For Japanese e-commerce giant Rakuten, data-driven marketing is providing unprecedented knowledge of consumers, enabling it to target customer communications and finesse its range of services.
In an exclusive interview with CMO.com APAC, Koji Suzuki, head of data-driven marketing, shared some insights into how Rakuten has harnessed data to create a diverse and successful Internet services ecosystem, with the customer at the heart of its business model.
He also explained how spinach–yes, spinach–has been key to the company’s online success.
Suzuki is among the speakers who will be at Adobe’s Digital Marketing Symposium, being held in Sydney, on July 28, and Singapore, on July 30.
CMO.com: Tell us a little about Rakuten, please.
Suzuki: Rakuten is currently one of the most popular Internet brands in Japan and one of the largest, having more than 99 million customers domestically, 500 million worldwide, with over 70 different online services, like e-commerce, online banking, online travel bookings, online fresh delivery, credit cards, and so on, generating over 3 trillion yen of transactions in 2014.
CMO.com: What does data-driven marketing mean to Rakuten?
Suzuki: Compared to traditional marketing, with Rakuten we’re trying to apply a completely different approach. One of the significant assets Rakuten has is the customer’s data, at scale and with lifetime behaviour data. Most importantly, most of this big data is connected by the Rakuten member ID. This means we can easily identify a segment of Rakuten members with hyperdetail and context–for example, people who live in Tokyo, aged 20 to 25, male, who purchased an iPhone 5 two years ago but who have been browsing Android phones frequently in the last two weeks, spending more than 500,000 yen per month on their credit card, and have travelled outside Japan more than twice in the last six months.
CMO.com: How would you define data-driven marketing?
Suzuki: Data-driven marketing is ultimately a means to satisfy customers’ desires. In many cases, customers know what they want, but by using data-driven marketing solutions, I believe we’ll be able to pull out even the subconscious desires of customers and turn them into business opportunities.
CMO.com: What are the actual benefits to the customer of such a data-driven approach?
Suzuki: Historically, marketing was a way to communicate with the customers, but unfortunately it was rather one-way. I believe data-driven marketing can deliver a solution that will allow the company to analyse a customer’s data and use that to design context-driven communications that have a much higher probability of meeting customer expectations.
CMO.com: What does that allow you to do differently?
Suzuki: It’s almost scary to identify members with such hyperdetail context, yet it is an extremely powerful asset for our data-driven marketing initiatives. Since we all live on Planet Mobile, how much relevant and context-based personal insight a company can deliver will determine the usability and quality of the Internet services we’ve got. We’re here to optimise the customer’s Rakuten experience via data-driven marketing.
CMO.com: How does that support your business planning?
Suzuki: Many of Rakuten’s services are traditionally considered as offline, real-store businesses, but Rakuten is constantly challenging this norm–migrating the offline business into an online business. We’re setting up the Internet ecosystem, knowing the influencing factors that determine when people decide to use an online service when they used to prefer offline.
CMO.com: Can you share any examples of how you have used data-driven marketing?
Suzuki: We have many high-calibre data scientists at Rakuten, and one of them discovered a quite interesting emotional shift in online fresh-food purchasing behaviour. With respect to online grocery shopping, even in such a technology-driven country like Japan, many people are still suspicious about the quality of the fresh food delivered from online grocery services. We observed many of the first-time online grocery service users are likely to purchase only root vegetables, such as potatoes and carrots, as they have the impression that potatoes are potatoes whether bought online or offline.
However, things get more complicated when it comes to purchasing more sensitive fruit vegetables, such as tomatoes and cucumbers, as they have the impression that the tomatoes get damaged during the delivery process; hence, they may not be as fresh as they would like.
Our data scientist discovered a key bridging product that will dramatically change their perception–spinach. We discovered that those online grocery shoppers who used to buy only root vegetables will start buying other products, including tomatoes, right after purchasing spinach.
CMO.com: Why was spinach so important?
Suzuki: Again, based on the user survey, many of them expressed that as they opened the grocery-delivery box seeing the delivered spinach, they all thought, “Hey, spinach is much better than I expected.” This is the moment when their past impressions about online grocery will be dramatically shifted from “suspicious, low-quality food delivery,” to “useful online grocery with high-quality food products.” This is the moment when they become more “brave” and proactively purchase different varieties of food items online.
CMO.com: What does that level of insight deliver to Rakuten?
Suzuki: We’ve redesigned our nurturing strategy–we find those customers buying potatoes, then encourage them to start buying spinach by providing promotion coupons/discount embedded in visible locations throughout the user journey. For us, this is a good example of a typical data-driven marketing approach, which will help migrate offline to online conversions, and we’ve been applying the same principle and approach to many of the other Rakuten services.
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