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May 15, 2014 Strategic Management Europe North America

Triumph Motorcycles: The Rise, Fall and Revival of an Icon

Leadership

When motorcycle daredevil Evel Knievel attempted the longest jump of his career — 141 f eet over thef ountains at Caesar ’s Palace, Las Vegas, on New Year’s Eve 1967 — he did it riding a Triumph. It was a logicalchoice given Triumph’s reputation f or perf ormance and scorching acceleration. The bike’s 650cc twin platf ormengine set the land speed record — 214.46 mph — as the world’s f astest motorcycle in 1956, a t it le it held(save f or 17 days) f or 17 consecutive years.

Today, Triumph is the f astest growing motorcycle brand in the United States. Not only has Triumph NorthAmerica experienced 29 months of sales growth, a 157% increase in revenue and opened 50 new retail stores,the company has almost doubled the annual volume of new motorcycle sales on the continent. The high-speedgrowth of Triumph is the result of an aggressive new strategy driven by North American CEO Greg Heichelbech.But, the journey of this century-and-a-quarter-old icon has been f ar f rom an easy ride.

Heichelbech detailed the history of the storied Triumph brand and his vision to make it the market leader at therecent Retail and Consumer Goods Growth Summit organized by Knowledge@Wharton, Wharton’s Jay H.Baker Retailing Center and Momentum Event Group.

The company began af ter Siegf ried Bettmann emigrated f rom Germany to Coventry, England, in 1885, andbegan selling bicycles as the Triumph Cycle Company. Three years later, the f irm manuf actured the f irstTriumph-branded bicycles and by 1902 had added an engine to produce its f irst motorcycle. World War I was aboon f or the company, which provided more than 50,000 “Trusty Triumphs” — the Model H Roadster of tencited as the f irst modern motorbike — to the Allied f orces.

“I pulled the staff together in a conference room and spent the day asking, ‘What’s wrong with yourdepartment?’ We ended up with 300 large Post-it notes on the board.”

“The Trusty Triumph saved their butts many times,” Heichelbech noted.

Triumph expanded into automobiles with its purchase of Dawson Car Company in 1921, but it split the carbusiness f rom motorcycles in 1936. Over the next f our decades, Triumph would introduce the parallel twinplatf orm engine, set multiple speed records and race victories, and cement itself as an innovator andperf ormance leader. It became popular with the likes of Steve McQueen, Bob Dylan, Elvis Presley and othercelebrit ies, imbuing motorcycling with a sheen of glamour and dominating motorcycle sales worldwide f orextended periods.

The glory days of the 1950s and 1960s came to an abrupt halt, however, with the introduction of the Honda byJapan.

Rise and Fall

“Triumph had a quality problem,” including persistent electrical problems, oil leaks and carburetor issues, saidHeichelbech. “The BSA Group bought it and then sold it to Norton.”

Union and management turmoil ensued, and in the late 1970s, the government stepped in and the Triumphbrand became def unct. Then in the 1980s, real estate developer John Bloor stumbled onto the Coventryf actory grounds. When he bought the land, he also got the rights to the Triumph name. Although the lore isthat Bloor had never ridden a motorcycle, rather than bulldoze the f actory, he decided to retool it, adopt someof the Japanese manuf acturing techniques and create new, innovative, world-class products. A f ire leveled thef actory in 2002, but Bloor rebuilt it . Then in 2008, when the world f inancial crisis hit, the motorcycle marketcollapsed.

“Sales of U.S. motorcycles across all brands dropped f rom 650,000 units to 375,000 units,” said Heichelbech.

Heichelbech grew up riding dirt bikes and racing motocross. Milwaukee-based Harley Davidson was in hisbackyard. Af ter earning his undergraduate degree in marketing at the University of Wisconsin in 1989 (lateradding an MBA f rom Loyola University), he decided to apply f or a job at Harley. Among other things,Heichelbech noted that Harley was known f or its f ierce loyalty to American manuf acturing.

“If you drove a f oreign car, the interview was over,” he added. “I drove a Ford at the time and I got the job.” Forthe next two decades, Heichelbech steeped himself in the industry, traveling the world on Harley’s behalf andworking his way up the corporate hierarchy through posit ions in f ield operations, marketing and dealerdevelopment. A number of his colleagues ended up at Triumph and suggested he come over.

“I looked at the brand, and it was really the best opportunity out there,” he said, adding that t he chance torevive a brand that had once been as strong as Harley was a powerf ul incentive.

“I wanted it to be the dominant import brand,” he noted. Heichelbech became CEO of Triumph MotorcyclesNorth America, the global company’s largest subsidiary, in November 2010 with responsibility f or U.S. andCanadian sales, marketing and distribution. At the time, the division employed 50 people, generated $74 millionin annual revenue and distributed motorcycles through 165 dealerships. When compared with Honda, Yamaha,Suzuki, Kawasaki, Harley Davidson, BMW and Ducati, Triumph was at the bottom of the heap in North America.The primary culprits were lack of brand awareness, posit ioning and distribution issues.

