ReconVelocity Founder and Owner, Hugh Hathcock joined Jim Fitzpatrick on the CBT Stage at NADA 2020 in Las Vegas to discuss their recent partnership with Sonic Automotive and the importance of improving your dealership’s recon process.
VIDEO TRANSCRIPT:
Jim Fitzpatrick: You guys popped on the scene with ReconVelocity six or eight months ago, and exploded from there. You’ve been on CBT News. We’ve gotten a lot of great emails and feedback from viewers that said, “Hey, went with ReconVelocity. Thumbs up. It’s just phenomenal, changed our recon life.” Talk to us a little bit about for some of the viewers or dealers that are watching this right now that are not as familiar with ReconVelocity. What solution do you bring?
Hugh Hathcock: We’re taking an area that dealers aren’t looking at as a high priority area that their dealerships need to get involved in, and we’re bringing a solution with a better technology product. But the biggest thing that we’re bringing that people in our space aren’t are the people in the process part. If you followed our company when we were at eLead-
Jim Fitzpatrick: Yeah. Yeah.
Hugh Hathcock: … there was a lot of great CRM solutions in the auto industry. eLead then, DealerSocket are all great companies.
Jim Fitzpatrick: Sure.
Hugh Hathcock: The separator was we had a lot better dealer experience and that comes from putting a lot of people in stores-
Jim Fitzpatrick: That’s right.
Hugh Hathcock: … having a great performance department in-house-
Jim Fitzpatrick: Sure. Sure.
Hugh Hathcock: … and just being responsive to dealers. In the recon space, all the competitors had pretty good software, but really nothing else. And the space was kind of undeveloped as far as having companies that really got what dealers need, which is they don’t need technology, they need technology that people are going to use.
Jim Fitzpatrick: That’s right. That’s right.
Hugh Hathcock: And people don’t necessarily use it just because the dealer buys it. They use it because-
Jim Fitzpatrick: That’s so true.
Hugh Hathcock: … they buy in, and they see how it makes their job easier.
Jim Fitzpatrick: And often what will happen is you’ll get dealers that’ll buy a software package to go back to the dealership and say, “Hey, this is a phenomenal solution,” and they go, “Yeah, boss, I hear what you’re saying,” and then it’s just never used. But in your situation, you do have boots on the ground. I think that’s a huge differentiator.
Hugh Hathcock: Oh, it’s the biggest.
Jim Fitzpatrick: Trainers that go actually into the store to hold the hands of those recon managers, used car managers, say, “No, no, no. I’m going to shorten the amount of time that a car is in recon for maybe two weeks down to two days or three days.” Right?
Hugh Hathcock: Right. We call them recon experts, but they’re the same thing as a trainer.
Jim Fitzpatrick: Sure.
Hugh Hathcock: And they go really into the store, and they kick off the thing with what’s in it for each person that uses it because the average dealership’s mechanics, detail, photo, all those people, don’t really understand turn and velocity and speed and-
Jim Fitzpatrick: Yeah, they don’t care.
Hugh Hathcock: … how all this works together.
Jim Fitzpatrick: That’s right, and they really don’t care.
Hugh Hathcock: Some of them don’t care, but a lot of them do care. Nobody spends the time with them, and they haven’t had a product that makes it easy for them to communicate.
Jim Fitzpatrick: Sure.
Hugh Hathcock: They haven’t had a product that shows the people that are doing a great job, kind of shows them off.
Jim Fitzpatrick: That’s right.
Hugh Hathcock: So if they look at this and they see it as, “Hey, this is going to make my job easier, people are going to see me now that I’m the guy that’s on top of it. I’m getting my part done fast.”
Jim Fitzpatrick: Yeah. Very good point.
Hugh Hathcock: They really do buy into this. And once we leave them, we’re coming back in the stores, because the turnover ratio in this industry-
Jim Fitzpatrick: Oh, yeah. I know. I know.
Hugh Hathcock: … and we’re calling these people weekly because that’s what it takes.
Jim Fitzpatrick: Yeah, you’re like their coach. Right?
Hugh Hathcock: It’s a coach. It’s a mentor to make sure these people are figuring out, hey, we’re not going anywhere. We’re going to stick with you-
Jim Fitzpatrick: That’s right.
