Hugh Hathcock, CEO, and Founder of Recon Velocity returns to CBT News with Kalah McCoy, Executive Vice President at Recon Velocity. Hugh tells about the selling of his previous company ELEAD One and how it helped him transition into the founding of his latest company, Recon Velocity. Hugh and Kalah describe how they saw an opportunity within the market for Recon Velocity and how they plan to build a solid brand and a great customer experience strategy with the company. By helping their dealerships to speed up their recon process and increase profits while improving their customer experience they intend to make the recon process as efficient as ever for dealers.
VIDEO TRANSCRIPT:
Jim Fitzpatrick:
Hi everyone, I’m Jim Fitzpatrick. Thanks so much for joining us on another edition of CBT News. We’re very excited to have back in our studios Mr. Hugh Hathcock and Ms. Kalah McCoy, who is the Executive Vice President of this phenomenal new company, ReconVelocity. Welcome back in.
Hugh Hathcock:
Thanks, good to be here.
Jim Fitzpatrick:
Great to see you again. For the viewers that might’ve been living under a rock here in the last month or so, talk to us, Hugh, about your new company and the solution that it provides the dealers.
Hugh Hathcock:
Well, as most viewers probably know, I own ELEAD, and when we sold that to CDK, we really-
Jim Fitzpatrick:
Was a really big deal. Everybody shook their head and said, “Wait a minute, Hugh Hathcock is working again in the auto industry. Why would he do that?” I mean, after a rumored $600 million paycheck, how come you’re not on the boat somewhere?
Hugh Hathcock:
We did the boat a little while.
Jim Fitzpatrick:
Yeah. Yeah. Right.
Hugh Hathcock:
But we decided we needed to be back in front of dealers and-
Jim Fitzpatrick:
Sure.
Hugh Hathcock:
We really saw an opportunity for dealers in the recons space. Recon, used car margins, new car margins-
Jim Fitzpatrick:
That’s right. Yeah.
Hugh Hathcock:
Dealers need another profit center.
Jim Fitzpatrick:
That’s right.
Hugh Hathcock:
We see recon as a huge profit opportunity, profit center. We are staffing this new company with recon experts, and we’re going to build the same brand that we had with ELEAD1ONE, and we’re going to make ReconVelocity the dominant recon tool in the auto industry.
Jim Fitzpatrick:
Yeah, and as we talked in our last meeting with you here at CBT News, the difference you believe is really the boots on the ground and the support that you provide to dealers, right? I mean that’s really at the end of the day what built your CRM company to be the leader.
Hugh Hathcock:
It is because dealers want relationships. I mean the car business is a relationship business. Virtually, all sales is relationships.
Jim Fitzpatrick:
Sure.
Hugh Hathcock:
And that’s why I’m back in the business. All my relationships are with car dealers. I don’t have any other normal friends.
Jim Fitzpatrick:
Sure. Sure.
Hugh Hathcock:
So, I mean-
Jim Fitzpatrick:
How did you land on recon? I know that you had a CRM company. You’ve got products through ELEAD that help dealers in Fixed Ops. How did you all of a sudden decide, okay, recon is really an area that needs a tremendous amount of attention?
Hugh Hathcock:
There’s not a lot of opportunity to find spots or opportunities in the auto industry now for dealers to make profit.
Jim Fitzpatrick:
Right. That’s right.
Hugh Hathcock:
I mean [crosstalk 00:02:27] if you look at the F&I box, you look at the front end, there’s not a-
Jim Fitzpatrick:
It’s all-
Hugh Hathcock:
Every, they’re-
Jim Fitzpatrick:
Compressed.
Hugh Hathcock:
jammed and-
Jim Fitzpatrick:
We talk a lot here at CBT news about margin compression and the dealers are really feeling the pain, for sure-
Hugh Hathcock:
They are. What we saw with recon kind of came out of the Fixed Ops as we were building Service One. We saw and we were talking to the Sonics, and we were talking to the big guys who said, “Hey, you really need to tie some of the stuff you’re doing on the Fixed Ops Service One solution side, the NPI side to recon.” And once we saw there was a major need for this, and the majority of our dealers and my relationships were telling me, “Hey, you’re right. I don’t really have a way to prove what I think I’m at.” We want to get dealers from 10 days to five days because it makes a big difference.
