Paul Loveday
‘Learning From The Negative’
‘Learning From The Negative’
‘Learning From The Negative’
‘Learning From The Negative’
‘Learning From The Negative’
Importance of Customer Care
Importance of Customer Care
Importance of Customer Care
Importance of Customer Care
Importance of Customer Care
“Find out what your customers want and sell it to them at a price they are happy to pay” – Henry Ford
The famous motorcycle company, Harley Davidson, once followed this simple advice that was freely given by one of the world’s richest men. But the company almost went broke; so what happened?
In 1954, Harley Davidson held 71% of the entire world motorcycle market – a feat unmatched by any automotive manufacturer before or since. They now hold 11% of the entire market – you may well ask “how can you lose 60% of your market?”
As Henry Ford had advised, the Harley Davidson marketing department undertook extensive market research and came up with a list of proposed products to take the company forward over the next 50 years.
They proposed the production of a lightweight city bike, a motor scooter for the ladies, a trail bike, a mini bike for the kids, a café racer and a personal snowmobile – and all these designs were put into production. Many of the new models and some parts we manufactured in Europe as the new designs did not fit the established corporate culture of the Wisconsin assembly plant.
One would have to conclude that this was a company on the right track. Harley Davidson was leading the world in innovative motorbike design. But none of these products are still in production!
The problem was the Harley dealers who wouldn’t push the new range. They claimed it was too expensive to develop a new market for the lightweights and they further claimed the new bikes didn’t suit their established customer’s image. They had to protect their margins and they “didn’t want to look after a bunch of Nancy boys who wouldn’t buy a real motorcycle.”
The Harley dealers had whittled their territory down to the ‘good old boys’ and Harley Davidson backed their dealers and stopped production!
However, Japanese manufacturers, notably Honda, had studied similar market research and in 1957 went into production and started exporting to the USA.
When Honda set up for business in the US, they didn’t approach existing motorcycle dealers, they formed brand new franchises and those franchisees didn’t see their first shipment of bikes until they had ordered and paid for all the spare parts Honda deemed necessary. This was Honda’s way of taking advantage of one of the major complaints from Harley owners, the poor availability of spare parts. Honda understood the value of caring for the customer.
Care for the Customer and Care for the Company are often seen to be at odds with each other. We can plot this on a simple 10/10 graph. The vertical side of the graph is Care for The Company, the horizontal side is Care for The Customer. Most small business people, when asked where they would plot their company, choose 5/5 to 7/7. On such a graph, Harley Davidson plotted 6/6. Compare that with Rolls Royce who plot 10/10.
How is that working for Rolls Royce? The cheapest Rolls in Australia is approximately $745,000 and the dearest is $1,330,000. Since being acquired by BMW, Rolls Royce have a 15-month waiting list on all models; they can’t make their cars as fast as people want to buy them! You can look after your customers while really looking after yourself.
So, what can we, as business people, learn from the Harley Davidson story? Look at the second part of Henry Ford’s advice, “sell it to them” he didn’t say “sit in your office and hope they’ll buy it”, you have to get out there and sell. And that might mean developing new markets because you can be absolutely certain that the market you think you know so well is constantly changing.
You can choose to be a 6/6 company like Harley Davidson or a 10/10 company like Rolls Royce. Above all, remember that customer care never goes out of fashion.