Inside Harley’s Cult-Like Loyalty | Ken Schmidt on Turning Customers Into Believers

There's a secret Harley Davidson discovered that turned near bankruptcy into brand worship. It wasn't their engines, it wasn't their logo. It was something much simpler, something that every leader and business owner can do right now to make people fall in love with what they do. Today I'm sitting down with the man who helped make that happen, Ken Schmidt, the voice behind one of the greatest brand turnarounds in history. And together we're going to uncover how noise, not marketing, creates domination. So let's go for a ride. Welcome to the show.

Well, thanks for having me, Jason. Great intro. I loved it.

Ah, thanks so much. Now, Ken, take us back to those really early days at Harley Davidson. That was when what was really happening behind the scenes when you joined and how close were things?

What was happening behind the scenes at that time is, to be honest with you, what I see behind the scenes at a lot of businesses, especially bigger, older manufacturing type businesses where sales decline, and Harley's case declined very sharply to the point that the company was hemorrhaging red ink competition, mostly from entirely from overseas. Companies were selling products that did the same things that Harley's did, but priced a lot less. So you had that weird kind of commoditized market dynamic and you had this internal belief, and this is the sin that condemns everyone to a life of struggling hell. The sin was this belief that if we just improve our product, we make the product better, make the product even more awesome. Hearts, minds and dollars are going to flow back our way. So that was the mindset. Let's fix everything that needs to be fixed as quickly as we can fix it and then things will get good and hardly proved. And I see it all the time. It never works. It just never works.

Yeah. So what was that first moment that you realized that the company had to stop focusing on the product and start creating a sense of belonging.

A great question, because what started to happen? That there was a very intensive effort within the business to improve the quality, reliability, rideability of the motorcycles. And that was indeed happening and became the subject of all these manufacturing renaissance stories and books that were written about how the struggling company did that. And the, the big aha moment, if I can get away with such a weak cliche. There was when the new engines were introduced and new chassis were introduced that the motorcycle industry, the motorcycle media who had, were staunchly anti Harley at that, by that point were putting Harley on the covers of all the magazines saying these are the best bikes being built in the entire world. And everybody were celebrating and yay. Victory. The hard times are over. And you would have thought, giving all this incredible praise, that everybody was going to be charging into Harley dealerships to buy new bikes. And yeah, a bunch of people did come in, especially people who'd been sitting on the fence and maybe considering it, but there was no tsunami of bodies coming in. And I was like, oh, what else are we supposed to do? We're giving the market the best stuff and they're not buying it. And what was interesting as we made some very happy accident discoveries, things that we had not intended to see happen, that were born out of, frankly, desperation. And what we did was an internal conversation. We were saying if people could just ride one of these things, they'll see for themselves. They'll see what the people at the bike magazines are seeing. They'll see just what a great bike it is. So we took all of the money that had been earmarked for marketing, which wasn't much because the company was essentially broke. But we stopped all marketing, all advertising, all promoting, all discounting, all dealer co op stuff, and invested that money in leasing two semi trucks that we could load with bikes and take out in the field, blue collar cities in America, your Cleveland's, your Detroit's auto industry type town, and put the signs up and anybody that wanted to take a bike for a ride could come and take one for a ride. And what we discovered was a couple of magical things happened. First, we were getting tremendous feedback, unprompted feedback from riders that like, wow, this is the first time we've ever stood toe to toe with people from the factory. We've been in dealerships, but we've never seen the people behind this stuff. And what a lot of them immediately did was lapse into complaining. Let me tell you how disappointed I've been in what you've done to this brand. Your logo's been tattooed on my body since the Korean War and you don't race anymore and you don't support warranties anymore and the quality's gotten so crappy. And we would go back and report to at that time, the senior leadership and say, people want to tell us what they think of us and they've never had the opportunity to do it. But at the same time, they're also telling us what they would like to see us do. What would happen if we got every member of the senior leadership committee, you're going to work with the demo truck next week. You're going to stand and talk to all these customers and yeah, you're going to get some high fives and positive comments on the new stuff. But you're also going to hear this negative stuff because when, if I'm telling you, Jason, what somebody else is upset about, it bounces off, right? It's oh, sucks for them. But when the person who's upset is telling you directly, that hits you right in the heart, right in the gut. Wow, these people are upset with us, but they want to see us do better. They're upset with me. I don't like the way that makes me feel we need to turn this around. And that's when we made the first kind of decision that would pay dividends for the next 40 years, is we're going to be the most visible hands on people in our industry and constantly ask people what they want to see us do. Because in the big discovery was 100 of people. If they're standing right in front of you and you ask them a question, they'll answer the question. They're not going to fill in the survey or you're going to get weak information that you can't act on. But wow, when they're telling you, I need the handlebars bent up higher so I don't have to reach so far, I need them wider, I need them lower, I'm tall, I can't reach whatever these things are. That was all simple stuff for us to do. I would just put punch a few buttons on a CNC machine and we sure we could bend bars that way or bend levers that way. Things started to click and again, I'm sorry for such a long wandering answer here, but that was when the discussions of being more human as a business took hold. Where when customers were saying that they felt like they knew us or I know I talked to somebody at the factory, I know them, I know how hard they're working. Now, the impact that has on the reputation of a business where most businesses are completely invisible to their customers. It gave them something to talk about, a reason to like us, to prefer us, to root for us if you will and come back and spend more time with us. So then we basically just said, all right, let's weaponize this.