Jim Fitzpatrick:
Sure. Kalah, from your perspective, what do you see out there in the marketplace? You’ve been in the auto industry now for a long time and selling CRM programs and such, so you’ve got your hand on the pulse of what’s happening in the industry. What are some of the pain points in this area that dealers are telling you, “Hey, we need some help?”
Kalah McCoy:
Yeah. It’s just it’s kind of neglected. I mean, dealers think that they’re doing a pretty good job, but they’re not really sure why or exactly what a really good job means. And if there’s no technology, there’s no software to really track it, then we don’t really have any verifiable data to back up what we’re hoping we’re doing and probably even less accountability in each one of the processes and steps and departments. And so it was just a kind of an obvious solution right under our noses that’s sitting there, something that’s not measured, no technology, and dealers they’re all, they’re open to it. They need some help with it, but there’s not really a lot out there for them. So ReconVelocity’s simple tool, intuitive, great mobile app for each user to literally be doing it on their phone, not have to be at a desktop-
Jim Fitzpatrick:
Wow.
Kalah McCoy:
And whoever-
Jim Fitzpatrick:
So, I can be at a lunch with someone and know how my recon is being handled through an app.
Kalah McCoy:
Well, yeah, we didn’t want to add an entire new platform or a whole set of logins that we have to do in each different department. They’ve got one app on their phone. They can literally touch a button to start and stop and put a clock on this process. Most dealers when they come and they say, “My recon time is three, four, or five days, I think,” they’re really usually only tracking that mechanical time or the body work. They’re not really looking at the big picture from acquisition all the way through to syndication when it’s retail ready for the customer to actually buy the car and drive it home. So when you put a clock on it from start to finish, most of the stores we’re going into are really more like between 10 and 15 days. Some are even higher, so-
Jim Fitzpatrick:
That’s a major problem today, especially when you’ve got companies and leaders in the industry telling you, “Man, when that clock hits 30 days, you got to get rid of the vehicle-
Kalah McCoy:
Right.
Hugh Hathcock:
[crosstalk 00:05:21] losing money.
Jim Fitzpatrick:
We’re running big efficient or very efficient dealerships are making the money. The ones that aren’t, are going to be in trouble, right?
Kalah McCoy:
Right.
Jim Fitzpatrick:
And this is a tool to help with that.
Kalah McCoy:
Yeah. We can have such an impact with our dealers and that’s what we were… What we’re always looking for is how can we help? How can you increase profits? How can we help with the customer experience?
Jim Fitzpatrick:
Sure.
Kalah McCoy:
If the customer is looking at a vehicle online, they think it’s ready right there to buy and-
Jim Fitzpatrick:
That’s exactly right.
Kalah McCoy:
… they might show up to the store and start calling, and the sales people really have no idea where that vehicle is [crosstalk 00:05:51] where it is in the process.
Jim Fitzpatrick:
The customers get mad at the dealer for even putting it on the website, right?
Kalah McCoy:
Right.
Jim Fitzpatrick:
… to say, “Well, why’d you put it on there if the car is still needs tires or it needs a-
Hugh Hathcock:
And I can’t come in to [crosstalk 00:06:00] buy it today.
Jim Fitzpatrick:
That’s exactly right. Yeah, and then, of course, if in the event the vehicle is sold out from under him when the car is retail ready, then you have a really [crosstalk 00:06:09] irate customer, right?
Kalah McCoy:
Right.
Jim Fitzpatrick:
Yeah. So talk to us a little bit about when you’re talking to dealers and you’re out there and they say to you, “Well, I think is around, well, I think we’re okay. We’re like five days,” and you learn that, no, it’s really like 15 days.
Kalah McCoy:
Right.