Hugh Hathcock: … because this thing goes in stages. You want to get the basics started.
Jim Fitzpatrick: That’s right. Got the foundational training.
Hugh Hathcock: If you look at eLead, most CRMs that are used in the auto industry are using about a 50% or under-
Jim Fitzpatrick: I know.
Hugh Hathcock: … level.
Jim Fitzpatrick: I know. That’s right.
Hugh Hathcock: In recon technology, it’s different because 80% of the stores don’t have a technology to begin with.
Jim Fitzpatrick: 80%.
Hugh Hathcock: Don’t have a technology-
Jim Fitzpatrick: You got a big market ahead of you there.
Hugh Hathcock: Well, that’s what was great and enticed us into this spot.
Jim Fitzpatrick: Yeah, for sure. Wow, great future. So for the dealers that are out there going, “Well, I don’t know that I have a recon problem. I hear what you’re saying, Hugh, but our cars get in and out, I’m told from the used car manager or from the fixed Ops director, that they’re only in there for a few days.” Do you find that to be the case?
Hugh Hathcock: Yeah.
Jim Fitzpatrick: That dealers are kind of in this cocoon?
Hugh Hathcock: They all overrate their speed, and they’re doing that because I think they really think from the communications they have with their people that they are at that. But when you ask the right questions, we know the answer we’re going to get to today’s car. It’s how do you keep up with that? And when you get into those harder questions, they don’t keep up with it.
Jim Fitzpatrick: That’s right.
Hugh Hathcock: They’re really depending on a used car manager to say, “I’m on top of it. Here’s how it works.” When you ask them, “Do you have a technology that helps you hold people accountable, put people in the-
Jim Fitzpatrick: That’s where the rubber meets the road.
Hugh Hathcock: Yeah.
Jim Fitzpatrick: Right?
Hugh Hathcock: Yeah.
Jim Fitzpatrick: I want to switch gears a little bit. Big announcement made by Jeff Dyke, who is the CEO and President of Sonic Automotive Group, I think, the seventh largest automotive group in the country. He came out and said, “Hey, ReconVelocity, we’re rolling this out nationwide in all of our stores.” Kudos to you. That is a huge endorsement. Right?
Hugh Hathcock: It is, because at eLead, we had six of the top 10 groups using our CRM-
Jim Fitzpatrick: Wow.
Hugh Hathcock: … when CDK bought it from us. So we know how to get into these big groups and we know how to take care of them. We know how to make them understand the need. And with CRM, we didn’t have to create the need, but in the top 10 groups, top 20 groups, none of them have ever committed to a recon technology. Now they might have had a few stores, use a product, but as a group, none of them have ever committed and said, “We’re going to put a recon technology in. We’re going to run this process with the right people and the right training and the right reporting.” That’s why it’s really a big deal because we’ve got three or four other ones that we’re right, really close to doing the same thing with–
Jim Fitzpatrick: Right. Right. There’s a couple of players in this space, not a lot, but what separates you… If you had to mention a few things, what are some of the big differentiators between a ReconVelocity and some of the other players in this space?
Hugh Hathcock: There’s really only one competitor we have and what separates the most between us and them is the people. We put a lot of resource in people on the ground.
Jim Fitzpatrick: Right. Yeah, which is a big one.
Hugh Hathcock: We train it.
Jim Fitzpatrick: Which is a big one.
Hugh Hathcock: They WebEx the training.
Jim Fitzpatrick: Right. Okay.
Hugh Hathcock: We put people on the ground, field support it. Nobody does. We have 20 people in support and performance.
Jim Fitzpatrick: Wow.
Hugh Hathcock: That’s maybe two or three with our competitor. So you take that and you add it to one of our new features this year is Locate. I’ve taken the OBD port, put the piece in the car at the start of the recon process. As the car moves through the steps, goes from, let’s say Mechanical to Detail. If the mechanic doesn’t hit the button right on the traditional recon technology tools, the step stops. Everything stops. So with our tool, as we have been in this for six months, a lot of dealers said, “Hey, why can’t you automate some of this?”