When you were sharing that insight with us, I was thinking how true it is that it doesn't matter how great a product is on paper, it can be the best product in the world, but until someone gets a chance to experience it, they really don't understand.

The other thing is, and the big takeaway that we had from this is that if we asked people, anybody in the street, what's Harley Davidson. What's Harley Davidson do? The answer was always the same. They make motorcycles. And he said, what does Honda do? They make motorcycles. What does Yama they make. There's a problem here. And the problem, at the end of the day, if all you're known for is what you do, 99 times out of 100, it's really obvious what you do. You're a plumber, you make software, whatever. If all you're known for is what you do, you're not competitive. Because people need to be able to attach human qualities to a business. If you want to be seriously competitive, if you want to build loyalty, if you want to have resonance, if you want to deliver things for customers and potential customers that they remember and come back for more of and experience, that needs to be the focus of your effort. They need to see that happening. And absent that human face, absent the human quality, you're a company that makes stuff, and I'm sure it's really good, but you better price it a little bit lower than the other guys that are also making that really good product, or I'm not going to buy from you.

Yeah. So for those listening along to the show, watching the show at the moment, what you might not know about Ken Schmidt is not only has he been in the trenches and done the work, he's now helping organizations across the world transform the way they create or gain attention on their brand. One of the ways he does that is as a keynote speaker. And I've been blessed to be in the room with Ken delivering a stellar keynote presentation. And I know, Ken, during your talks that you mentioned that people aren't loyal to products, they're loyal to people. Why do so many brands still get this completely wrong? Regardless of the fact that there's experts like you that have done it and proved that it is really that human touch that makes it.

It's kind of nice thing that people have, but it's misguided and it's. They're so proud of what they're doing, and rightly, they work really hard to make and to produce or to sell or promote whatever it is that their business exists to do. And they are fully convinced that's the attractive or, and, or, you know, they came up in the business. I've been making furniture in my family for three generations. This is what we know how to do. And when you try to explain to people that, again, what I said earlier, if all you're known for is what you do, you're not competitive. They always take a half a breath because they're reacting like they want to punch you in the nose, but at the same time they think, hey, wait, maybe he's right here. This is something that we don't think about. And we market and we do all the traditional stuff that we're supposed to do, and we go to the trade shows and we show our stuff and we have our website and our brochures and our marketing people and our sales people. We do all of that. But it's virtually identical to what the people were competing against are doing. And they don't look at the business from the outside in, because if they did, they'd realize that, geez, we're kind of lost in a sea of vanilla where everybody looks the same, everything's good, everything's reliable. All these people are trustworthy. But I don't have any reason to like you over your competitors, so I'll go on low price. That's why Amazon exists.

Yeah. But nonetheless, Amazon still has a very strong focus on that customer experience. They might, in many categories be the cheapest in the.

But even if they're not, that customer belief that. That nobody in the retail world has done anything for me that I like or prefer has done anything to foster with me or have any real level of human engagement or the kind of experiences that I think are positive, worth returning for. So I'll just hit a few buttons and be done, and the box will show up and life will go on.

And if you're not happy with that box, unlike the retail experience, five seconds later, you can have. You return. Poof, it's gone.

Beautiful.

Gone. Yeah. Talk about being customer. I think it's one of the. Unfortunately, one of the few examples of a company that has tested the time and remained passionate or committed to that ethos of we've got to get it right for the customer, and then we follow with the. Making the production.

