B2C marketing in Japan: an assessment
The one where: I grade B2C marketing teams in Japan - in very broad strokes - even though no one asked me to
A topic that has come up between friends and I a few times following my recent post about Cosmic Bung is the overall landscape of B2C marketing techniques in Japan (we’re not boring, we just like marketing!).
Marketeers who have experience of working with companies in Japan during 2010 and 2011 were heartened to see Cosmic Bung's progression in attitude. Their experience of what marketing in Japan was...not negative...but certainly limiting. Alas, I had to report that Cosmic Bung were an exception and that B2C marketing had not changed very much.
In my experience* until very recently, only a few companies in Japan truly understood the power of data, segmentation, CRM or analytics. Most companies have tended to adopt a mass market approach, no matter the audience or appropriateness.
Things are changing slowly (most of the Japan based projects I’ve been involved over the last few years have involved data led strategy) but, objectively, companies in Japan are lagging behind best practice when it comes to several areas of data-led marketing, especially digital marketing.
There are several inter-connected reasons for this tardiness and in this post I will be discussing one in particular (a lack of specialists) and three off-shoots (departmental evolution, misfiring analytics and testing).
A lack of specialists
Around the the tail-end of 2013, while talking to a Director of Marketing I was working with in Japan (Nakata-san**), I was surprised to learn that the subject of marketing had only recently been added to the curriculum of universities in Japan***. Nakata-san had had to train up several marketeers herself and for the majority of them her training was their first exposure to several basic marketing concepts. This was despite the fact that she had inherited all of the staff in her department a year earlier.
Nakata-san told me that most marketing departments in Japan are made up of what others would recognize as either Sales or Operations staff, trying to do their best but severely disadvantaged due to a lack of training and know-how. Even discounting university education, marketing training was in short supply. This point has stuck with me to this day; I would say that 80% of the marketing people I have met in Japan were really sales people with marketing titles.
As I worked with Nakata-san's team and saw their interactions with other departments I recognized a chicken-and-egg situation I had seen in several other companies in several other countries...multiplied by a factor of fifty: because the marketing department had not shown its true value, there was a hesitation to develop it. Everything from getting access to existing databases, to buying relevant reporting software, to being allowed to use certain channels (to name just three) was an uphill battle for Nakata-san, with push-back across departments.
How marketing departments evolve
The fight Nakata-san had to coral channels was indicative of another problem in Japanese marketing. Organically growing marketing departments without having any marketing know-how can work if there are people who recognize that marketing is its own beast and learn about its peculiarities (tech start ups around the world are a good example of this). In mainstream Japan this seems rarely to be the case.
As recently as 2015 I have seen first hand how companies in Japan grow disparate, makeshift marketing teams. We'll call the company in question Rams JP****. Rams JP had five marketing-but-not-marketing teams that had grown out of IT (email marketing, e-commerce), Customer Services (social media marketing) and Business Intelligence (marketing planning and analytics). There was an 'offical' marketing team but they were only allowed to conduct direct mail campaigns (in 2015!). They also looked after the operational side of the company's loyalty scheme.
All of these teams took instructions regarding campaigns and offers from the Business Intelligence team, who weren't looking across channels in a holistic way. Decisions were made based on partner companies and rule-of-thumb rather than customer needs or behaviour. Even teams from the same department (e.g. email and e-commerce) would not communicate plans to each other.
What may surprise you is that Rams JP is the Japanese operation of a large US company. Rams US is known for their excellence in marketing and is usually at the forefront of best practice. If you read through this article again, you'll see that I have repeatedly said "companies in Japan" rather than "Japanese companies". Just as local companies have evolved with a lack of marketing compass, several overseas companies in Japan have also grown their marketing teams and departments from disparate sources. Teams establish their fiefdoms and in any business culture that becomes hard to re-channel into something different.
So far I've talked about how the lack of marketing specialists hurts companies in terms of skills and the way their departments evolve. I have seen both of these factors affect companies in Japan to varying degrees. The effect of analytics, however, has been consistently negative.
Let's get one thing out of the way: the Japanese are great at analytics. It's a caricature but it's true. I worked closely with colleagues at Mizuho for two years and they could spot things in numbers to an unerring degree.
So analysis in of its self is not an issue. The problem is the know-how involved with sorting what should be captured, analysed and disseminated. Too often, I have seen companies in Japan focus on the wrong metrics.
A case in point would be a previous client of mine who we'll call Fass JP. Fass JP is also part of a MNC originating from the US. Fass JP suffered greatly after the increase in consumption tax in April 2014. After a brief upward spike leading up to the hike, sales dropped worringly low for the remainder of 2014.