Jim Fitzpatrick:
What happens to that dealer? [crosstalk 00:06:26]
Kalah McCoy:
We approach it as a team effort, right? We all want to be moving in the same direction to get to a similar goal, and-
Jim Fitzpatrick:
Sure.
Kalah McCoy:
… and so we want the divisions and the departments to work together towards that goal. So the approach and how we come and install it and teach them how to use it and really get everybody on board with that dealer/customer vision-
Jim Fitzpatrick:
Sure.
Kalah McCoy:
Then that helps a lot, but that’s really hard to do if it’s just over the phone or… We have to be in the stores. That’s the bottom line. This works best when we’re in the stores and getting everybody on the same, on the same position.
Jim Fitzpatrick:
That’s right. That’s right. Hugh, you built a highly successful CRM company, ELEAD1ONE, based on the fact that you had boots on the ground, right? I mean that was really the biggest differentiator, right? I mean-
Hugh Hathcock:
It was.
Jim Fitzpatrick:
… the software was great, don’t misunderstand what I’m saying, but everybody… You were synonymous with great customer service. A dealer, I’ve said it before, could call you at 10:00 at night or 2:00 in the morning, hit your cell phone and say, “Hey man, I got a problem. I need your help,” and somebody’s in the dealership at 8:00 the next morning. Will that be the same approach?
Hugh Hathcock:
It’ll be that. We’re building that recon expert team now. Right now we probably have 40 people in support, trainers-
Jim Fitzpatrick:
Good. Good.
Hugh Hathcock:
Performance guys on the phone. When ELEAD1ONE sold, that was over 200. So you build that in proportion to your accounts-
Jim Fitzpatrick:
Sure. Yeah, of course. Of course.
Hugh Hathcock:
The good news is we understand how important that is to dealers. It’s in our DNA, so we’re not going to do it any other way. We’re going in and we’re being real aggressive with dealers with this because the majority of dealers don’t think they have a problem, and-
Jim Fitzpatrick:
That’s right.
Hugh Hathcock:
… I’m willing to put this tool in on a trial period at no money.
Jim Fitzpatrick:
Sure.
Hugh Hathcock:
Not too many people will do that nowadays.
Jim Fitzpatrick:
That’s right. That’s right.
Hugh Hathcock:
I’ll put my money where my mouth is and when they see-
Jim Fitzpatrick:
You can afford to.
Hugh Hathcock:
When they see that they do have an issue, then we’re going to put the people, the process, the right technology in place, and it’s going to be a really great company that does so many special things for dealers and creates a lot of money, and dealers want to make money.
Jim Fitzpatrick:
Yeah. There’s no question about it. Digital retailing is coming on strong. We hear more and more about it. Five years down the road, maybe 10 years down the road, you may see the majority of vehicles being sold the way Carvana sells their cars from the comfort of your couch and up comes a vehicle and it’s delivered to you. And that same philosophy may hold true in Fixed Ops where you can sell and, I should say service more vehicles, if the vehicle can be delivered to you. I know that we had a sidebar conversation about some things that you’re working on and have worked on to answer those needs, right? Talk to us a little bit about that.
Hugh Hathcock:
We purchased a company and called it Velocity Valet, and it’s really a pickup and delivery software that will, consumer goes to the website, your dealer’s, their dealer’s website, clicks on whatever we name the service. It can be pickup and delivery, it can have a-
Jim Fitzpatrick:
VIP.
Hugh Hathcock:
VIP service-
Jim Fitzpatrick:
Concierge.
Hugh Hathcock:
Whatever [crosstalk 00:09:28] you want to call it for the dealer.
Jim Fitzpatrick:
Sure.
Hugh Hathcock:
We’ll go in and we’ll design and help partner with the dealer and build the whole process. But when the consumer can have the dealer pick up the car, deliver the car, tell them exactly what’s wrong with the car and what additional service work needs done while they don’t have to leave their job or their home-
Jim Fitzpatrick:
Yeah, that’s huge.
Hugh Hathcock:
It’s a game changer.
Jim Fitzpatrick:
It really is. There’s no question about it.
