7 things the car industry can learn from the motorcycle industry ... and (to follow in Part 2) Vice Versa

I have been very fortunate to work in the car and motorcycle industry with great brands such as Ford, Mazda, McLaren and the world’s most successful motorcycle company, Harley-Davidson. I have always been intrigued by the similarities and yet the differences between these two sectors and I firmly believe that each sector has much to learn from the other.

Over this two part article I give a perspective on seven things that the car industry can learn from the motorcycle industry and in part two, vice versa. Of course I am being a bit provocative. Not every motorcycle company and every motorcycle dealer does these seven things better, just in my personal experience these are seven areas of opportunity from which much of the car industry could learn. I would love to invite comments and dialogue around this.

Seven things the car industry could learn from the motorcycle industry:

1. Maintaining new vehicle margins at retail
2. Loving your owners groups, monetising the power of advocacy
3. Creating dealership spaces that customers want to "hang out in" over time
4. Making money out of personalisation through accessories, clothing and other merchandise
5. Keeping the excitement and drama of new model launches
6. Remembering who is the first customer; great Dealer relationships
7. Truly leveraging the power of social media

Those are the headlines. If you're still with me, and want to read on, let’s get into this in more detail…

1.      Maintaining new vehicle margins at retail

The reality of the gross margin that most Dealers achieve on selling a new car is pitiful. There have been and continue to be some exceptions with super car brands like Ferrari or the brief period where demand exceeds supply for a new model like at my time at Mazda when we launched the RX-8 but on the whole damaging intra brand competition, excess supply and the relentless chasing of sales targets and market share has turned the new car into a commodity purchase. This has never happened to the same extent in the motorcycle industry where new vehicle margins, on the whole are maintained protecting that part of the Dealers business. The key opportunity for car manufacturers and Dealers is to eliminate the worst excesses of intra brand competition. Customers don’t necessarily want big discounts, they just want to know that the price they are paying is fair value and that they are not being hoodwinked by an industry that has a poor reputation for transparency.

2.      Loving your owners groups, monetising the power of advocacy

It’s a well known fact that the Harley Owners Group, HOG, is the most successful in the world with over 1.2 million members worldwide. “HOG” members buy more expensive bikes, change them more often, buy more accessories, and more clothing and spend more on servicing than the average customer and they are more likely to recommend the purchase of a Harley to friends. But who are these strange people? Surely they must be obsessive lunatics whose lives just revolve around their Harley bikes and wearing waistcoats with patches and don’t drive cars? Wrong. These are the exact same customers who buy new Ford, Audi, BMW and Mercedes cars. They just happen to devote more of their leisure time to Harley. So how is it that the car industry has failed to sustain similarly successful owners groups that impact so positively on the brand and the business? There are a number of reasons but I think the critical one is the failure of manufacturers to embrace and to cherish these groups because they see them as a bit "nerdy". Poor strategy and lack of understanding of lifetime value is compounded by a form of elitism in many Marketing Departments exacerbated by rapid turn over of staff. I would love to see a car manufacturer really prove me wrong on this.

3.      Creating dealership spaces that customers really want to hang out in

During a management program called “Walk a Mile” Directors from the "Motor Company" went to work for a week at a Harley Dealer. I was astonished to discover that customers were coming into the Dealership on a daily basis just to “hang out”. Sometimes they would buy something, sometimes they would just chat with other customers and members of staff. Harley had created a dealership space that encouraged the customers to come in and see it as their own. And, between you and me, this wasn’t even a very good Dealer by HOG standards. Car Dealerships continue to be on the whole sterile, transactional environments built around the product and the sales process. That’s fine but it simply encourages a transactional relationship that does nothing to build long term loyalty to that space or to that brand. If you see a car brand that is changing this dynamic then let's discuss.

4.      Making money out of personalisation through accessories, clothing and other merchandise

Have a look at Harley-Davidson 2016 Full Year results on line. They earned $842 million in revenue from Parts and Accessories and $284 million in revenue from General Merchandise. Combined that’s 27% of the revenue that they made from motorcycle sales. And as for the margins… And although Harley arme unquestionably the best, they not alone in this among other motorcycle manufacturers. Car companies are typically woeful at selling anything other than replacement parts. Only Ferrari has ever really been able to monetise its brand in any meaningful way into related products. But why? This is worthy of a complete article on its own but I would love to see a car company genuinely embrace the opportunity to successfully extend its brand.

5.       Keeping the excitement and drama of new model launches

If people asked me the difference between new car and bike launches I would say "if you have a new model launch at a car Dealer and you invite 1,000 people, if you were lucky 100 will turn up. At a Harley Dealer you invite 100 owners to a private new model reveal and 250 turn up!" When Harley-Davidson revealed their new 2018MY Softail models at the Annual Dealer Show in Los Angeles, the Dealers from around the world were literally the first people to see the new bikes, and the next day they started shipping to Dealers. They hadn’t been shown at a press launch at a motorshow two years prior to launch, or done so many press test rides that by the time the model was launched to the Dealers it was already old news. And I bet it was a great party too! Harley, and other motorcycle companies have managed to maintain the excitement, drama and fun of new model launches and that extends through to customers who want to be the first to order and to test ride.

6.      Remembering who is the first customer; great Dealer relationships

With some notable exceptions the relationship between car manufacturers and the Dealer partners tends to be cold and at times adversarial. I think that the motorcycle manufacturers have done a better job in remembering who is their first customer, the Dealer partner, and have maintained better Dealer relationships around the world. Not a universal truth I admit but I have seen it enough to believe it is a fundamental difference. And from a foundation of better relationships between manufacturer and Dealer comes a more productive approach to problem solving and to creating better outcomes.

7.      Truly leveraging the power of social media

I believe that car companies, with relatively larger marketing budgets and more sophisticated marketing departments have not learned to harness and leverage the power of social media in the same way as some motorcycle companies. I think in a way the limited budgets of the “bike brands” have encouraged them to become much more scrappy and innovative as they don't have the money for traditional ATL marketing. If this comes as a surprise to you, do a simple test. Go onto Facebook and Like / Follow a couple of the motorcycle brands eg Harley and Triumph and do the same thing with a couple of the big car brands. In my experience you are going to be served much more and more interesting and relevant content and other links from the motorcycle companies that draws you in and encourages you to get closer to the brand. I think this remains a major untapped opportunity in the car industry. Maybe if you asked one of the car companies to reduce their budget by 50% you might see more scrappy creativity unleashed but I don't know which Marketing Director is going to volunteer for that...

So that’s my list of seven. I would love to hear your thoughts on this. Have I got this completely wrong? Do I have a natural bias because of my time at Harley-Davidson? Have I missed something major?

Tune in next week for my perspective on the other side of the equation. Seven things that the Motorcycle industry need to learn from the car industry.

To follow…

Seven things the motorcycle industry can learn from the car industry...