Natural Foods Merchandiser

Harley Strategy Built On Lifestyle


It's got mystique: It's sexy, cool and a little bit bad. But the strategy Harley used to achieve success—after its devastating downturn in the 1970s—can be followed by any company, even wholesome natural products stores, says Ken Schmidt, a former Harley executive.

Today, Harley is in demand all around the world. Buyers often have to wait to get the bikes they want. But things didn't look so good for the company after it merged with American Machine and Foundry Co. in 1969.

"The name on the fuel tank never changed," Schmidt says, "but markets plummeted and the company nearly went bankrupt. The cool factor was always there; it just wasn't being taken care of."

So in 1981, 13 Harley-Davidson executives bought the company from AMF, and Harley began to reinvent itself.

"If you look at competitive motorcycles, they tend to look the same and sound the same. The experience is the same," Schmidt says. "Harley makes a concerted effort to do things a lot differently."

Harley began by investing both people and dollars to get employees from all levels of the company out in the field—at dealerships and at rallies—to talk with customers. Employees soon learned what customers expected, Schmidt says.

"It became clear that what the company had been doing for years was unacceptable; [the customers] were disappointed about the quality of the motorcycle and the quality of the ownership experience," he says. "When actually hearing [complaints and concerns] from customers instead of reading it on a memo pinned up somewhere, Harley's employees took it to heart. Given the choice, no one wants to disappoint someone when they know they'll be standing across from that person at some time in the future."

To take advantage of the increased communication with Harley owners, employees throughout the company were given freedom to suggest company changes. That enabled both company headquarters and individual dealerships to find ways to respond to what customers wanted. Harley-Davidson also learned that merely meeting needs wasn't enough.

"If there's one thing that I learned in my years with Harley, it's that if you meet someone's expectations, you essentially haven't done anything," says Schmidt, who was Harley's director of communications from 1985 to 1997. "There's nothing memorable there; there's nothing that sets you apart from the competition because everybody fully expects his or her expectations to be met.

"They are met a thousand times a day. So when you do extraordinary things, connect with people and make them feel good, let them see the effort you're making on their behalf, they tend to remember, and they tell other people. It not only sets your business apart, but it also creates demand for your business."

One Harley-Davidson strategy was to compete on a different level. Buying a Harley is just the beginning of a relationship, Schmidt says, and even if, as he admits, it sounds corny, it works.

"The [Harley-Davidson] business philosophy is built on bringing people together. All human beings actively seek out a sense of belonging and community," he says. "What Harley-Davidson does, and does very well, is it allows people to belong to something."

If you own a motorcycle, you can go to the dealership on a Saturday morning, and even if you go alone, Schmidt says, it's virtually guaranteed you'll meet other people who want to ride. You might ride with one person on a Saturday. Or you might go to a Harley event or rally with a hundred people—or a hundred thousand people.

"If I was a neurosurgeon I could go to a [Harley] rally and talk to a pipe fitter for 45 minutes and connect. What we do for a living never comes up because it's not important," he says. "We talk about our motorcycles, our riding experiences and how much fun we're having. It gives us common ground."

Customers can buy any brand of motorcycle, he says, but if they buy from competitors, riders are not going to have the rallies and events—they won't have the camaraderie that comes with a Harley. "[Our competitors] have adopted a different philosophy. They try to compete with their product, which is a tougher way to compete," Schmidt says.

Harley tried to compete solely with its motorcycles, "going shoulder-to-shoulder against the predominantly Japanese companies in the '60s and '70s," Schmidt says.

"It got killed. If it's just about the hardware, somebody is always going to come up with a faster motor and sleeker gadgets," he says. "Unless you're doing something to stand out, to connect with people on an emotional level, you're just competing with hardware. And when you compete with product, someone else is always going to find a way to do it better or cheaper."

Getting involved with customers, understanding what they want, and intentionally doing things differently to forever surprise and delight them, sparks word-of-mouth marketing, he says. And that leads to sales.

"If you look at Harley-Davidson's Web site or the print literature, [you'll] see just how incredibly beautiful everything is; it never talks about the product, it doesn't talk about the hardware or the way the bike is built with all the metal and all the machinery," Schmidt says. "It's all about the emotional stuff. It's what it does for you, where you can go with [a Harley], and not just physically, but where in your mind, where in your heart it can take you. We didn't know the emotional attachment people had was so strong.

"If you go back 10 or 15 years and look at brochures and other literature Harley was producing, it was all about product. 'Look at those wheels, look at that tank, look at that motor. Look how painstakingly we do all that stuff.' But that was competing with product."

Because Harley changed its strategy from selling product to selling community, most Harley-Davidson motorcycles sold today are sold by Harley owners. They want the community to grow.

"They tell other people about the experience. They tell people about an event they went to that Harley sponsored, or they tell friends about some amazing thing they saw at the dealership, or how helpful the guy they saw at the dealership was—and how it created a great experience. They tell other people. It just spreads."

For anyone who thinks Harley's strategy can't be used on his or her business, Ken Schmidt has one thing to say: Saturn.

Made by General Motors, the Saturn is a decidedly practical, unsexy, utilitarian car, priced for people who don't find joy in haggling on price. But like Harley-Davidson, it's built a sense of community among owners.

"They have free car washes on Saturday," Schmidt says, "and the donuts and coffee are free. People come into the dealership on Saturday morning and establish relationships. Everybody in the lobby is a Saturn owner. They talk to each other and one thing they have in common is their car."

Schmidt says he finds Saturn's approach interesting: The first chairman and president of Saturn was on the board of directors at Harley-Davidson, Schmidt says. "He obviously saw the benefit of bringing people together and what that does for word of mouth and building a sense of community, which is a tremendous builder of brand loyalty," he says.

Ken Schmidt will speak at Expo on Friday at 8:30 a.m. in room 204.

Natural Foods Merchandiser volume XXIII/number 3/p. 44, 46

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