I'm glad you're saying that, Jason, because so many times if I'm talking to business people and we will talk about Amazon, that's easy for them. You know, they've got so much money to play with. I said, what do you mean, easy for them? I said, no, they decided to do this and they're doing it and they're reaping the rewards from that, which is why they have all that money. They just threw it in the box and shipped it to you. You'd never go back or you'd hear bad things said about them. They said, this is what we're going to do. It is not to inject Enthusiasm and some visible passion into what you're doing and legitimate empathy and care for the people that you're serving. That's not capital intensive, that creates capital.

And people forget that. There were many years where Amazon, despite market pressures, continued to make losses and not once shied away from what they decided on, which was getting it right for the customer. Now they help generate one of the richest people in the world. So they clearly got the formula right. Talking about getting the formula right, though, there's a few brands in the world where customers are so fanatical they go out and get tattoos. Harley Davidson is absolutely one of those. How though can businesses today build that kind of emotional connection with their customers where maybe it's not a physical tattoo, it's the next best thing to it. What would be a business's first step to. To get on the journey of creating that level of emotion?

Here's what I Because the tattoo is such a visible manifestation of loyalty, the confusion that we had at Harley is we believe that was they were showing people tattoos are showing loyalty to their motorcycle. And as we got smarter, we learned no, they're professing their loyalty to the people behind the motorcycle. If we do things for them that make them feel better about themselves, that is, if we, instead of selling people stuff, focus first on delighting them. What you were just talking about with Amazon a minute ago, if you put the customer at the front of everything I say, how would you like to feel in any type of buying environment or any even transactional for once in your life? Wouldn't it feel nice to have somebody show you a tremendous amount of respect or to light up when they see you or to hear in their voice a level of passion and enthusiasm and commitment that where you would sense this is, this isn't what I'm used to. This is quote, unquote delightful. The science behind it and it doesn't show up in a lot of books, but it certainly should. Is that the human species, we're joy seeking species. Given the choice between pain or mediocrity or happiness, we'll choose the joy, happiness, delight thing every time is all humans will return to any source of delight in their life until it fails to delight them. That's what loyalty is. And if we focus our effort on yes, we're going to serve you yet we're going to provide great service. Right? Every business in the world says they do. But if we're going to focus first on being a source of delight for you, which requires maybe saying some things that you didn't expect to hear. So it's not the can I help you? Approach to businesses. What are you doing this weekend, man? Tell me about that. And then as that person is answering that question, you light up like they're telling you the secret of the universe. That is so cool. Tell me more about that. And as long as you're showing interest in that customer, that person on the other end of the phone who might be calling in for the first time, it's knocked back like somebody's asking me questions about what I'm doing this week. I'm in a hurry, but I'm going to answer those questions because somebody showed an interest in me. I like the way that feels. This is a business that's building preference because I can buy the same stuff from somebody else. But I like you a little bit better because you made this effort for me. I'm seeing your face even though I can't see you. I'm just talking to you on the phone, but I'm seeing somebody. And that face is being burned into my psyche that I'm always going to associate with this business because that's human. And, man, when you can cross that and get people to react and think of you in those terms because you've made the effort to make that happen. But that is a differentiator in the marketplace that's extraordinarily difficult for competitors to copy because most won't even try.

Yeah, absolutely. I also think that what Harley Davidson managed to do, and in no small part because of the work that you led, was really amplify this sense of community. And the tattoo is obviously a very visible expression of, hey, I belong to this community. If I think of other brands that have fanatical customers that get tattoos, like Apple, for example, there's a lot more people that don't have tattoos. I would think this is true for Harley Davidson as well. And Apple, there's a lot more people that are actually fanatical about the brand that don't have tattoos, but they. They want to be part of what they believe that community means, what that brand means and how well the brand can create that conversation around. We're more than just a pile of metal and formed metal and bolts and nuts and all those sorts of things. It's creating that community. And I think that's something that I don't want the audience to forget. It's about creating a community, about putting people.

