Regis McKenna R&D/J.D. POWER - BenchMarketing JapanRealtime Strategies for Customer Satisfaction This is the first in a series of columns based on key findings from the JD Power/Regis McKenna PC-Network Users Satisfaction survey. Shortly after establishing their offices here in Tokyo, they discovered the lack of comprehensive computer industry information available in English. While the annual vendor market share figures released by IDC and Dataquest are eagerly awaited each year, there has been nothing that reflects an end-user perspective. Several months of collaboration resulted in the completion of the first annual PC end user survey in December 1995. The results have just been published, in both English and Japanese; this column summarizes some of the key findings. Late in 1995, we contacted over 20,000 Japanese MIS managers, department heads, and PC users to ask about their current PC/network plans and satisfaction levels. Although it was an 18-page survey, we were pleasantly surprised to receive a nearly 16% response rate. Handwritten on several of the returned questionnaires were words of thanks -- it seems this was the first time many of the respondents had been asked for their opinions. The importance of a dialog Winning customer loyalty in a foreign culture is a daunting task. However, with the Japanese market rapidly expanding in terms of the number of PCs on desktops and connected to networks, marketers face an urgent need to focus on real-time customer satisfaction. To better understand the decision-making process, to get a sense of the actual structure of the user base within various industries and organizations, and to gain an understanding of the business motives and expectations driving the acquisition of network systems, companies must establish a direct line of communication to the people who actually use these systems in their daily work. Sony is well known for its view that asking prospective users what features they want in an innovative new product is like asking them what life is like on Mars: interesting, but not necessarily accurate or useful. Once the user is engaged in experiencing the product, though, the only way to know whether expectations are being met is by asking. One of the key competitive marketing weapons a company can have in Japan today is a direct, ongoing dialog with its customers. Without such a dialog, there are several obstacles (which were revealed in the survey) that act as inhibitors to market acceptance of, and satisfaction with, PC systems in Japan. First, the slow rate at which many companies are implementing both stand-alone and networked systems -- only 2% of the more that 2,500 companies with PCs installed had a 1:1 PC-to-employee ratio -- suggests the hands-on experience and word-of-mouth among users that can help to accelerate market acceptance is largely absent. Second, intra-company communication, between departments or divisions, is not as common in Japanese companies as in US businesses, where information is more readily shared. And finally, external sources of information -- such as Japanese computer magazines -- tend to emphasize the "how to" aspects of new technology-based systems, rather than the qualitative business benefits of using those systems. (Look at past installments of the "What the Japanese are Reading" column in Computing Japan to see this tendency in action.) The technology adoption curve One of the models used frequently at Regis McKenna, Inc., is an adaptation of the Product Adoption Cycle, first developed to graphically illustrate the acceptance and utilization of new strains of seeds among American potato farmers. We have renamed this the Technology Adoption Curve, and find it to be equally effective with ICs and routers as it was with Idahos and Russets. The model represents the penetration sequence and relative market size of the various buyers and users of technology products and services. Our experience with launching new technologies has shown that there is often a gap that develops between the first two categories of end-user -- the innovators and early adopters -- and the remaining "mainstream" markets. The typical sequence of events leading to this situation may seem familiar. First, there is early success in "skimming the cream," or selling the early adopters an initial system. This is often followed by new competitors entering the market, which is followed by price pressure, followed by an inability to get early customers to move forward with further purchases, followed by unsuccessful attempts to sell new customers, followed by... a chasm. Based on the survey findings, we believe there is a great likelihood that many Japanese companies will develop a gap in their adoption of PCs and PC networks. A key contributing factor is the existing (and planned) ratio of PCs to users in most organizations. The survey results show that currently only 2.1% of the respondents have a one (PC) to one (person) ratio -- increasing to only 24% in the near future. Even at the one PC to two or three persons range, the survey findings indicate that only 61% of the companies have this future intent. Overcoming the challenges This suggests that, for the next few years at least, 10 or more workers will be sharing a single system in more than 50% of the companies who are beginning to implement PCs and networks. We believe that the inability to make regular day-to-day use of a PC will dramatically hinder end-user acceptance and overall satisfaction. Unless PC system and/or software marketers can enhance the end user's experience -- through the use of interactive training tools with the ability to monitor and direct cumulative learning -- the time to mainstream market adoption may be a long way off. A related challenge was also identified in the survey. It is no secret that Japanese business tends to be very focused on process. The traditional practice of nemawashi (gathering support for consensus) followed by ringi (formalizing the decision) is often assigned greater importance than the decision itself. This process orientation is reflected in the way that technology has been adopted in many Japanese organizations. The survey shows that in the majority of companies, the primary objectives for establishing PC networks were to share printers and data and to improve the efficiency of work. Less than 10% of respondents pointed to improved communication -- either within or outside the company -- as a primary objective. Sharing know-how and shortening the decision-making process were even lower in the objectives rankings. Regrettably, many of the early adopters of PC systems in Japanese companies are realizing only the most basic of benefits that networks can provide. Once again, companies determined to succeed in the Japanese business market may have to recalibrate not only their marketing approach, but also the specific business processes for which PC network solutions are designed. Trying to build loyalty among Japanese end users without considering these key differences will make the road to success bumpy indeed. Next month: Adoption rates and market acceptance issues
Sidebar The primary objective of the PC Network Users Survey is to provide useful insight to the various participants in this industry -- systems vendors, software developers, integrators, communications service providers -- into the market structure and customer satisfaction issues that affect the success of marketing efforts in Japan. We are committed to regular updates of the findings, including both the input and experience of the companies who use the survey as well as the changing needs and perceptions of the users from whom the information is gathered. This will ensure that the results stay current and reflect the dynamic nature of the Japanese marketplace. By sharing some of the survey findings in this column, we hope also to initiate a dialog with Computing Japan readers to get real-time reactions to some of the insights. You are invited to send your questions/reactions via e-mail or through the traditional forms of communication, including phone or fax, to either of the following contacts: R&D/JD Power: Brian Heywood Regis McKenna, Inc.: Sharon Colby Chappell |