After selling his wildly popular CRM and BDC software solutions company eLead1One to CDK Global for over $500 million dollars last year, automotive retail veteran Hugh Hathcock knew he wasn’t done with the industry yet. Coming back strong with a brand new reconditioning solutions company, Hugh, who was recently featured in Automotive News, stopped by the CBT Studios with his son Gage, and daughter Hailee, to discuss ReconVelocity, and how its debut software can help your dealership run a more efficient recon process.
When working through the basics of Service One with Fixed-Ops for eLead1One, Hugh says that reconditioning was something they knew they needed to improve upon, however, they wanted to make sure they gave the problem their full attention and set it aside until the time was right. Well, over the course of the next two years eLead1One was sold to CDK Global and Hugh felt that it was time to act on this open opportunity within the industry, thus going on to found ReconVelocity. Hugh continues to describe what exactly ReconVelocity does to help dealerships and why there is such a disconnect when it comes to reconditioning in dealerships.
VIDEO TRANSCRIPT:
Jim Fitzpatrick: I know that you know this name, Hathcock. Today we’ve got Gage, Hailee, and Hugh Hathcock. Welcome back to CBT news.
Hugh Hathcock: Thanks for having us.
Hailee Hathcock: Thank you.
Gage Hathcock: Thank you.
Jim Fitzpatrick: Yeah. This is very delightful for us, because we want to know what you’ve been up to, Hugh. Talk to us about the latest company and the solution that you’re providing to dealers.
Hugh Hathcock: Well, you know, back when we were building Service One with eLEAD, about four or five years ago, we were talking to a lot of fixed-op, used car guys, general managers.
Jim Fitzpatrick: You guys were all over the country.
Hugh Hathcock: And service was different than variable front end. You know, we were great in CRM, but as we were putting together the Surface One thick stop solution, we were talking about not just NPIs and techs, and lane apps, and advisor training, but Recon came up a lot.
Jim Fitzpatrick: Oh I know. Yeah.
Hugh Hathcock: At that point, we were so involved in just trying to get the basics of Service One with fixed stop right, that we kind of said, okay this is something we need to look at, but we want to give it full attention. So we kind of put it as a back project and said, you know, we’re going to get to it when the time’s right. And the company ended up record selling over the last two years to CDK, and yeah, the time became right when I needed a product that dealers would use to make a lot of money. And there’s a huge opportunity there that the average dealer doesn’t recognize. We learned that from two years. You know, they were saying, this service won’t do anything for reconditioning. None of your used car inventory tools have a recon process built into those, right? No. CRMs do.
Jim Fitzpatrick: Yeah, recon’s been kind of that forgotten territory, right. That dealers said, we need a solution for this. Some dealers don’t even know they need a solution for it, because they might’ve been lied to from some of the people in the dealership. And please don’t write to me a fixed ops directors who used car managers on this topic. But you know what I’m talking about, because I too was a dealer and this was an area that was near and dear to my heart, recon, right?
Hugh Hathcock: Well the dealer, the GM thinks he knows, because he’s listening to his used car manager.
Jim Fitzpatrick: That’s right. I thought I knew.
Hugh Hathcock: It’s his stock guy saying, “Boss, we got this. It’s five days or less.”.
Jim Fitzpatrick: Sure.
Hugh Hathcock: And we walk in and we talk about a reconditioning tool like ReconVelocity, and the first thing the dealer is thinking is, “I’m already good at this. I don’t need this and this isn’t a problem.”.
Jim Fitzpatrick: Sure.
Hugh Hathcock: And if you ask him to show you how he comes up with his five day or less process, he can’t show it to you because it’s not a … it’s on a spreadsheet, it’s on a Google doc, it’s on a whiteboard. There’s not a piece of technology that 80% of the dealers are running that really takes the reconditioning process and gets it dialed in, makes people accountable, and gets people passionate about something so important in the auto industry today.
Jim Fitzpatrick: Well, Gauge, talk me about what you hear Hugh talking about here? Because it does boil down to the right operations, the right processes inside the dealership, right? Talk to us about that and your role there.
Gage Hathcock: I mean I, I would say it’s about the people. I mean the software, all of that is really just a tool, a hammer, so to speak.
Jim Fitzpatrick: Sure.
Gage Hathcock: It’s gonna be really about the people that we’ve invested in, these recon experts. We’re going to constantly be monitoring and talking to our dealers like we’ve always done. I mean that’s what’s going to separate us, and that’s what’s gonna really allow us to achieve what we’re trying to achieve for the dealers, right. So the dealer, that’s what we’re here for, right? We’ve got to make sure that that million dollar profit center, really that’s sitting in most dealers hands right now, that we’ve got address that. And the only way we’re going to do that is through having these experts, having this hands on support model, having people assigned, going through constantly helping the dealers do this. Showing them where to swing the hammer to make the biggest impact.
