Interaction, a throbbing question. For people it is one thing to buy a product or service. And another very different thing is to tattoo a logo on your biceps.
Is there another company in the world, apart from "Harley-Davidson Motor Company", that works hard to establish genuine relationships with its customers? Harley-Davidson is an exceptional loyalty company created by the pattern of interactions with its customers.
How easy is it for your customers to interact with you? Could you reinvent the customer experience in a way that reinforces the customer's sense of affiliation with your company and its products or services?
William Harley and Arthur Davidson, both 20 years old, built their first motorcycle in 1903. The first year, total production was just one motorcycle; in 1910 the company sold 3,200. Movies such as "Easy Rider" made the Harleys a cultural icon and soon the company attracted people who loved the bad boy mystique, the loud voice, and the distinctive, powerful, and loud roar of engines.. The Harley bike sounded like no other on the street and even Elvis Presley and Steve McQueen had to ride one too.
The "Harley-Davidson Motor Company" had good times and bad times. Sometimes the bad guys seemed to lead her directly into bankruptcy. In the 1960s, Honda, Kawasaki, and Yamaha invaded the North American market; And when sales at Harley-Davidson fell dramatically, due to poor quality and increased competition, the company began looking for buyers. The new owners, however, knew little or nothing about how to restore profitability at a motorcycle company. Harley-Davidson is the last remaining motorcycle manufacturer in the US. Despite the impressive numbers, in 1979 a record of more than 50,000 motorcycles, the quality was so poor that traders had to put cardboard under the motorcycles in showrooms to absorb oil leaking from engines.
Daniel Gross, en su libro Forbes Greatest Business Stories of all Times, nos dice cómo en 1981, con la ayuda del Citibank, un grupo de ejecutivos de Harley-Davidson inició negociaciones para adquirir de nuevo la compañía y rescatarla de la bancarrota. Entre los ejecutivos estaba William Davidson, el nieto del fundador Arthur Davidson, que se sumó a la firma en 1963. En una clásica compra apalancada, juntaron 1 millón de dólares cada una y tomaron prestados 80 millones de dólares, de un consorcio de bancos liderado por el Citibank.
Harley's rescue team of loyal executives knew that Japanese motorcycle manufacturers were well advanced when it came to management quality. They then made the bold decision to visit a Honda plant. Paradoxically, the Japanese had learned quality management from the Americans: Edward Deming and Joseph Juran, the parents of the movement. There, this new management approach was rejected by North American manufacturers until it was brought to Japan, where they were excited to learn and implement it. But soon with Harley Davidson Motor Company the circle closed again.
After taking a just-in-time inventory and involving employees, costs at Harley had dropped to such a level that the company only needed to sell 35,000 bikes instead of the previous 53,000 to cover expenses. Their "lobbies" in Washington also helped; Import tariffs were provisionally increased from 4 to 40 percent for Japanese motorcycles - a huge respite, which the only remaining North American motorcycle company urgently needed for its recovery.
Visiting a Japanese motorcycle manufacturing plant and lobbying for import tariffs in Washington were risky moves by Harley executives in their quest to generate new profitability and growth for the company. Other very strategic measures were the exclusive marketing and design campaigns for the company's brand. Studies showed that approximately 75% of Harley customers made repeated purchases. The executives recognized a pattern that served to restart the company's global strategy. What was needed was to find a way to appeal to the extraordinary loyalty of their clients, and they found it by creating a community that valued the street-riding experience more than the product.
The Harley Owners Group sponsorship was one of the most creative and innovative strategies to create an experience around the product, and that is the new paradigm that Harley executives promoted and that we are already seeing more and more in other industries as well. The company began organizing "rallies" to bring the Harley experience to potential new customers and thus strengthen the relationship between members, dealers, and employees. The Harley Owners Group became immensely popular and allowed motorcycle owners to feel like one big family. In 1987 there were 73,000 registered members. Harley now has no less than 450,000 members.
In 1983, the company launched a "marketing" campaign called SuperRide in which more than 600 reps invited people to try a Harley, and 40,000 potential new customers accepted the invitation. Henceforth, many Harley customers were not just buying a motorcycle when they were buying a Harley; they were buying "the Harley Experience".
Harley-Davidson offered its customers a one-year free membership to a local group of motorcyclists, motorcycle publications, private receptions at motorcycle events, insurance, roadside emergency service, vacation rental facilities, and plenty of other benefits for its members. The brand's experience design, not just the product, has allowed the firm to expand by capturing value, including a clothing line, a parts and accessories business, fountain pens and the Visa Harley Davidson card.
If you analyzed the list of companies that produced the highest returns on investment during the 1990s, you would discover Harley Davidson. Only a few companies have been successful in inventing new business models, or in reinventing existing business models. Harley Davidson went from supplying motorcycles to antisocial motorcyclists to selling a lifestyle to those who wanted to be "bad boys" in the 1950s crisis. Traditionally, Harley-Davidson motorcycle owners came from the working and middle classes, but as the quality and prices of "bad boy" motorcycles increased, and with energetic "marketing", the company soon attracted a different category. Buyers - A third of Harley buyers are now professionals or managers and 60% are college graduates.Harley's new customer segments are Rolex motorcyclists. Hell's angels no longer practice sport. Now they are groups of accountants, lawyers, and doctors. Women also make up a good chunk of new bikers, and exclusive women's biker clubs are popping up all over the world.
The future looks bright for the North American motorcycle firm: according to The Economist, total sales in the US increased more than 20% in 2000. More than 650,000 new motorcycles were sold in the US the same year, and 539,000 past year. Motorcycle buyers spent approximately $ 5.45 billion on new motorcycles in 2000.
Be alert and understand it as quickly as you can: the new brand approach is to sell a lifestyle, a personality; The new brand paradigm is based on appealing to emotions and it will be more and more about creating an experience around the product. Brand managers and executives will need a new pair of lenses, because the rules have changed, and so have the opportunities to maximize profitability and create value in the process. However, most companies continue to follow traditional advertising campaigns, and seem to be unaware that the media has fragmented into hundreds of cable channels, thousands of magazines, and millions of Internet pages.
Consumers are no longer safe targets for commercials; they are looking for new experiences. Whether it's the bad boy aura of the Harley ride experience, the exquisite coffee experience at Starbucks cafes, or the active involvement in Red communities, more and more companies will need to follow those leading creators of the new brand design.. They should observe in the dynamics of their relationships with customers, the nature of their interaction. You will have to ask yourself some serious "out of the box" questions, if you want to move with the value that is changing due to the new market conditions.
The brand design has changed along with the "marketing" and advertising campaigns. New variability among clients, heterogeneity where there used to be a homogeneous group of clients, recently emerged social stratifications among consumers, new preferences and new lifestyles are here to stay; We better get used to them, until each other, until something changes again, and we are assured. So shall. Remember: companies that are creating new wealth are not only being better: they are being different. Mind-bogglingly different!
Copyright © 2002 Josef Schinwald. All rights reserved, www.josefschinwald.com
