How Does Harley-Davidson Build Long-Term Customer Relationships?

Questions and Answers

How does Harley-Davidson build long-term customer relationships?

As noted in the text, there are two major building blocks for customer relationships. One is customer satisfaction, the other is customer value. Both of these can be discussed (however, customer value is treated more fully in question 2). But students should also be prompted to identify specific tools or programs that HD employs to help build customer relationships. Among these are HD's sponsorship of the Harley Owner's Group (H.O.G) which includes events, publications, and other means of facilitating customer-to-customer interaction.

What is Harley-Davidson's value proposition?

The text defines customer perceived value as the difference between all the benefits and all the costs of a market offering relative to those of competing offers. This video case does not really focus on the costs of owning a Harley, but that can certainly be discussed with students. The price tag is high. Non-monetary costs like storing the bike and not being able to use it during cold and rainy seasons might also be considered.

However, the bigger focus here should be on, "What benefits does a Harley customer receive?" Early in the video clip, Joanne Bischmann, VP of Marketing, seems to summarize this element of the value proposition. Harley-Davidson stands for independence, freedom, individuality, expressing one's self, adventure on the open road, and experiencing life to its fullest. This is what people are buying when they buy a Harley.

Relate the concept of customer equity to Harley-Davidson. How does Harley-Davidson's strategy focus on the right relationships with the right customers?

The case does not overtly treat these topics, but there should be enough information that students can make some sound observations. Two things need to be considered in discussing customer equity: loyalty and profitability. Figure 1.5 in the text illustrates the concept of building the right relationships with the right customers. While HD might generate revenues and profits through some Butterflies, their main focus seems to be on the True Friends, the long-term customers who are also profitable. Harley's core products (the motorcycles) are high-dollar and high-margin products.

A customer buying one such product contributes a certain amount to HD's bottom line and is therefore "worth" a certain amount. But customer equity grows dramatically when such customers buy consecutive bikes either for themselves or for spouses or other family members. Add to all this the opportunities for further transactions through the purchase of accessories, clothing, and other HD licensed items, and the potential for building customer equity with such a loyal core of customers is tremendous.