Jim Fitzpatrick: I was going to say, at the end of the day dealers have been sold a great number of different softwares in their time as dealers and it’s kind of like you leave them on an island. Not you.
Gage Hathcock: Most do.
Jim Fitzpatrick: But many companies out there go, “did you sign the order? Yeah, it’s good for a year. You can’t get out of it. Ha ha. And we’ll see you.” Right?
Gage Hathcock: We basically pioneered the whole no contract, on the CRM side. If that’s right. That’s the way we just do business. We don’t know how to do it any other way. So our investments have been, yeah a ton in technology, but mainly it’s been in the people and the experts that are gonna help achieve this.
Jim Fitzpatrick: Sure, sure. Hailee, talk to us a little bit about what your role is and the differences that you see in a ReconVelocity versus maybe some of the other people in this space.
Hailee Hathcock: I just graduated college in May.
Hugh Hathcock: Where did you go?
Hailee Hathcock: University of Florida.
Jim Fitzpatrick: We gotta get that in, right? Go Gators.
Hailee Hathcock: Of course he does. I think it’s just interesting to see that whenever we walk into dealerships, even in the past few weeks, they just look at us and they’re like, “Why are you here? Why are you working?” Like you said. And it’s really because his passion has kind of given off to me and Gage, and others in our family and that work with us.
Jim Fitzpatrick: And it’s always been a family run company, right? I mean, that’s really where the passion came from.
Gage Hathcock: The dealers is our family. They really are. So if they succeed … They’re the reason why we’ve succeeded, first of all, so we need them to continue to succeed. And this is the next biggest thing for a dealer is this recon gap.
Jim Fitzpatrick: Sure.
Hugh Hathcock: But when you talk family, I’m here because I want to transfer the knowledge.
Jim Fitzpatrick: Right. It’s not about the money as much as it is …
Hugh Hathcock: If you’re lucky enough to have kids that want to work in the business that you spent your whole life in.
Jim Fitzpatrick: Sure, I’m one of those. I know exactly what you mean.
Hugh Hathcock: It’s very rewarding when they say, “Dad, hey, we want to do something. We want to build something like you and your mother did with eLEAD.” And this guy brand, the whole dealer support team for, for Elite One. And he just left CDK a month ago. And I mean, this is his life, he loves it, he breathes it, he’s so passionate about it. I’m so proud of him.
Hugh Hathcock: And she’s a weekend of the deal, really where she’s going to be digital.
Jim Fitzpatrick: But she’s a Gator, so that’s kind of like ten years advantage.
Hailee Hathcock: Big advantage.
Hugh Hathcock: But she’s going to be in doing a lot of digital. She’ll be in marketing, but she’s going to learn this just like he learned it. She’s going to go in and do installs. She’s going to go on sales calls. I mean, how many dealers kids have we seen that maybe didn’t do it the right way and they weren’t as …
Jim Fitzpatrick: Yeah, so this is a very exciting opportunity. I mean, for not just you guys here, but … And overseeing this whole thing and launching this, but also for the dealers, for the customers out there that you’re going to have that say, “you know, wow, this is an area that I didn’t really focus on in the past.”.
Gage Hathcock: I’m sexy.
Jim Fitzpatrick: And I know you’ve got a solution to that. I mean that’s really what it is.
Hugh Hathcock: It is. It’s not like CRM. CRM, if you … We became really the market leader in CRM, but it took a lot of hard work, and a lot of technology expense and time to build out desking and data mining, and all the integrations and all the digital retailing, and everything that eLEAD … I mean it touched everything in the store.
Jim Fitzpatrick: I know it did. Yeah.
Hugh Hathcock: This is a lot easier to build because it’s really a 10 step workflow process that we had to build. The key is staffing it with the recon experts, the performance team. We put in early two thousands when eLEAD, was in its infant stages, we were the first to build in house performance teams, where somebody was calling the dealer and saying, “Hey, your sales people, these 10 worked their work plan, these five did half of it, and these five are clueless.” We’re doing the same thing with this company.
Jim Fitzpatrick: This tool will allow a GM or dealer principal to really identify where the problem lies in recon and who is doing what, right?
Hugh Hathcock: All the bottlenecks, all the finger pointing, all the blame game, it’s all part of this. It’s all about communications, right? And people want to be recognized when they do a good job.
Jim Fitzpatrick: That’s right. Good point.
Hugh Hathcock: And the majority of these guys … This organizes, this makes people accountable. And when you get everybody understanding, it’s a time thing. It’s about going from 10 days to five days.
