Japan's B2B marketing is 15 years behind the rest of the world, so what measures should managers take now?

When many people think of marketing, they probably think of activities that increase awareness through media such as TV, magazines, and SNS. This is consumer marketing = B2C (Business to Customer/Consumer) marketing. On the other hand, marketing for companies that do business with corporations is called

B2B

(Business to Business) marketing. For example, it is said that there are 60,000 B2B companies that do business with one Toyota company, and B2B companies are far more numerous than B2C companies, and their market size is also larger. However, Japanese companies’ B2B marketing is 15 years behind the rest of the world and is in a critical situation.

This time, we asked Mr. Ichiro Niwayama of Symphony Marketing, a leading B2B marketing expert, to explain the reasons why Japanese companies are lagging behind in B2B marketing and the current situation, and also explain how corporate management can succeed in B2B marketing. We asked specifically about the measures that should be taken to ensure this.

Interviewee: Mr. Ichiro Niwayama, Symphony Marketing Co., Ltd. Interviewer: Mr. Toshihiro Yamada, Deputy Editorial Director, Toyo Keizai Inc.

B2B marketing must be a symphony played by an orchestra.

I’m curious about the company name

Yamada

Symphony Marketing. Mr. Niwayama, do you play any musical instruments?

Niwayama

: I don’t play musical instruments, but I like music, and I especially go to listen to orchestras. I attend overseas marketing conferences four or five times a year, so I always go and listen to them while I’m there.

There is another reason why we named it Symphony Marketing. When we founded our company 33 years ago, the term marketing orchestration was introduced. Up until then, all marketing had been done under the direction of one talented marketer. Marketing orchestration has come to involve various experts in data management, analysis, and other areas in marketing under the direction of the chief marketing officer (CMO). If we compare management to music, the manager is a composer who writes the main melody, and the CMO is the one who divides the management strategy drawn up by the manager into parts for each expert and makes it possible to perform. We chose the name of our company to represent a symphony played through such orchestration.

Yamada:

I also play the oboe in an orchestra, so I sympathize with the idea of linking music and management.

Japan’s B2B marketing is 15 years behind the curve

YamadaThen

, please tell us about the current state of B2B marketing in Japanese companies.

Niwayama

Marketing has B2C consumer marketing and B2B corporate marketing. B2C marketing is thriving in Japan, and is comparable to other countries. On the other hand, B2B marketing is about 15 years behind Europe and America. Marketing automation (MA) began to become popular in Europe and the United States around 2000, but the MA concept and system came to Japan in 2014. Unfortunately, it has not yet become widespread. Compared to advanced companies overseas, we are still lagging behind.

YamadaRecently

, the use of generative AI in marketing has become a hot topic, but even before that, there seems to be a major problem with B2B marketing in Japan.

Niwayama

:The biggest problem is that Japanese companies lack basic B2B marketing knowledge. B2B marketing at a global level is not being done.

YamadaIf

your main customers are overseas, such as semiconductor manufacturing equipment manufacturers, I think you are doing B2B marketing.

NiwayamaActually

, that is not the case. Japanese companies used to generate sales through strong products and strong sales, but in recent years they have been under pressure from forces such as Taiwan and China. The era without marketing and winning solely through technology and sales will not last long.

On the other hand, marketing is at the core of European and American global companies. They often say, “I can’t believe that a Japanese company with sales of trillions of yen doesn’t have a marketing department or even a CMO position!”

The role of B2B marketing is to create projects that lead to sales other than inquiry sales.

Yamada:

What goals should B2B marketing set?

Niwayama

:For example, let’s say that a company’s business division’s medium-term business plan has a sales target of 300 billion yen in three years. Let’s say that the sales team estimates the numbers and finds that no matter how hard they try, sales in three years’ time will only reach 270 billion yen, or even less. We need to generate another 10%, or 30 billion yen, through non-sales activities. Marketing is what is needed to make that 10%.

If you can achieve the numbers with sales alone, you don’t need marketing. Some companies may have been able to get away with that for the past 50 years. However, in today’s highly competitive world, there are almost no companies that do not need marketing. In the midst of competition, companies look at competing foreign companies and realize, “What are we lacking in? Marketing!”