I remember Jason, and this happened more times than I could count with. I would be with a major investor from the financial Community or someone from a domestic car company or a computer company or a beverage company. And we'd be doing some cross pollinization, looking back and forth, benchmarking against each other. And I would bring them into one of our environments, a large motorcycle gathering. And people are always curious because they felt like they were on the outside looking in or that they wouldn't belong. And obviously don't ask me to speak for these people, just ask them a question yourself. And you're going to be so surprised by the way that they answer you because nobody's going to talk about the product. Nobody's going, oh, I really like this one because it weighs 800 pounds on the get, 61 pounds of torque at the rear wheel at 3,500 rpm. I mean who remembers that crap? Nobody. But that's what people would think that oh, they're so drawn and they're so drawn by the hardware. And they would hear people say, especially when the demand for Harley's outweighed supply for about a 10 year period. They said, what kind of bike do you have? I don't have one yet. What kind do you want to get? I don't care what kind I get with specific model. I just, I have to get a Harley. I went in on this, I want to be part of this. And I say, can you imagine in any industry, for any product or service makes when people felt that drawn to something? And again, the product was the catalyst but it was the people and the energy in the community that they said, I can't get this anywhere else. I don't have a lot of friends or my, my social calendar is not full but I can come and do things like this and be around like minded people and have a lot of fun and brag to my friends and then they're going to want to come. Community is wow is so incredibly potent and powerful. And it's another one of those things where businesses. That's not something that we could do here because our company makes back office software for the dental industry and that's boring. Do you ever have meetings? Sure. We have trade shows and stuff. So you're in a room full of building full, a hotel full of like minded people. They're all there, they're waiting. What an opportunity. Let's have an event, let's do something for. Let's just get them all in the same room at the same time, all speaking the same language under your umbrella. You're getting the benefit, you're getting the credit for bringing folks together. Why wouldn't you want to do that?

Yeah, why wouldn't you? Indeed. So, Ken, you've said before that every business must answer three questions. What do people say about you? What do you want them to say? And what are you doing to make them say it? Which of those three questions is the hardest for leaders to face honestly, and why?

I would say number two, which is what do you want them to say? And I know that because when I'm consulting or doing training with the business, if I'm speaking just with the executive leaders of the business, picture six people sitting around a boardroom table. I'll say, everybody, pull out a pen and a piece of paper. You're gonna have a little quiz. And I want you to imagine right now that somebody that you or someone from this business has spoken with somewhere along the line, last week, last month, last year, as a prospect, it was a customer, but as somebody that you would claim that your business has a relationship with because there was some conversation, some engagement, could be a long term customer, and that person sitting on a flight, on a plane, next to a human being that you would envision as the single greatest, biggest, most important customer that you could ever have. This is a whale. This is somebody that you've never been able to get a meeting with, never been able to sell anything to, never been able to get to answer any of your calls. But having this person as a customer would change everyone's life. Millions of dollars of business. And that person is explaining a problem that he's having at his business to this other person who you claim knows you. And that person knows that you could solve this person's problem. You could sell them what he's or she is looking for. What would you want this person who knows you to say about your business in this extraordinarily important conversation? And you have 60 seconds to write down your answer. Give them 60 seconds, because if I gave more, they think about it too much and please pass them in. And if there's six people getting six radically different answers, I said, now, do you think that's a good thing that the people in charge here, people running the business here, don't know how you wish to be described and remembered in the market, spoken of, and important conversations like this that you know are happening at every trade show in the world right now, and say you have 500 employees, 5,000 employees, 50,000. 50,000 employees in your business would have 50,000 different ways of describing what you're about here. That's a problem. That's what we need to work on. And if you think that people are going to describe you by using language like they have a laser, like focus on quality or their people make a difference, they have great service. The only time that would be of any benefit to you would be if they didn't describe any of your competitors that way. And they would, because that's how you describe your competitors. So therefore, what we need to focus on is what do we want people to remember? Because that is the essence of, to me, of what experience is. Experience is what we remember. And I remember you positively. They're awesome. I love these people. What a great business. What great people. They remember you negatively. They suck. And we've all said that about businesses in our lives. And then there's about the 80% of business interactions we've had that are in the middle of that spectrum. And that's all the times that we got what we wanted, heard what we expected to hear, heard what we've heard a million times before, got what we paid for, and remembered absolutely nothing about it. And that's your challenge as leaders of this business. How are we going to be remembered? Let's focus on a being delightful, putting that human face on the business so that they prefer us be a source of delight for people, but also create a vernacular about who we are as a business that our competitors aren't using and claim that space before they do. So we're going to strike words like, you know, quality from our business descriptions and customer service. Those are the givens. Yet we can get to that if people want to talk about it. But let's come up with something else to hang our hats on. Maybe this is a conversation for our marketing people. I'll say, are you marketing people responsible for the reputation of this business when you're up talking to investors? I said, no, it's your job. Everything flows from the top corner office down in. What you say and do is what everyone else in this business will say and do if you make it. And then that's where we start. And it's always fun at first, but they understand the challenge. And they also believe that just being thought of highly for their product is enough until you explain to them that it's not. But. And then you literally see the light bulbs go, yeah, you know what? He's right. Our stuff does look exactly like our competitive stuff. And we have said the exact thing for the last 50 years.

Yeah, it's amazing how much we commoditize ourselves without actually taking into account what we're doing and forgetting at the same Time.