Jim Fitzpatrick: That’s huge.
Hugh Hathcock: And five days is two terms. S.
Jim Fitzpatrick: Times that by 50 cars a month, and then if it’s 100 cars a month, and then it’s 200 cars a month, and then to some of these auto groups out there that have 15 and 20 and 25 stores or to the big public’s out there that have got 2 and 300 stores.
Hugh Hathcock: Oh, it’s multi-millions.
Jim Fitzpatrick: All of a sudden, that really starts racking up. Right? You know what I mean? Plus it makes the process inside the dealership that much easier, doesn’t it?
Hugh Hathcock: Anytime you can get people communicating better, and they understand the culture of where we’re trying to go with this … But I think the key, Jim, is you’ve got to have people in the store that are field reps with eLEAD, I mean we were …
Jim Fitzpatrick: Yeah, that was your whole deal. I mean it was boots on the ground all the time.
Hugh Hathcock: And we’re going to replicate that model. That’s my brand. We’re going to put people in the stores, and that’s expensive, but it’s worth it. And as we get this thing going, when we see a dealer go from 10 days to 5 days, and 5 days to 4 days.
Jim Fitzpatrick: Right. I know there’s not many players in this field, but what separates you? I know that you had mentioned to me something about a delivery program or something that you touched on. Talk to me a little bit about that.
Hugh Hathcock: Well Recon is priority one. At ReconVelocity we’re going to make sure we own this space. We’re going to do whatever it takes to get in every dealer in the United States, and do them a great job.
Jim Fitzpatrick: Something tells me there will be thousands of dealers in the next 24 months.
Hugh Hathcock: Oh there’s already … We’ve got 500 committed already and we’ve been in business less than two months.
Jim Fitzpatrick: Oh my gosh, right.
Hugh Hathcock: In the first year we’ll easily put in over a thousand stores, but we’re going to do it the right way. We’re not going to WebEx your install like most of my competition does in this business. I don’t think you can WebEx and get people to buy in. If you’re doing keystroke training over a computer and a speakerphone. We’re not going to do it that way.
Gage Hathcock: We’ve never been software off a shelf. That’s just not how we do it.
Jim Fitzpatrick: Ha, software off a shelf.
Hugh Hathcock: But your question was about pickup and delivery.
Jim Fitzpatrick: Yeah.
Hugh Hathcock: We all know how Amazon has changed retail.
Jim Fitzpatrick: Without a doubt. Digital retailing is coming.
Hugh Hathcock: Customers don’t want to come into your service lane and bring their car. It’s an inconvenience. It takes time. If you can go pick up a car, once the car is there put It on the rack, ID, whatever additional service it needs, communicate it to the consumer, there’s no doubt you’re going to double your RFs. If you deliver the car back, you take all of the inconvenience out of this.
Jim Fitzpatrick: That’s right?
Hugh Hathcock: So we purchased the company, and it was a overseas company that were doing some work for Mercedes and Hyundai, and it’s called velocity valet. We’re three months into a rebuild, we had to add some North American integrations, OEM stuff, recon stuff. A lot of neat computer technology stuff that is takes a little time to get it right. So we’re probably about a month, two months from rolling that. That’s going to be a module within ReconVelocity.
Jim Fitzpatrick: Wow.
Hugh Hathcock: ,I want to give dealers something besides just recon in this tool that they can grow into. And if you know me as we grow this company, we’re going to make sure we’re the best recon company that’s ever been in the car business.
Jim Fitzpatrick: I am sure of that.
Hugh Hathcock: But we want to do more than that. We want to help dealers grow their profits. And we had been a sales front end company for the majority of my 33 years in the auto industry. But I’ve learned a lot about fixed ops and recon over the last seven, eight years as we built surface one out. So there’s a lot of opportunity there.
Jim Fitzpatrick: Well Gage, Hailee, and Hugh Hathcock thank you so much for joining us on CBT news.
Hugh Hathcock: Thank you Jim.
Jim Fitzpatrick: It sounds very exciting. I wish you the best of luck when you sell it for 600 million maybe you can call me and we do like a boat trip or something. Or can I get anything?
Gage Hathcock: I’ll let you be the buyer.
Jim Fitzpatrick: Ha ha, I’ll let you be the buyer.
Hugh Hathcock: They’ll be selling it and I’ll be gone by then.
Jim Fitzpatrick: Thank you so much, man.
Hugh Hathcock: Thank you.
Hailee Hathcock: Thank you.
Gage Hathcock: Thank you.
CBT Automotive Network. The number one most-watched network in retail automotive. This has been a JBF Business Media production.