Yamada:

Is a figure of around 10% appropriate for marketing? I feel like it’s quite a bit less.

Niwayama:

It is quite difficult to exceed 15%. The first target should be 10%.

Yamada:

Can you tell that this case is from sales and this case is from marketing?

Niwayama:

It is important to manage your business in a way that allows you to understand this. In B2B marketing, there is a global standard model called “Demand Waterfall” developed by a research and advisory firm called SiriusDecisions, and most global companies have adopted this model.

“Demand Waterfall” model adopted by global companies

There are two ways to create

Niwayama

projects (Pipeline), one is MQL (Marketing Qualified Lead), which is derived from marketing. The marketing department acquires new prospects, selects them, and passes them on to

inside sales

and sales. When the sales person accepts that he will be in charge of the task, he becomes a SAL (Sales Accepted Lead).

The other is SGL (Sales Generated Lead). This project was created through sales activities, not related to marketing, based on inquiries and relationships with existing customers. The combination of SAL and SGL is called SQL (Sales Qualified Lead), which is managed by SFA (Sales Force Automation).

Yamada:

Project creation is done by the marketing and sales departments, and the final sales result is a ratio of about 9:1 between sales and marketing. What kind of marketing do you do before managing with SFA?

Niwayama

Marketing’s absolute mission is to provide a stable supply of business deals to sales and sales agents. There is a marketing process called demand generation (proposal creation). Collect lead information, plan, execute and analyze campaigns, and track lead status. We also perform nurturing, such as automatic email distribution, to increase the accuracy of deals. Marketing Automation (MA) was born as a platform for these activities.

We define success in B2B marketing as knowing that 30 billion yen out of 300 billion yen in sales comes from marketing.

What is demand generation? Explaining the meaning, how to approach it, and examples!

B2B marketing for Japanese companies is like an orchestra where everyone can play instruments but can’t read music.

Yamada

: You point out that there are issues with the way Japanese companies use MA tools.

There are approximately 20,000 companies that have introduced the

Niwayama

MA tool (SaaS system), but 99% of them only use MA for email distribution. In other words, in 99% of companies, the marketing department is unable to provide a steady supply of business deals to sales. If this happens, the marketing department will not be treated as a target by sales and will not be trusted within the company. People will say, “What’s the point of spending all the money on the budget?” This is the situation in many Japanese companies.

Yamada

: Why is this happening?

This is because everyone from

Niwayama

managers to new employees lacks marketing literacy. There are very few people in Japanese companies who have studied marketing systematically. When you implement an MA tool, the vendor will teach you how to use the tool. But it doesn’t teach you marketing knowledge. So, to compare B2B marketing for Japanese companies to music, it’s like trying to play the Ninth in an orchestra made up of people who can play instruments but can’t read music notation. There are sounds here and there, but there is no music at all.

Yamada

: I see, it’s not something I could listen to. In such a situation, Japanese companies could become weakened.

Niwayama:

It cannot be denied that he has actually weakened. Therefore, I am advocating that managers should seriously engage in B2B marketing in order to win in global competition.

Managers can seriously engage in B2B marketing by understanding the essentials of marketing.

Yamada:

What specifically should managers do?

There are broadly three pillars to what

Niwayama

managers should carry out.

The first is for managers to learn the basic principles of marketing and increase the marketing literacy of the entire company. The key to marketing is “Right Person, Right Information, Right Timing.” “Who should I approach? What information does that person really need right now? When is the right time for that person to receive it?” This principle has not changed at all since I discovered marketing 40 years ago.

Yamada

: “Right Person, Right Information, Right Timing” is simple and easy to remember. It means applying this to your company and thinking about it thoroughly.

What is important in marketing is the selection and development of organizations and people.

Niwayama’s

second point is for managers to understand the principles of marketing and to properly create an organization to carry out marketing. Many companies have realized the importance of marketing and have written in their medium-term business plans to “strengthen marketing.” There’s nothing wrong with that, but I often see people mistaking organizations for people.

