make a huge difference for building positive and lasting relationships with customers.

What this means for your dealership

By having an easy-to-use, up-to-date website you can build trust and provide convenience before customers step foot in your dealership. Reserving a service repair online should be as easy as booking a hotel. Make sure the "Schedule Service" link is prominent on the front page of your website. Additionally, have a section that displays your service expertise. Promote the amenities that your dealership offers, especially the ones that most independents don't have. Lastly, make positive service reviews prominent and easy to find. Reviews can be big influencers for making the final decisions on where to get service.
  • Provide a homepage link to the automated online scheduling
  • Provide every day low price coupons on top op codes
  • Make sure information your customers value is easy to find and read
  • Make sure accessibility and functionality are equally as good on mobile
  • Include positive service reviews from customers; make them easy to find and distinct from sales reviews
  • Showcase expertise, amenities and conveniences
  • Target advertising to service customers and provide answers to key questions (ex: who you are, what you offer and why buy from you?)

What this means for your dealership

It's clear that the future holds a lot of uncertainties, but that doesn't mean that you should be nervously waiting in anticipation of what could happen next. Instead, it demands that you start to think critically about how your technology, processes and people affect relationships with customers.

Navigating the unknown means being willing to embrace change. It also means continually working to better understand your customer. Create different personas of your customers and figure out different strategies to support their buying processes in your dealership. Finally, when it comes down to it, execute your strategies with boldness. Be willing to step out into potential failure. Learn from your mistakes, make adjustments and try again. And you should always be molding and improving your business as the world around us changes faster and faster.


This past year has been one of many changes and challenges, and 2018 looks to be no different. But we've learned a lot of valuable lessons about how to enable dealerships to better serve their customers and ultimately, build thriving businesses. And we can't wait to see what's next!

About the data

CDK Market Research creates innovative studies to find new actionable insights about car shoppers, dealers, and the automotive industry. The results help make CDK a better vendor, and help our clients increase their profitability and customer satisfaction.

Language of Reviews: Part 2, January 2017
Taking Back Fixed Ops, March 2017
In Her Own Words: Women and Dealer Reviews, April 2017
Women in Dealerships, June 2017
Millennials and Car Buying, August 2017

1 NADA Mid-Year Report, 2017