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acecycleins 04-15-2008 10:12 AM

I've been in this business for a decade and have watch cycles in sales closely because my livelihood depends on it. One constant- HD products sell with regularity in a higher capacity than their counterparts because of branding. Joe Rub WANTS that HD product and they are willing to forgo some othe the usual haggling steps to get it.

Ken- you haven't sold bikes until you get beat up in a Kawasaki dealer for an average $75 a bike for a month in commissions. That's a minimum you can starve on. The dealer is making about $300-500 a bike if they are lucky.

Harley builds the margin to retail a bike with a $2500 profit to the dealer. Most walk away happy thinking they bargined the bike down but the dealer still made a grand off the bike at point of sale. In todays bike world that's pretty healthy.

Guys like Earl Small starved during the AMF days and relied on Japenese bike sales to stay alive. Today, Earl pays the bills with HD and barely survives with the Asian bikes. It's wasn't superior build quality that got HD that way. Customers were treated better and walked away with what they thought was a good deal. That's what matters. They didn't and don't seem to care that their bikes retail price and selling price were thousands of dollars different (higher most of the time). All that mattered was riding that Harley. Now the bikes sell close to retail, but the margin is the same. Harley manages to sell a bike at a profit level higher than the competition because Joe Rub doesn't realize that retail value is still $2500 (18% roughly) higher than dealer cost. The market average for Japanese margin is lucky to be in the 10% range with high hopes to hit the 12-13% mark.

Perspective is everything in the bike sales business. Harley, like Mercedes, uses marquee and branding to sell the product. They aren't really better, but the name is everything and the resale is a factor. When all is said and done, you feel good about buying your Dresser for $19,980. The dealer put about $1200 in the coffers and Sales Geek made his $200+ for the sale. Everyone's happy and Mr HD Dealer will have a repeat customer in two years.

longride 04-15-2008 10:14 AM

Quote:

Originally Posted by seruzawa (Post 182478)
Ace, you are absolutely right about that. HD has a huge customer base that doesn't seem to care about d1ckering. They belly up and pay without demur. Other corporations would kill to have such loyal followers. Good thing HD doesn't sell Kool-aid.

It's interesting that BMW has a similar clientele. After the initial surge of K1200S sales the bikes are gathering dust just like the Vrods at the HD dealerships. BMW owners want traditional BMW would by BMWs even if they had to contend with freakish electrical systems, self-destructing rear hubs and a manufacturer that blames the customers for their bikes problems.... oh wait. They already do.

(25 lb test deployed)


Let me sum up what Ace meant here. He means that people buy Harleys currently purchase an inferior product at full price because they are too stupid to know any better, are sucked in by all the Harley hype, arent nearly as sharp and superior as those that buy a superior European or Japanese motorcycle. Get it?

longride 04-15-2008 10:18 AM

"One constant- HD products sell with regularity in a higher capacity than their counterparts because of branding."

Funny how that didn't work out from the 60's to the 80's when H-D sold to AMF and nearly went bankrupt 2 times after that. Did the brand change since then?


"Guys like Earl Small starved during the AMF days and relied on Japenese bike sales to stay alive. Today, Earl pays the bills with HD and barely survives with the Asian bikes. It's wasn't superior build quality that got HD that way. Customers were treated better and walked away with what they thought was a good deal. That's what matters."

So Earl Small treated his customers like shyt until AMF sold off, and then treated them better? Build quality had nothing to do with it? Do tell. This is getting funnier by the post!

acecycleins 04-15-2008 10:24 AM

Quote:

Originally Posted by longride (Post 182489)
Let me sum up what Ace meant here. He means that people buy Harleys currently purchase an inferior product at full price because they are too stupid to know any better, are sucked in by all the Harley hype, arent nearly as sharp and superior as those that buy a superior European or Japanese motorcycle. Get it?

You're wrong- I like the products and have had the pleasure of ownership. I am saying they sell based off fabel, myth and marquee. They don't sell a superior product. They sell a superior brand. Marketing got Harley where it is. Not build quality or warranty services.

longride 04-15-2008 10:29 AM

Quote:

Originally Posted by acecycleins (Post 182492)
You're wrong- I like the products and have had the pleasure of ownership. I am saying they sell based off fabel, myth and marquee. They don't sell a superior product. They sell a superior brand. Marketing got Harley where it is. Not build quality or warranty services.

If you are correct then I wonder why Harley spent all that money on new manufacturing techniques, new reliable motors, and quality control. All they needed was a new marketing team! I think you could have saved Willie G billions if you would have just told him that!

seruzawa 04-15-2008 10:43 AM

Quote:

Originally Posted by longride (Post 182489)
Let me sum up what Ace meant here. He means that people buy Harleys currently purchase an inferior product at full price because they are too stupid to know any better, are sucked in by all the Harley hype, arent nearly as sharp and superior as those that buy a superior European or Japanese motorcycle. Get it?

Settle down, Bro. He said that HD quality was as good as the Japanese, not worse. It is. But you can't deny the fact that a huge percentage of HD buyers don't haggle. They belly up, pile on the accessories and clothes and pay premium price with a smile. You've never met any? You think that's smart? Stand in any Harley dealership and you'll see 'em walk right in and plunk the $ down without question.

It's because of what they think HD stands for. I dare any other manufacturer to even come close the numbers of fanatical owners. When's the last time anyone saw a Honda or BMW owner tattoo the manufacturer's logo on himself? Probably never.