Hugh Hathcock: So once we put the OBD, geofence all the spots in the dealership that are parts of the recon process, now we’re able to take it, and when the mechanic doesn’t hit Complete Step, we’re able to say, “Okay, the car’s moved to Detail, which is the next step-
Jim Fitzpatrick: Does it automatically.
Hugh Hathcock: And everything keeps going whether we have user error or not.
Jim Fitzpatrick: Fantastic. It’s like you just turned-
Hugh Hathcock: So it’s a game changer.
Jim Fitzpatrick: … turned it into a smart car, and it talks back to the dealership, say, “Here’s where your car is.”
Hugh Hathcock: And that’s been something a lot of dealers have looked at and said, “This is something that I really want.”
Jim Fitzpatrick: Can it help also in the event that you’re talking about inventory control, you’re talking about when the person shows up to say, “I want to do an audit. Where are all these cars?” It’s going to help in that respect too, right?
Hugh Hathcock: Yeah. I mean, they can manage loaner fleets. They can manage everything from sales, like if you want to put it in all the cars, you can say… You could track where the cars are going. You could track if there’s low battery, low fuel levels.
Jim Fitzpatrick: Wow!
Hugh Hathcock: Before you try to test drive it, or it could even be a consumer product, which we’re really looking at moving into.
Jim Fitzpatrick: Something that can upgraded in F&I or something?
Hugh Hathcock: Yes.
Jim Fitzpatrick: Okay. So now that could become another profit center as well.
Hugh Hathcock: Yes, for the dealer.
Jim Fitzpatrick: Yeah. That’s fantastic.
Hugh Hathcock: But right now we’re primarily focusing on being the best recon company. So we want to put all our priority focus on making sure our software, our trainers… we have the best recon tool. So we’re focusing the Locate piece on automating the steps, which is going to give us a huge competitive advantage.
Jim Fitzpatrick: Right, right. And you’ve done such an incredible job, obviously, with eLead, eLead1One. I mean, it’s really a household name in CRMs in the retail automotive sector. There’s probably nobody that doesn’t know that brand. Is the goal to do the same thing with ReconVelocity?
Hugh Hathcock: It is, and it’s going to be easier. The last 10 years in the CRM space, you had a lot of really good competitors, and it was harder. In this space, there are no competitors that really are as passionate about this with the knowledge, with the relationships-
Jim Fitzpatrick: And with the boots on the ground.
Hugh Hathcock: … with the resources from-
Jim Fitzpatrick: That’s right.
Hugh Hathcock: … that sale. I can make this happen really quick and we’re 100% devoted to making that happen. We want to dominate this space and-
Jim Fitzpatrick: Right. So the idea is you sold eLead1One for a tremendous amount of money, peel off a lot of that money and allocate it to ReconVelocity to do it right.
Hugh Hathcock: To do it right.
Jim Fitzpatrick: To get it right with dealers.
Hugh Hathcock: Right.
Jim Fitzpatrick: Right?
Hugh Hathcock: And we added Match, so that’s another new product we hadn’t talked about yet. I mean we’re taking the used car when it hits recon, and at eLead1One we had a tremendous… I think eLead1One, when we did GoalDigger back in the early 2000s, that was really the first data mining tool in the industry-
Jim Fitzpatrick: Was it really? Wow.
Hugh Hathcock: … way before the companies that came in like, the great companies that came in like AutoAlert and all those companies?
Jim Fitzpatrick: Yeah. Yeah.
Hugh Hathcock: Mastermind. They’re great companies now. But 10 years before that we were data mining, doing the same analytics.
Jim Fitzpatrick: That’s pretty cool.
Hugh Hathcock: The difference is we weren’t putting it on a dashboard in front of the dealer. We were sending it to the eLead call center and making those calls and doing it for the dealer.
Jim Fitzpatrick: Nice. Nice.
Hugh Hathcock: So we got a lot experience at uncovering prospects and customers and doing that. So once we got into recon, we said, “Hey, if the guy’s got a hundred cars hitting recon a month that our used cars, at day one, we can go into the DMS and the CRM, ID the used car buyer that’s a payment buyer. And we can run all the analytics, all the numbers, all the payments, all the financial data, and we can give him the five best prospects that are used car buyers.” Most people in data mine, what did they do? They say, “Okay, you’re in a used car. You come through service. You’re in a 2018 Toyota Accord or a Honda Accord, and we can move you into a 2020,” and they upgrade them into new cars. We don’t do that. We’re used to used.