Hugh Hathcock:
We’re talking to a lot of dealers about this. This is being done some in the industry already through some of the OEMs. Genesis does it. Lincoln does it with black label, and we’re getting a lot of response from dealers that say, “Hey, we want to do this for all our cars.”
Jim Fitzpatrick:
Yeah. It’s definitely the way the industry almost has to go, right, in order to, I mean, dealers suffer now-
Kalah McCoy:
Definitely what the customer wants.
Jim Fitzpatrick:
Yeah. I mean the retention in dealers now for Fixed Ops is somewhere around 30%. You sell a car. You only have about a 30% chance of seeing that customer back in your service drive for a multitude of reasons, but convenience and price is usually at the top of it, right?
Hugh Hathcock:
But if you pick up their car and you deliver it, price does not become-
Kalah McCoy:
No.
Jim Fitzpatrick:
That’s right.
Hugh Hathcock:
… the factor that it once was.
Kalah McCoy:
Convenience is driving-
Jim Fitzpatrick:
Yes.
Kalah McCoy:
… every shopping experience.
Jim Fitzpatrick:
No question about it. Everyone has that Amazon brain where it’s like, “I’m not going to get it today?” Now even Amazon’s delivering it today-
Kalah McCoy:
“And I have to take it to the dealership?”
Jim Fitzpatrick:
Yeah, exactly. “Man, that’s old fashion. What’s that all about?” There’ll be a day that our grandkids get up and go, “You used to take the car to the dealership?”
Hugh Hathcock:
This is a module that we’re including in ReconVelocity. So we’re going to turn it on for dealers, and how we-
Jim Fitzpatrick:
Oh, really?
Hugh Hathcock:
… build it out-
Jim Fitzpatrick:
Oh, wow.
Hugh Hathcock:
… we’re, it’s a work in progress. The majority of dealers really are excited about it, but they don’t know exactly what next step is.
Jim Fitzpatrick:
Sure.
Hugh Hathcock:
It’s progressive, so-
Jim Fitzpatrick:
But if I know you…
Hugh Hathcock:
We’re going to figure it out-
Jim Fitzpatrick:
Give it six months and-
Hugh Hathcock:
We’re going to turn it on for dealers though, and we’re including it in this deal.
Jim Fitzpatrick:
Oh, wow.
Hugh Hathcock:
So, I mean [crosstalk 00:11:23] this is more than this recon, and [crosstalk 00:11:25] there’ll be another two to three projects over the next couple of years that catch our eye that, but it’s got to be something that’s really good for me to want to get into it.
Jim Fitzpatrick:
For dealers that are listening to us right now, as I know they are, because we get emails and comments and questions, where do they learn more about ReconVelocity? What do they need to do to say, “Hey-
Kalah McCoy:
Can go to ReconVelocity.com. We’ve got social media pages on Instagram, Facebook, Twitter. We have-
Hugh Hathcock:
LinkedIn.
Kalah McCoy:
Yeah. LinkedIn, lots of postings, and you got our cell phone numbers and-
Jim Fitzpatrick:
There you go.
Hugh Hathcock:
We’re at [crosstalk 00:12:01] Digital Dealer, Driving Sales in October.
Jim Fitzpatrick:
And you’ve got a booth there all set up, ready to-
Kalah McCoy:
We do.
Jim Fitzpatrick:
Okay, ready to go.
Hugh Hathcock:
NADA course is coming up in February.
Jim Fitzpatrick:
So if you’re going to Digital Dealer, you’re going to Driving Sales, they can connect with you there as well get more information.
Hugh Hathcock:
Love to see you.
Kalah McCoy:
That’s right. Come by and see us.
Jim Fitzpatrick:
Fantastic. Well, Kalah McCoy, and you know him, you love them, Hugh Hathcock. I loved watching your success because I know it’s going up, that’s for sure. So, thank you again-
Hugh Hathcock:
I appreciate that. Thank you, Jim.
Jim Fitzpatrick:
I really appreciate it. Thanks.