Yep.

Ken. As we draw towards the last few questions of this episode of Chats with Jason, it would be remiss of me not to talk about the elephant in the room in a lot of boardrooms at the moment. We've talked today a lot about the importance of the human touch, the human experience, but it's. Almost every boardroom is talking about how AI is going to be the silver bullet. It's going to give us more efficiency, it's going to reduce our costs, it's just going to fix every problem every business has had. I don't want to go down that rabbit hole. But in a world where AI is going to be playing a part in businesses, perhaps more so than ever, how do we keep the human noise alive in brands?

Oh, that's such a great question. It's coming up all the time. And what. It's always interesting to me to hear the internal arguments and discussions about this at businesses where they're saying people can tell that the stuff that we're doing, our social feeds, that that's, that's AI driven, or we're concerned that they can see it and that they're thinking of it that way. And I always say, you better find out, first of all, if you're going to be doing this. Second, I say AI is a. This is grossly oversimplified. AI is a tool that you can use and you're going to use it just like everybody else does. But AI can't convey passion and enthusiasm, wit, unless it's told to. And it won't be told to, because what you're going to ask it to do is extol the virtues of the business, the product, the thing that's being. So, yeah, it's going to do wonders for your internal processes and stuff that no customer in the world ever cares about. The customers having their five seconds with you, their 15 seconds with you, because they stumbled upon your website or they met you at a show or they walked into your store. If AI is going to be used as a tool, it has to have the same voice that you're favorite, most prized, dearly beloved employee would have speaking with a customer or a prospect. Because if that's not happening, you're still on the commodity track because all your competitors are doing this, too. So please don't, in the name of efficiency, believe that you can overstep humanity or that the AI, that the bot or the fake video or whatever can capture that. It can, to a degree, but by the parameters that you're feeding that man you have to be so careful because empathy and soul, we know when something is real and genuine. And I know that the lines are getting blurred, but it's like somebody telling you when you're explaining one of your problems. Oh, yeah, that sucks, man. That guy's not even listening to me. I didn't. That sucks, man. Oh, what? Oh, geez, I'm so sorry. How did that happen? Oh, okay. That's a human response. Something that's harder for AI to engender. But again, when everybody's doing it and everybody will be doing it, it will become so vanilla, the businesses will lose their humanity. Called businesses. Now you're getting a chatbot. So many of them, and it's like, see you. See ya. Yeah, you're reducing costs this quarter. This year. Nobody wants to talk to a chatbot. That chatbot's not gonna ask me how my kids are doing in school, whatever that is. That chatbot's not going to sound genuinely delighted to hear from me. This is not going to happen. But people think they can get along fine without the human touch. And I just say good luck to those people.

Yeah, I think we're absolutely aligned there. Ken, as we go to ask the last question to close out the show, you've lived by a powerful motto all your life. Never do what's expected. Make yourself as noticeably different as possible and have a lot more fun than you're supposed to. How can leaders today give themselves and their teams permission to live by that motto?

Oh, I love it. Just simply by saying, I'm so proud of what we're all doing here. Let's change, let's have some fun. Let's become something that the outside world is going to look at with tremendous envy. And it's not going to be just about the thing that we do. It's going to be us as people. What can we together do to be noticeably different? Why is everything that we do, because we're in the financial services industry blue like all of our competitors? Why shouldn't we be green or orange or yellow with lightning bolts? Let's talk about that. Let's just convene and have some meetings with some cross functional groups and talk about, like, fun ways to make things distinct and memorable. Because what starts to happen is people realize, hey, all of these things are possible. All these things are doable. I'm being asked for my input, which is also cool and fun, but it also helps shifting the mindset that says, okay, things, we can change and do things differently here. We just need to pull the trigger and decide this is what we're going to do and then do it. The worst that can happen is we try something that doesn't work as well as we hope, but then we just resharpen our edges and do it again.

What a great way to end the show. And remember, whether your last name is on the building or not, we all inherit something old habits, old expectations, or old ways of leading. But the true successor is isn't the one who repeats the past, it's the one who dares to reimagine. And when we do that, when we transform the experience, we transform the business and the world around us. I'm Jason S. Bradshaw and this has been another episode of Chats with Jason. Hey, just quickly I wanted to reach out and say thank you for taking the time to listen to this episode of Chats with Jason. I'd really appreciate a five star review view on your favorite podcasting app. Or if you're watching along on YouTube, give me a thumbs up and show that you like this video. And be sure to subscribe so that you don't miss out on the awesome content and the great guests that we've got coming up for you.