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Succeeding in Japan: Japan Entry GTM

Written by
Marcus Otsuji

Note from the author:

This is the 4th article and cornerstone of the “Succeeding in Japan” series and we’re finally going to dive into the details of a Japan entry GTM. While this is by no means a comprehensive document, we did want it to function as a useful guide for companies embarking on their Japan journey. As such it may be a bit long as we wanted to prioritize utility rather than readability. Also, while this document can and should be helpful on its own, I hope you have read the first three articles in this series as they do provide important context and perspective.

Introduction:

In October 2004 I joined web analytics startup Omniture Inc as the first Japan based employee. Over the next 7 years we grew the business to 70 people and $30M in ARR. By today’s standards perhaps not particularly remarkable, but back then as one of the pioneering SaaS businesses it was a noteworthy effort and an important part of the overall success of the company. Japan was roughly 10% of organic revenue globally, but just as important, our strong local presence was a key differentiator in winning many global contracts as none of the other web analytics vendors were able to establish a Japan presence of any significance.

All these successes aside though, truth be told the Omniture Japan journey was a rough ride. The first two years were particularly punishing as the local team and HQ alike struggled to adapt to realities in Japan that were very different from other geographies. We did some things right, but we also made many unforced errors. In both cases we learned a lot and those experiences informed the Japan entry model outlined in this article. Over the past six years since founding Geodesic we have used this model (and refined it along the way) as we’ve supported over 20 of our portfolio companies on their Japan journeys. As I have stated in previous articles, there is no one-size-fits-all model for Japan entry, but there are core principles which if followed can help to avoid common pitfalls and greatly increase the probability of success.

This article, therefore, seeks to 1) present a general framework for thinking through Japan entry GTM strategy and 2) cover tactical best practices for each of the primary functional areas. Success in Japan is after all a company wide effort and so we hope this document will help leaders to not only articulate a clear vision for Japan but also facilitate internal discussions with functional leaders regarding their specific roles and responsibilities.

Note: this article’s recommendations will assume a B2B enterprise software company entering Japan with little or no revenue and no employees. However, we hope some of the principles will be applicable more broadly.

The two biggest causes of Japan entry failure:

Let’s jump right in by calling out the two biggest causes of Japan market entry frustration and failure:

This article will address the first point above regarding how to think about your GTM as you first enter Japan. We will tackle the topic of hiring a country manager in a future article.

Why your US GTM will fail:

Your global GTM (or something close to it) is actually supremely important and implementing it in Japan is the ultimate goal, just not during the 18–24 month entry phase. Here is why: with some marketing and PR, it is actually easy enough to secure meetings with prospects and build pipeline at a reasonable rate. Even POCs are not too difficult to come by if your technology is compelling. At this stage, the problem comes with conversion. Specifically, pipeline (even POCs) will not convert at the same speed or consistency as they do in other regions because of the time and sustained effort required to first establish individual relationships of trust and broader market credibility (I go into this in depth in article 2). Accounts that do convert will often start with small contracts representing much less than a full commitment to your product. It goes without saying that the ROI on these types of engagements look horrible and a sustainable business model based on these early engagements will not be apparent. In the critical entry phase if CROs are held to the same standard in Japan as in other regions regarding sales productivity they will never invest incremental discretionary dollars into Japan. This is how the downward spiral of perceived underperformance and underinvestment/divestment gains momentum inevitably leading to failed outcomes if the proper corrections are not made. Faced with this situation some companies try to supercharge their GTM with more marketing and pipeline building, which also ends poorly as leads only get placed into the same leaky funnel and again, fail to convert.

A framework for success: “entry” phase GTM strategy and tactical best practices

Since leads will not convert predictably or in a way that is scalable in the beginning, rather than broadly spreading your message and generating lots of leads to build pipeline, which will only tie up your entry team’s limited resources, the better strategy is to instead be laser focused on deep early adopter engagements. Even if early contract sizes are small, working with credible early adopters is critical in order to:

1) identify and publish compelling local use cases and

2) make necessary enhancements to your product and support offering to meet the unique needs of Japanese customers (if any.)

Compelling local case studies and a “localized” product are two of the most important signals of credibility customers look for. They signal that the company cares enough about Japan to modify the product to meet the unique needs of Japanese customers (if necessary) and that the company has been able to not only sell their product, but deliver the promised value to Japanese customers. Without these two pieces of the puzzle in place, predictable and scalable sales is almost impossible. So making a focused effort to get these two done to clear the way for a scalable GTM is the primary goal of the “entry phase.”

Here is a further breakdown of critical steps and operational focus by functional area to align and support the execution of the goal above:

Legal: establish a local entity. This is a prerequisite to hiring and also an important signal of commitment to the market.

HR: Hire a local team starting with a talented country manager. This can start with as few as 2–3 people (country manager, account executive, pre/post technical resource) and scale from there based on budget and results. Hiring the best possible country manager is the single most important step to navigating the entry period successfully. We’ll be dedicating a whole future article to this mission critical step.

Sales: It is primarily the sales team’s responsibility to drive the strategy outlined above which means high growth, profitability and scale will have to wait as the company first focuses on identifying and securing a critical mass of early adopters (perhaps 15–20) and compelling case studies (perhaps 3–5) with reputable local companies. Some of these engagements may be created through marketing lead generation efforts, but the core of the strategy should be centered on a carefully curated named account list followed by rigorous account planning and execution. This will focus limited resources on accounts that really matter and that will have the highest probability of converting. This is due to either their propensity to adopt technologies early, personal relationships with the entry team members or because the nature of their business makes them a good fit for your technology. To confirm: during the entry phase, qualified POCs (those with an executive sponsor, clear use case and budget) are more important than pipeline coverage, new logos from the named account list are more important than ACV, and the generation of compelling use cases is more important than ARR. That is not to say that pipeline, ACV, ARR etc. are not important. They are and should always be a part of the entry plan. However, executives should know in advance that during the entry phase such metrics are not the only ones that matter and may not be the best measure of the health of the business so focusing on them exclusively can be frustrating and misleading. Also normal GTM activities that drive these metrics will not generate predictable results or scale well and so investments should be calibrated accordingly.