“The idea is to give demo rides” to get potential customers to experience the thrill of the bikes.

The Revival

“Af ter 20 years in the industry, I knew what was broken,” Heichelbech said. “I pulled the staf f together in aconf erence room and spent the day asking, ‘What’s wrong with your department?’ We ended up with 300 largePost- it notes on the board. It was very helpf ul in determining the tactical changes.”

The next stop was the 14-member dealers’ council. “We were in Atlanta in January, and there was a snowstorm,of all things, so a one-day gathering turned into living with these guys f or three days,” he recalled “Let me tellyou, I learned a lot about what we needed to do and how to go to market.” The company’s business model wasbroken, Heichelbech added, and until the dealers were convinced it was f ixed, they were not willing to invest inTriumph.

Inf rastructure was a big issue. Triumph still relied heavily on Excel spreadsheets, according to Heichelbech,which didn’t make the company easy to work with f rom a dealer ’s perspective. The ability to match supply withdemand was compromised. “We couldn’t ship anything out of our warehouse due to poor systems, bad layout,the wrong inventory and aging inventory.”

In addition, since most motorcycle dealers carry three to f ive dif f erent lines of bikes, they have to work with 10or more dif f erent inf ormation portals or dealer management systems. These systems track and automatevarious components of running a dealership including f inance, sales, parts, inventory and administration. Thef eedback inspired Heichelbech to ditch his logistics department and use UPS f or inventory management, amove that raised his f ill rate, i.e., the ability to supply dealers with needed product, f rom 50% to 99%. He alsoopened a customer service operation that is available 24/7 365 days a year.

“We were the f irst in the industry to have one f or both dealers and our end customers,” Heichelbech noted. “Itf unnels all calls to Salesf orce.com, which also collects all data f rom social media.” The service line doesn’t relyon voice mail, he added: Within two rings, a representative answers. The operation f ielded some 60,000 phonecalls over nine months ending this past March.

“Our average close rate on an inquiry is 22 minutes, but it ’s of ten done in just f ive minutes,” Heichelbech said.

The other big piece of the puzzle was posit ioning and awareness. Who was Triumph? Consumers wondered,“Are they still in business?” and “Do they sell cars or motorcycles?” Heichelbech noted. He implemented astrategy based around building an emotional connection with the consumer and added some new approachesto the tradit ional marketing mix, which historically included attending rallies such as Sturgis Week, now in its74th year, and Daytona Bike Week.

“The idea is to give demo rides,” to get potential customers to experience the thrill of the bikes, he said. “We’dspend $100,000 and see 5,000 people [at the rallies]. The trouble is, half of them are what we in the businesscall ‘prof essional demo riders.’”

“I don’t want incremental growth. I want to be number one.”

If you go to Daytona these days, don’t expect to f ind Triumph there. Heichelbech has f ound more f ertileground with social media and a partnership with denim company Lucky Brand.

“The deal with Lucky Brand has been great,” said Heichelbech, while noting he’s been able gain broader visibilityf or the Triumph brand while spending considerably less money than the cost of being at the rallies. For

example, Lucky produced a self -promotional video that included Triumph Motorcycles provided by Heichelbech.

“It cost me just two motorcycles and I got 20 million views on YouTube,” he said, ref erring to a video that Luckyproduced that included Triumph motorcycles contributed by the company. He’s also worked with the clothinglabel to introduce a line of Triumph-branded clothes that includes T-shirts, sweaters and jackets.

“We sell more Triumph T-shirts at Lucky than we do at our dealers,” he added, but he also f ound a way toboost clothing sales at the dealerships. “I just put it in their stores: 10 leather jackets, 20 shirts, to make it realto our customers, so customers can f eel us,” Heichelbech noted. “I gave the dealers 180-day terms to sellthem and if they don’t, they can send them back.” Sales of Triumph-branded clothing have gone f rom $1 millionto $6 million in revenue annually in the last f ew years.

‘I Want to Be Number One’

Heichelbech has also expanded his media advertising buys beyond tradit ional industry magazines such asMotorcycle World to lif estyle publications including Men’s Journal and Sports Illustrated. But the appeal of hisproduct has broken the gender barrier.

“About 15% to 20% of our customers are f emale,” he said, spurred in part by Elena Myers, who won theDayton 200 in 2012, and rider/racer/builder Sarah Lahalih, who is currently customizing a Triumph Scrambler.

Since Heichelbech took over at Triumph, awareness of the brand and its heritage has grown, the number ofdealers has increased to 225, annual revenue has risen to $184 million and prof itability has increased by 200%.The company has also surpassed Ducati and BMW in terms of annual sales.

“I don’t want incremental growth,” he noted. “I want to be number one.”