Good for HD. And today the buyers get a bike that doesn't spew oil over over them, shed parts or resale at less than 50% 3 years later. A bonus!

acecycleins 04-15-2008 10:48 AM

"So Earl Small treated his customers like shyt until AMF sold off, and then treated them better? Build quality had nothing to do with it? Do tell. This is getting funnier by the post!"

AMF's HD deal was a marketing disaster. If you look at sales numbers from those years it wasn't until the late 70's that things got so desperate they needed a wholesale change. When Willie and Co bought back the brand they did it with the intro of the FXR frame and the EVO motor. People were slow to react. So, from the late 80s to the late 90s they re-branded the image and started (in the 90s) dictating to the dealers how they expected the dealerships to be run. It worked. Were the 80s Evo bike different from the 90s bikes? NO! The idea was to instill brand and the customer would see the difference- eventually. They did. If AMF were never involved would Willie and Co have had the same issues as they did in the 70s? Hindsight is a bad thing, but if they had a marketing machine that is as well oiled as it is today- probably not. The bike aren't really all that different. The expectations of the employees is the difference. Shovels weren't terrible bikes. Quality may have been an issue but the loyal customer didn't care- even back then. The "true" Harley buyer knew what they were getting for the money. If you look the build quality of a 77 Yamaha XS750 it was no better or worse than a 77 XLH. Yamaha just marketed better in those days.
As far as quality control goes- everyone of these manufaturers has better quality than 20 yrs ago and advancements will continue for all.

sarnali2 04-15-2008 11:05 AM

Harley build quality, the Evo. motor and Ronnie Rayguns trade embargo is what saved them. They had to improve or they would have tanked in the early 80's. Harleys were always cool but a lot of people wouldn't touch them because of percieved quality issues and Shovelhead horror stories most of which were total bulls*t.

Here comes Vaugh Beals and the rest, along with a lot of anti Japanese sentiment at the time (remember Lee Iacoca's flag waving ads?) "saving" a great American Icon from the Japanese who were buying up anything they could get their hands on. Honda and Yamaha almost bankrupted themselves underselling to gain market share to the point Reagan encated a trade embargo on Japanese bikes. That gave HD enough wiggle room to get the new plants and designs up and running.

Harleys were cool again, people that had wanted one could now buy one with some kind of faith in the bikes reliability, HOG gave them sanctioned activities they could participate in, Malcomb Forbes and his Capitolist Tools made Harleys desirable for a whole range of customers who would never set foot in and old school dealership that now also wanted a Harley...It just grew from there.

Being the shrewed businessman they were, HD brass kept production behind demand this created a feeding frenzy atmosphere for every bike leading to waiting lists and surcharges and enough people "had to be cool and own a Harley" that fed the sales boom. It's a combination of putting out a high quality product coupled with excellent mangment and marketing that's got them where they are today.

With the current downturn and market glut they're going to have to rely on customer service to see them through like everyone else.

longride 04-15-2008 11:19 AM

I'd say I disagree with just about everything you said. Harley was in trouble in the 60's and needed to sell of because their market share was dwindling because they were about 10 years behind the times. They sold outdated bikes at high prices, and the Japanese and Brits were putting them under. AMF continued the trend and churned out more bikes with terrible quality, and drove all but the most loyal customers away. The Shovel may have not been a terrible design, but lots of the ones that came out of the factory were terrible. I owned 3 Shovels and an Ironhead 80 Sportster, so I know a bit about the quality of those bikes. My 79 CBX made a Harley of 79 look like a Model T! Customers were slow to react to the Evo? You would be too if you had 30 years of vibrating, leaky, unreliable motorcycles to live down. Saying the bikes aren't really all that different today as they were then shows you pretty much know nothing about Harleys. Come and take a ride on my 82 bagger and compare it to my 01 bagger. Not even in the same league dude. The 82 was outdated the day it was made, and the 01 has been as reliable as a rock. And you are also incorrect about build quality between the Japanese and Harley in the 70's. My 76 Superglide had horrible build quality. From cobby castings, to horrible looking welds, to badly designed and engineered parts. In 1969 Honda came out with the 750 Four and blew away everyone's idea of comfort, performance, reliability, price, and build quality. That was the death song for Harley if they didn't step up their game. Ask the British about that one. If you compare that 69 Honda to a 77 Harley, you would see the difference even those many years later. Marketing can't sell an inferior product. You don't make 20 straight years of record profits on marketing. Harley did a complete makeover from management to marketing to manufacturing. It all has to work to be successful. They have a brand to envy because they earned it. They went out and talked to what the people want to buy and they made that product, and it is world class. The Japanese take a different approach. They make a product, and then try to talk you into buying it. Those are the real differences between the two. There are as many reasons to buy a Harley as there are people that buy them. I chose an Electra Glide over buying a new GoldWing because I felt the Harley fit my touring needs better and was a better value to boot. I was correct on both counts. I didn't buy a brand. I bought a bike, so your theory, while comfortable for you to think about, is not correct in any way.

longride 04-15-2008 11:21 AM

"It's a combination of putting out a high quality product coupled with excellent mangment and marketing that's got them where they are today."

Bingo! Tell Ace that the Shovel is not quite up to the standards of your new Superglide while you are on a roll Sarnali!


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