Channel: IT departments in Japan depend much more on systems integrators, consultants and agencies than their counter parts in the US. As such, partnering with companies that have the right relationships with target customers and the technical skill to implement and support your technology is an important part of the overall sales strategy. Moreover, if reputable SIs and distributors carry your product it can be another positive signal of credibility to the market.

Customer success (including implementation, technical support, consulting, etc.): Once new logos are landed by the sales team, it is the responsibility of the customer success team to ensure that the product is properly and quickly installed and that the promised value is delivered.

As companies who have already entered Japan know, Japanese customers expect issues to be resolved quickly and generally demand a higher level of support than in other markets. This is often a challenge to customer success and product teams back at HQ so securing the support of relevant HQ leaders as part of the Japan entry plan is critical. The Japanese B2B software market is hyper concentrated in one city (Tokyo) and word of mouth has a much bigger impact on reputation and sales than marketing so ensuring that early customers become fans (of your technology and your company) is critical even if the immediate economics don’t justify it.

One common “worst practice” to avoid is routing Japanese customers to English speaking support reps either via phone or email. This is perhaps one of the biggest red flags for the Japanese and will impede adoption of your product within your customer base. Having a capable and enabled local support team who can handle all inquiries and communications with Japanese customers (supported by staff back at HQ) is a definite prerequisite to broad adoption of your technology.

Marketing: Marketing is simultaneously one of the most important functions when entering Japan and also the place where companies make the biggest errors. It goes without saying that during the entry period marketing needs to be maniacally focused on helping the sales team to execute their strategy of landing early adopters. Practically speaking here is an overview of best practices to consider and common pitfalls to avoid:

Best practices —

Create a strong online presence: when potential customers find out about your company, they will almost always search the internet for useful information in Japanese and share relevant links with colleagues. So this should be one of the top priorities as you enter Japan including the following:

Thought leadership: you can start with your standard global messaging but often the messaging that moves the market in Japan will be slightly different. If you find something that resonates better in Japan, have the flexibility to change.

Sales / partner enablement: partner with sales to identify high value materials such as sales decks, technical white papers, case studies, etc. and localize accordingly.

Pitfalls to avoid:

Product: The main goal here is to work with early adopters to quickly determine the MVP for Japan and deliver accordingly. This could include new features, integrations with local ISVs, multibyte (Japanese) character handling, compliance with local regulations, retraining algorithms on Japanese data sets, translation of the interface and/documentation into Japanese, timing of scheduled maintenance (so as not to occur during Japanese business hours), setting up a local data center, etc. There is no need to deliver all requests at once of course, but quickly determining what the MVP for Japan is and delivering accordingly is a necessary prerequisite for crossing the chasm and sends a very powerful statement of commitment to the broader market. To be sure, for many companies the MVP for Japan is already met with the product as is (especially if you sell to IT or your users are developers or engineers). However, even in these cases, listening to customers and delivering new features, fixing bugs expeditiously, etc. even if not mission critical will build an incredible amount of good will quickly.

Summarizing the entry stage:

To be sure, the entry phase for Japan is one of investment and should be temporary (typically 18–24 months if starting from scratch). It is a lot of work, but at the end you should have built a solid foundation upon which you can start to scale including the following:

The result of a successfully executed entry is that when more conservative “early majority” companies encounter your company, assuming they find your technology compelling, they will also see all of the things that give them the confidence to move forward with a POC or purchase. From a GTM perspective, this means that your pipeline will start to convert more consistently and average contract size should also increase so you will be able to implement something closer to your global GTM. All of the inertia that initially worked against you, will start to work in your favor as positive market sentiment will start to coalesce around your company. The beauty of Japan is not only its scale (2nd largest B2B software market in the world) but also that it can be accessed through a single city (Tokyo). So, early investments produce great leverage for those that do it right and if your competition has not made similar investments they will be at a significant disadvantage as they try to compete.

Closing comments and next steps:

Although this article explicitly focused on B2B enterprise software companies there are notable gaps that were not addressed including DevOps/OSS companies and PLG (product lead growth) companies both of which often start in Japan already with customers and employ a significantly different sales motion as compared to the traditional high touch model which was assumed for this article.

Moreover, while the best practices above should be helpful directionally, they do not cover the next layer of details that need to be addressed: which systems integrators or agencies should we partner with and how do we contact, pitch to and negotiate with them? How do we avoid channel conflict between channel partners and our direct sales team? How many people should we hire as part of our entry team and what roles? How much localization does our product require? Should Japan report to APAC or direct to HQ? Etc. etc. Again, the devil is in the details and a successful Japan entry requires getting as many of these things as right as possible. However, as each company is different the correct answers for your company will most likely come as part of an interactive dialogue with key stakeholders as you lean in towards your Japan entry — and these are exactly the kinds of conversations we at Geodesic have with our portfolio companies every day as we help them plan and execute their entry strategies for Japan. If you have a question regarding your entry strategy, please let us know and we’ll be glad to set up a time to talk. Arigatou gozaimasu!