Captive insurance professionals were given an insight into what it takes to turn an ailing company at the brink of bankruptcy into a multimillion dollar success story at last year’s Cayman Captive Forum held at The Ritz-Carlton at the end of December. Business Editor Lindsey Turnbull reports on the conference’s keynote presentation given by Ken Schmidt, the former director of communications for Harley-Davidson.
The Harley Davidson Motor Company has been around since 1903 but in the mid 80s it found itself floundering as sales dropped and credit became harder and harder to come by. As the company sat on the brink of collapse Ken Schmidt was brought in as creative director and it was his completely different take on marketing that helped Harley Davidson become a globally successful brand (indeed Cayman has a Harley Davidson accessories outlet in George Town.)
Schmidt entertained the Cayman Captive Forum audience by recanting his experiences in lifting the company into the success story that it is today.
Understanding the human psyche
Captive Forum attendees would have been able to spot Ken Schmidt even if they did not recognise his face, with his leather jacket and armful of beaded bracelets a sharp contrast to the sea of suited and booted insurers. His outward appearance should have given clues to his dynamic and different approach to marketing, which simply boiled down to common sense and a deep understanding of what makes human beings and thus consumers tick.
“Human behaviour is based upon attraction and repulsion. We knew that we needed to leverage this basic drive in order to better position Harley Davidson. This would then give us an unbelievable advantage over our competitors and would transcend the company far beyond the product itself,” Schmidt said.
Schmidt said that if you travel anywhere in the world business people all speak the same language. They talk about becoming successful by creating a quality product to give market domination.
“But just basing marketing on delivering a great product is not enough to differentiate a company,” Schmidt said. “Honda makes a quality product as do BMW, so to use dull, lifeless and non-memorable language such as ‘it comes down to excellence and quality’ was insufficient for us and turns people off.”
Behaving in the same way as its competitors was not good enough for Harley Davidson, so Schmidt set about setting the company apart from the rest.
He recalled a presentation in Switzerland (a country in which BMW dominated the market for heavy, slower motor cycles such as Harley Davidsons) to a group of potential investors. When asked how Schmidt intended to set Harley Davidson above the competition Schmidt said he replied that he was simply going to get people to like them.
Explaining his theory, Schmidt said: “The brain needs to be disengaged for a moment, with the thought process taking the mind further than just the product itself. If everyone is selling pretty much the same product then those people who will do business with us will be the ones who like us.”
Schmidt said he believed that demand could not be created by metrics and statistics. “We are not a data and metric-driven society,” he offered. “We therefore needed to reach past the brain and reach the heart.”
He continued: “Think about it – humans do not behave rationally and logically. If we did we would never smoke, drink or gamble. We are emotional and therefore our emotions transcend rational thought. Is it rational to part with perhaps $24,000 for a new Harley Davidson when you can buy a perfectly good Honda for $8,000? The brain says buy the Honda; the heart says buy the Harley.”
The right environment
Schmidt described how the company set about creating an environment to which customers would be attracted. He showed a photograph of a Harley aficionado with a Harley tattoo emblazoned on his back as well as portraits of the original owners of the company.
“This guy is a living history of Harley Davidson.” Schmidt said. “His Harley Davidson tattoo is one of the most recognised tattoo patterns and it says: ‘Look at me!’”
Schmidt said this was a good example of how Harley Davidson meets a basic human need that generally goes unfulfilled most of the year round: to feel important, recognised, as well as part of an exclusive group.
“We are generally invisible most of our lives and we are creatures of habit. We shop in the same grocery stores, buy the same goods, communicate and purchase online (and thus invisibly) and don’t even remember half the time what we have purchased because it becomes meaningless.”
Schmidt said that if, on the other hand, a company made the effort to make someone feel noticed and special something incredibly positive happens.
“You only have a few short seconds in which to engage your customer so you have to move quickly,” Schmidt confirmed. “But if you can make your customer feel instantly better, reacted to and validated there is a 100 per cent chance that they will tell someone else about what happened to them and recommend that company in the process.
One bike at a time
In the mid 80s Harley Davidson set about recreating its brand, starting with a redesign of their bikes which they then let leash on the tough biking community of Southern California.
“Up until that point the motor cycle press had not been kind to Harley Davidson. However, these new bikes managed to make the front page of every bike magazine with rave reviews. We assumed that the customers would come flying in and basically waited for the stampede,” Schmidt said.
Unfortunately for the company this did not actually take place. Although customers were drawn into showrooms and were impressed by what they saw, they rarely actually purchased a bike.
“We knew we had to change the way in which we sold the product,” Schmidt confirmed.
Thus began a serious sales campaign, which had Schmidt and his team take to the road all around the States and Canada, with a trailer full of Harleys ready to offer to the public test drives.
“We knew we just had to sell the product one bike at a time,” he stated.
At the same time they undertook market research, finding out exactly what prospective bike owners would like to see differently about the bikes.
“Everyone seemed to be saying the same thing – could we not bend the framework to accommodate the shape of their body better.”
Schmidt says they struck on an important theme at this point – giving customers the ability to customise their bikes to their individual taste and design.
“Our parts and accessories booklet grew from about 54 pages to around 12,000, with tens of thousands of parts and accessories available,” he said.
Engaging the customer
The idea of listening to the customer and making them feel part of the company has continued to this day and is an important part of Harley Davidson’s company ethos.
“It continues the theme of making customers feel important and special and therefore they continue to like us and want to do business with us,” Schmidt stated. “Involving customers in the design process makes them feel part of the company and therefore want to support something that they themselves have created.”
Social networking has been an important tool for Harley Davidson even before social networking (via the Internet) became the buzz words they are today.
“We grew the Harley Davidson Owners Group from a small group of die-hards to a group of around 1.3 million individuals who all generate hundreds of millions of dollars for Harley Davidson’s muscular dystrophy charity via a continuous stream of social events,” Schmidt said.
“Harley Davidson owners have a sense of belonging and talk of being part of the family where everyone has a voice. The Harley Davidson dealership has become the focal point of that family,” he added.
The dream fulfilment business
Harley Davidson therefore learned to speak the language of the customer and as such, the brand began appealing to a broader audience.
“Riding a Harley Davidson has allowed owners the freedom to escape and relax from the dull daily routine,” Schmidt commented. “Our owners come from a wide background of careers – from welders to dentists to neurosurgeons. But the one thing they don’t talk about when they get together is work.”
He concludes: “Harley Davidson is about dreams, passion, freedom and individuality. Passion is powerful and if you can engage the heart you get the business.”