From cookies and call centers to reconditioning

After an automotive career that launched with mailed cookies and turned into a $500 million-plus sale last year to CDK Global, Hugh Hathcock could have comfortably retired.

But Hathcock, who founded customer relationship management vendor ELEAD1ONE in 1999 and sold it in September to the dealership software giant, is by no means finished with auto retail.

"I got a real passion for this industry," said Hathcock, 59. "I've been in this industry almost 35 years. All my friends are car dealers, all my relationships."

And relationships are his business, going back to those cookies shipped to dealership customers who had just bought a car. Hathcock's latest venture is ReconVelocity, digital software that streamlines and tracks the reconditioning process.

Now "80 percent of the dealers in the United States — new-car franchised dealers — don't have a technology tool for recon," Hathcock said. "They're managing this tool on whiteboards, paper, Google Docs, and they're managing it very reactively."

ReconVelocity integrates with inventory tools and dealership management systems to automate the touch points in used-vehicle reconditioning. When a car is acquired at auction, online or through a trade-in, it is put on the software's timer when the dealership takes possession and is tracked through the reconditioning process.

A detailer, for example, would open ReconVelocity's mobile app at the start of that process. When the work is done, he or she would hit a button to complete that step. The software also is used to help gather photos and relay how long the process took. Another example: A technician with a car on a lift would have $1,000 budgeted for reconditioning but discover the car needs $500 in additional work. Rather than waiting for a visit or calling a manager, that can be communicated instantly on the app, and the manager can sign off on the work remotely within minutes, rather than in a day or two.

"The average dealer's taking 10 to 12 days to complete this recon process," Hathcock said. "Once we put the software in place with the processes, with the training, we're getting stores down to five days [reconditioning time] in less than 90 days."

That leads to quicker sales, higher revenue and more profit for the dealerships, he said.

Some prominent dealers are already believers.

Rick Ford, CEO of RFJ Auto Partners, a 24-store dealership group, introduced Hathcock to a small software firm, Trace Recon, that had organized Ford's reconditioning process. It led to Hathcock buying the company six months ago and establishing what is now ReconVelocity. "He's taken it to a whole new level," Ford said.

Since implementing the program about 18 months ago, Ford said reconditioning time at RFJ's stores has dropped from 12-14 days to about five. His goal: three days.

Publicly traded Sonic Automotive Inc., ranked No. 5 on the Automotive News list of the top 150 dealership groups based in the U.S., is among retailers testing the platform at a handful of stores.

"When it comes to pre-owned, in our days supply and in our inventory management, we do a really good job there," Sonic President Jeff Dyke said. "But it doesn't mean we can't do better. Every half a day that we can save, every quarter day that we can save, just adds money at the bottom line."

The Sonic stores have been using ReconVelocity for about a month, and initial feedback is positive. "Hugh's done a great job," Dyke said. "We've been dealing with [ELEAD1ONE] since the early days when they were just a cookie company, and we have a fantastic relationship with him."

ReconVelocity is being tested at other dealership groups, Hathcock said. The company has commitments from more than 500 dealerships so far, he said, estimating that installation is likely in 350 to 400 stores by year end. His goal is to expand that to 1,500 stores by the end of 2020.

Despite launching a successful tech firm in ELEAD1ONE, Hathcock said he is not techy. Rather, he knows how to take care of dealers. He began developing those skills in his 20s, when he was cold-calling stores throughout the South.

In the 1980s, his father came up with the idea of mailing cookies to dealerships' recent customers along with the dealership-feedback postcards Hathcock had been sending. The idea took off — to the point that Hathcock's parents were baking cookies in a private bakery in southern Georgia, as Hathcock and his wife traveled the U.S. visiting dealer clients and promising baked goods to thousands of their customers.

ELEAD1ONE was born from the relationships and support Hathcock was giving to dealers. It began with a call center in 1991 and led to the digital CRM company starting near the end of that decade.

The baking operation became Fresh Beginnings, which now has a variety of cookies, brownies, chocolate candies, pretzels and nuts made and packaged to order, according to its website. Fresh Beginnings was sold along with parent company ELEAD1ONE to CDK, which still operates the business. The Fresh Beginnings bakery churns out some 45 million cookies around Christmas alone.

Hathcock has invested $30 million in the new venture and expects to invest another $20 million in the next six months, in part for "people expense," he said.

With headquarters in Atlanta, and a support center in Destin, Fla., the company has about 45 employees with another 40 candidates being interviewed, Hathcock said. The company wants to build a team of "recon experts," well-versed in understanding the process, its workflow and the importance of selling used vehicles quickly after they are acquired, he said.

While Hathcock wanted to maintain an auto retail presence, his latest effort stemmed from more than his passion for the industry.

"The most important" reason, he said, is he wanted to work with his children, as his parents had done with him, and pass along his knowledge to the next generation.

Hathcock has five children, three of whom are involved with ReconVelocity.

"Just being able to provide a knowledge transfer, so as they go on this journey they have the ability to do some of the great things for dealers that I've been able to do," Hathcock said, "is very, very, very important to me."