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.

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.

• 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.

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.

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.

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.

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.

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.

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.