Yamada

: I don’t understand the position of the marketing organization.

Niwayama:

That’s right. One of the questions we often receive is, “Next fiscal year, we will start a marketing department with 15 people, but where should we put it?Would it be a bad idea to put it in the sales department?” Since we don’t know where to place our organization, we don’t know what kind of people we should select or what we should use to evaluate them. If you start marketing in that situation, it won’t work.

In top overseas companies, the CMO is the advisor to the management and has a very high position. The marketing department, led by the CMO, is often an independent organization that reports directly to management. If Japanese companies are to create a new marketing organization, management must commit to developing the organization and its people, rather than seeking short-term results.

When choosing a CMO, it is important to determine whether or not you can formulate strategies.

YamadaHow

should I choose the top person and CMO for Marketing?

Niwayama

: In the past, Japanese companies used to send talented employees to overseas MBA programs using company funds. Unfortunately, however, Japanese companies had no idea how to handle MBA holders, and these people did not stay with their companies until they reached the management level. If you don’t have one within your company, you have no choice but to look for it from outside the company, but since only about 1% of companies in Japan practice B2B marketing in earnest, the current situation is that you have no choice but to look for it from foreign companies and consulting firms.

What should I be careful about when searching from outside

Yamada

?

NiwayamaFor

foreign companies in Japan, there is a CMO at the overseas headquarters who creates strategies, and someone who translates them into tactics. The mission of Japanese marketers is to implement and report on the tactics determined by the headquarters. In the case of such marketers, it is unlikely that they have ever created a strategy or been in the place where it was created. I understand B2B marketing and can operate tactics, but I don’t know if I can create strategies. When hiring someone as a CMO, you need to be aware of this.

Yamada:

That’s an important point.

Choose the most suitable MA tool for your company and make full use of it using the 3S theory

The third pillar that

Niwayama

and managers must do is to select the tools that are most suitable for their company and make full use of them. As I mentioned earlier, the concept of marketing automation (MA) took root around the world around the year 2000, and MA tools became widespread. Then it became the cloud, evolving dramatically and creating a plethora of new digital marketing methods and capabilities.

Currently, there are 11,000 tools around the world equipped with generation AI, so we want you to make sure you don’t make the wrong choice. There is no point in using tools that are suitable for your company unless you use them correctly. The absolute theory for selecting tools is “3S”. These are Strategy, Structure, and System. Again, we need to develop a marketing strategy to realize our business strategy and create an organization with the necessary and sufficient quality and quantity. Once these requirements are met, you can choose the correct system.

MA tools are suitable for different company sizes, such as for enterprises, small and medium-sized enterprises, and startups, and the tools will change depending on the marketing strategy you use. In addition to sending emails, I would like to accumulate marketing knowledge within the company and use MA tools as a tool for creating new projects.

YamadaIf

the MA tool currently in place is not suitable for your company, can you replace it with another MA tool? With core systems, you are subject to vendor lock-in (restricted to one vendor) and it is difficult to switch to another company’s product.

Niwayama

MA Tools has no vendor lock-in. Unlike core systems, it is relatively easy to switch to another product, and some companies actually review their systems when updating.

In Europe and America, tools are evolving rapidly, and marketing operations (MOps), an operation team that selects and combines tools to suit a company’s marketing strategy, are attracting attention. This is because the selection of marketing tools and the level of utilization of their combination determine marketing results.

Yamada:

The level of marketing in the world is much more advanced than that of Japanese companies. In order to narrow the gap and win in the global market, managers must seriously address the three pillars of marketing.

Finally, can you tell us what business owners who have realized the need for marketing can do now?

Niwayama:

As a first step, we recommend establishing marketing knowledge throughout the company. This is because it is very useful for people in the marketing department as well as non-marketing departments when doing business. Our marketing training is attended by people from departments such as sales, research and development, manufacturing, and production technology. Marketing literacy will increase if the entire company knows about marketing. The entire company will focus on improving sales numbers, which will lead to better marketing results.

Yamada

: Thank you very much for letting us hear your practical story.

List of interview articles with Ichiro Niwayama