It was against this backdrop that a senior marketeer from Fass JP called one of my Analysts in a panic in late 2014. She urgently wanted to know why the average open rates of a series of B2C email campaigns she was managing was down an average of 300 every month for the previous three months. The marketeer was only ~200 orders off 2013's sales for the month, and was convinced that the loss of opens was inhibiting her matching 2013's sales.
Asking why opens are down is not an unreasonable question in itself, but in this case 300 emails accounted for 0.3% of the total send volume. What's more, we soon realized that in her haste to match 2013's numbers, the marketeer had increased the number of emails being sent from two a week to three a week...with no change between the second and third email (so customers were effectively receiving the same email twice in the same week). As we dug deeper, we saw that CTOR for the first two emails in a week was actually higher than yearly averages...but the landing pages for some of the emails had not been setup correctly, so there was an inevitable fall off in terms of conversions.
This sort of analysis is bread-and-butter to a marketing specialist but we had to spend two weeks or so educating the marketeer on the finer details of all these points (while she continued panicking about the open rate).
I've seen this kind of misfiring analysis repeatedly in Japan. The kinds of marketing analysis that are concerned with strategy and business objectives have been equally misguided.
I'm using the example of the marketeer at Fass JP because it underlined the lack of 'true' marketeers in Japan to me. (This lady was an accomplished salesperson and I'm in no way having a go - she was trying to make the best of the situation she had been put in.)
The situation also made me wonder how much better Fass JP may have fared during 2014 if their B2C marketing had been focused on building relationships, built on relevant analytics and focused campaigns in the years leading up to the tax hike.
A key part of that focus on building relationships is an area that the companies I have worked with seem particularly resistant to: testing. A large part of marketing is testing, amending and testing again. Contrary to the Japanese engineering philosophy of constant refinement and improvement, Japanese marketing departments seem wedded to marketing ideas because "that's how it's always been done". Data and metrics play little or no role in these decisions. There is no denying that some time the "if ain't broke" route is the best...but without regular testing, it becomes very hard to find unexpected connections with customers, efficiencies in marketing, and to spot trends.
Improving the situation
There is no silver bullet for improving B2C marketing in Japan. Whatever the size of organization, improvement will only occur with the support and commitment of senior management and it seems to me that a lot of senior management in Japan come from sales based roles. This takes emphasis away from fostering relationships and places them squarely on hitting sales numbers.
The irony here is that the essence of what Japanese B2C marketing is missing is what Japanese B2B sales teams are built upon. Salespeople take the time to get to know their clients, forge relationships with them (sometimes over the course of several years) and their service is highly personalized. It's not perfect and it's very Japan-centric but it's ahead of the B2C side of things.
To be honest, companies in Japan could just keep forging ahead as they have been and wait for the Internet of Things (IoT) and bots to shake up digital marketing in the next couple of years, and then tackle the new landscape. My worry is that companies who haven't even adjusted to multi-channel, data-led marketing as it stands now will once again be left in the dust. The companies who do best when technology changes marketing are the ones who have a holistic view of their touch-points and aren't afraid to experiment.
Another worry for Japan Inc. is that while they may be able to keep going as-is in Japan, as the trend of Japanese companies increasingly expanding abroad becomes the norm, they will have to adapt their offerings to local markets. If they allow their local offices to conduct digital marketing, then they will need specialists in Japan with experience to make sense of what is reported to them. At this point B2B will also be affected, as B2B marketing in several countries requires the kind of digital skills that companies in Japan lack on a B2C level.
All-in-all, and perhaps suprisingly for a country that displays both creativity and technical know-how in so many different industries, I am sorry to say that the majority of Japan's B2C data-based marketing has several hurdles to clear. Hopefully the upcoming 2020 Olympics - given the sheer amount of cool data-led initiatives a major event like that could lead to - will prove to be the turning point to helping Japanese B2C marketeers back on track.
* Just in case a proving of credentials is necessary: my experience with Japan since 2010 has included working for a subsidiary of Mizuho Bank and with (as a consultant) companies in IT, retail, automotive, bio-tech, cosmetics, FMCG and finance (all but one were foreign MNCs).
** Not actual name...and yes, this particular name was chosen because of the footballer :)
*** I should point out that I didn't actually fact-check this (as I normally would) as I trusted what Nakata-san told me. Nakata-san has an enviable marketing and management CV (gained outside of Japan at several MNCs) so I have no reason to doubt what she's talking about.
**** Short for Ramshackle :)