Few brands are as iconic and unique to American culture as the motorcycle manufacturer Harley-Davidson. Their heavy, powerful bikes are instantly recognizable, right down to the throaty roar of their engines. Harley-Davidson customers are even more fanatically loyal to the brand than most sports fans are to their teams.
But this success didn’t come easily for Harley-Davidson, and neither was it consistent. There was a time the motorcycle company nearly lost it all.
At the turn of the 20th century, two friends barely out of their teens, William Harley and Arthur Davidson, completed their first motorcycle prototype and entered it in a Milwaukee state fair race on September 8, 1904. It took them an entire year to make one motorcycle, but that didn’t stop word from getting around about how great their bikes were. Not ten years later, Harley Davidson was making over 15,000 motorcycles a year. Even Uncle Sam wanted a piece. THey ordered 15,000 bikes to equip their forces in World War I.
By 1920, Harley Davidson was the largest motorcycle manufacturer in the world. By the end of World War II, they were one of the only two American motorcycle companies left. They become American pop culture icons thanks to the movie Easy Rider and the bike’s distinctive growl. Celebrities and citizens alike were dying to own one, and Harley Davidson was happy to oblige. Life for the brand was good.
And then it wasn’t.
Harley Davidson nearly went bankrupt in 1982, but the downward spiral started long before that.
Japanese motorcycle brands such as Honda and Yamaha appeared on the scene in the 1960s and took the U.S. market by storm. These new foreign bikes were more affordable and had better quality, performance, and handling than anything made locally–including Harley Davidson. In their current state, Harley Davidson just couldn’t compete.
American Machine & Foundry bought the company in 1969, but the new owners seemed to cause more problems than they solved. They introduced sweeping changes like streamlined production and massive workforce reduction. You can pretty much predict the labor strikes that followed, and the decrease in quality that Harley Davidson had already been suffering from became even worse.
If the new owners played a big factor in Harley Davidsons’ fall from grace, then the drop in quality played a huge one. It had gotten so bad that soon the brand was being labelled with unflattering nicknames like “Hardly Ableson”, “Hardly Driveable”, and “Hogly Ferguson”. In fact, the nickname “hog” became synonymous with bad quality. Their brand was being driven into the gutter, and Harley Davidson’s new competitors were all too eager to pick up the slack.
But the brand had too many allies to crash and burn that way. One of their biggest allies was William Davidson, grandson of the found Arthur Davidson. And he would come to the rescue in a big way.
Back in the Saddle
William Davidson and a team of former Harley Davidson executives bought the company back from AMF in 1981. They had pooled money from a variety of sources, including Citibank, and were now in a position to take take back the brand they loved so much.
Now that they were back in charge, William and his team decided they were going to fight the Japanese brands on their own terms. They weren’t going to just ape the Japanese style of motorcycles. This time, they were going back to their roots–their loud, heavyweight, retro roots.They designed their new lines of motorcycles around the custom models from the past, and banked that nostalgia would draw customers back. It did.
But a pretty face wouldn’t be enough to keep customers around. The new management had to find a way to improve quality while reducing costs. To solve this, they had to turn to their Japanese competitors. The Harley Davidson team toured a nearby Honda plant and adopted one of the practices they saw there: an American process called Total Quality Management. TQM prescribed “just in time” inventory management (which reduced production costs), while promoting employee involvement (which improved morale). Thanks to this new system, Harley Davidson was able to produce high-quality bikes faster and improve their profit per bike.
The real kickstart to Harley Davidson’s new life, however, came in the form of marketing. They developed unique marketing and branding campaigns designed to play off the ironclad loyalty of their customers and promote the Harley Davidson name as a lifestyle, not just a product. To that end, they created the HOG.
The Harley Owner’s Group, or HOG for short, was a company-sponsored community of loyal Harley Davidson customers. The groups met so regularly and became so close that many customers considered their HOGs to be a family. HOG members bought up bikes, Harley-branded accessories, and clothing and were highly vocal and visible brand advocates. In short, they were everything a brand could want in a customer.
Harley Davidson knew they had a great thing going, and made the most of it with a campaign called the SuperRide. Over 600 dealers invited potential customers to test drive Harleys. 40,000 customers accepted the invitation, and they weren’t just sold a bike: they were sold “the Harley Experience.” The experience included things like local bike club membership, publications, private receptions, insurance, and other benefits.
[quote align=”center” color=”#999999″]Today, Harley Davidson sells over 200,000 bikes worldwide annually, and has dealerships in over 60 countries. The brand had reversed a potential bankruptcy by focusing on every aspect of the customer experience. A product that pleased, a brand that resonated, and a lifestyle that fit like a leather jacket.[/quote]