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Gateway Japan President Derek Schneideman on: Breaking the Four Percent Barrier

Japanese clients have just about the highest standards in the world, says Gateway Japan President Derek Schneideman speaking at an American Chamber of Commerce Japan Marketing Committee event at the Capitol Tokyu Hotel on Sept. 8. "We sure as hell better know who we're talking to and what they're looking for."

Japanese computer makers Fujitsu and NEC have a combined 50 percent share of the domestic market. Together, top-selling US computer makers Gateway, Compaq, and Dell can muster only ten percent. Foreign PC success has been haunted by initially high sales followed by a leveling off period at 3 or 4 percent.

The "four percent plateau," as Schneideman calls it, is made up of Japanese consumers willing to make purchasing decisions based on a more American model. That core group of risk takers anxious to challenge the cyberworld with little support from PC/software makers does not represent the mass of Japanese consumers. For foreign PC makers to break into the mainstream, "it's much more important that we reach out to the majority of customers who make purchase decisions in a Japanese style and on a different decision basis. Driving technology alone is still important but peace of mind, an affinity for a brand, a sense of trust are equally if not more important to breaking through that four percent barrier," notes Schneideman.

Products developed for Japanese consumers are designed specifically for their wants and needs. American companies like Gateway generally develop products for America or a generic product for the entire world. Taking the products developed in the States and working them into a seamless buying and service experience that appeals to the local market has been the key to Gateway's on-going marketing evolution. "Gateway Japan has put tremendous focus (and) enormous investment on reinventing our customer experience here in Japan." Schneideman says his company was the first to offer client PC financing options, Internet connections bundled with their PCs, a full range of software peripheral options, training and education programs online, online auctions, and online order tracking. A core element in the Gateway game plan is the Customer Care Program. The company surveys 80 percent of all their customers three days after receiving a Gateway product -- quizzing them on everything from their satisfaction, to style and what advice they would give other buyers, and whether they'd buy a Gateway product in the future. Three months later, the company surveys that same 80 percent. "The results from these (surveys) help us assess where we are, [and] where we're not meeting customer expectations. Why three days and three months? We do it after three days because we want to measure our marketing, our advertising and our sales, [and] we repeat after three months because we want to measure our after-sales services, customer services and quality of our product."

"Buyers remorse" does not appear to be a problem for Gateway customers. "The longer a customer owns a Gateway computer, the happier they become. In the three-day survey, we get a 91 percent satisfaction rating. After three months it's risen to 94 percent." Gateway understands the all-important concept of service in Japan, maintaining a two-to-one ratio in service personnel over sales. In a recent Nikkei survey, Gateway was ranked number one in overall customer support, beating out Hitachi, Dell, Sony, Fujitsu, and IBM, in that order. Gateway was also ranked number one in telephone support and number two in online services.

Research has led the company to create a very different form of advertisement for a recent series of TV spots. Japanese consumers are not interested in large full-color shots of chunky desktop equipment; PC products need to be portrayed as sleek, cool, sophisticated, and sexy. "When we started running these ads, our call volume jumped by three hundred percent, visits to Gateway stores increased, and the company estimates overall brand awareness for Gateway soared 35 percent. They will be better able to judge whether the commercial was the cause of increased sales after the next series of spots hits the airwaves."

Schneideman notes that the immediate nature of the Internet is driving company/customer relationships into real-time mode. "If our clients aren't as happy as they should be, we're in a direct position to address it now, today. Other companies with a different model are unable to do (so)." Gateway works under a direct sales model: "our contact with the customers is direct, immediate and interactive. We get direct responsibility for creating and maintaining the best possible customer relationships. In our model there are no middlemen, no distributors, there are no resellers, there are no excuses."

Since it's start in 1995, Gateway Japan has gone from two employees and 10 million dollars in sales to a staff of 800 and over $500 million in sales. Schneideman believes firmly that his company's personalized attention to each customer is what's driving their growing success in Japan. In words that sum up the work ethic for all foreign companies looking to enter the Japanese market or break out of their own, "[remember the] four percent plateau" Schneideman counsels. "We better give them a better customer experience then they could possibly get from anywhere else."

by Gail Nakada in Tokyo

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