Jim Fitzpatrick: Yeah, yeah. I got you. I got you.
Hugh Hathcock: That’s a big separator.
Jim Fitzpatrick: So you’ve just become the used car manager’s his best friend. You’re going to help him lower the number of days the vehicles’ in recon and then also find a buyer for him. Right?
Hugh Hathcock: Right.
Jim Fitzpatrick: That’s crazy.
Hugh Hathcock: And dealers like products that sell cars.
Jim Fitzpatrick: That’s right. Saving money is good, but making money is even better. Right?
Hugh Hathcock: It is.
Jim Fitzpatrick: Yeah. If we were sitting here five years from now, what does ReconVelocity look like? What success look like? How many dealers are you…
Hugh Hathcock: Let’s look at three years.
Jim Fitzpatrick: Okay. Let’s look at three.
Hugh Hathcock: In six months, I had no idea that we would be able to take this product just on the technology product side and get it to where it is. We’ve added Match.
Jim Fitzpatrick: That’s fantastic.
Hugh Hathcock: We’ve added Locate. We’ve automated steps. We bought another couple of companies.
Jim Fitzpatrick: Sure, sure.
Hugh Hathcock: So looking past three years is really hard as far. As the dealer count, we know we can get 2000 or 3000 dealers easy in that time period.
Jim Fitzpatrick: Yeah. Easy.
Hugh Hathcock: As far as how the company’s going to go product wise, that’s a harder question because right now we’re so focused on just making sure we’re the best recon technology tool.
Jim Fitzpatrick: You’re so good at as an operator of these companies, is that you really build it around the needs of that dealer. You know what I mean? You’ve done that with the CRM business and you’re doing it now with the recon business, to be able to customize it specifically for a dealer group, to say, “What are your needs? Let’s take a look at that and then let’s add that component to it.” Right?
Jim Fitzpatrick: I know I spoke to Brian Benstock and his dealership up in New York, and that’s what drove him to say, “Hey, we’re going to go with ReconVelocity because they came in and said let’s take a look at what your needs are specific to this dealership.” As you know, they’ve got a recon center that’s 37 miles away, and you guys come up with a solution to help them with that. Right?
Hugh Hathcock: And that’s part of the way we do business. I mean, at eLead the dealers would always say eLead was the easiest company to do business with because they were flexible and they made this thing fun. And they understood that if we needed a custom report, it shouldn’t take $50 million and five years to build it.
Jim Fitzpatrick: Right, or a five-year contract with no out. Right?
Hugh Hathcock: Yeah. So we’re still the same month to month. We’re the same company.
Jim Fitzpatrick: That’s right.
Hugh Hathcock: But it’s easier in this space because all the competition is really small, so they don’t have their eye on… Some of this stuff hadn’t changed in five or 10 years, and we’re in six months into this and our third software version-
Jim Fitzpatrick: Wow.
Hugh Hathcock: … totally rewriting it.
Jim Fitzpatrick: That’s incredible.
Hugh Hathcock: So the dealer decides the growth of the product, new features.
Jim Fitzpatrick: It’s amazing what $500, $600 million will do. Right?
Hugh Hathcock: That helps.
Jim Fitzpatrick: That helps. Hugh Hathcock, Founder and CEO of ReconVelocity. That is a company… If you haven’t heard about it, first, you haven’t been watching CBT news. But if you haven’t heard about it, you’re going to be hearing a lot more about it in 2020. Take a look at your recon process now, dealers, and find out more about how you can lower the amount of time that that car’s in recon and how you can make more money with marketing tools like he’s talking about today, which is very excited.
Jim Fitzpatrick: Kudos to you. Congratulations on all your success. I was by your booth. I wanted to talk to you, but you were covered up over there.
Hugh Hathcock: Yeah, been really busy. That’s a great thing.
Jim Fitzpatrick: That is a good thing. Thanks so much.
Hugh Hathcock: Thank you, Jim
Jim Fitzpatrick: I appreciate it. Thanks.
Hugh Hathcock: Enjoyed it.
