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My research field is marketing, and I specialize in market analysis and marketing in the service industry. From industries that have been greatly affected by the COVID-19 pandemic, such as food and beverage/retail, travel/lodging, rail/aviation, and entertainment, to the so-called tertiary industry, which accounts for more than 70% of GDP, such as finance/insurance, communications, logistics, and fitness. Unlike industrial products, the services provided by companies are intangible and invisible, and their quality cannot be measured by machines. I am researching the mechanisms behind how such invisible "quality" appears from the perspective of customers and users of services provided by various companies throughout Japan, and how repeat customers are born from this, based on theory and data.

One of the pillars of my research every day is empirical research using data from the Japanese Customer Satisfaction Index (JCSI). In 2006, during the first Abe administration, an industry-academia-government council called the Service Productivity Research and Development Council (SPRING) was launched as an industrial policy to improve productivity in the service industry. As part of this project, I participated as the chief of the development group for a customer satisfaction survey to visualize customer satisfaction in the service industry. It was a dream opportunity for me, as such a large-scale project would be difficult to implement by a single researcher.

At that time, a similar index was used in the United States and Asian countries, called ACSI (American Customer Satisfaction Index). Initially, the development group thought it would be a good idea to obtain a license and use it, but when we tried to introduce ACSI, we found that it was not suitable for the Japanese situation. There were survey methods that were not suitable for Internet surveys and questions that were not suitable for Japan, and there was a risk that the accuracy of the survey would not be maintained. For example, ACSI has a question that asks consumers whether they have made a "complaint" against a specific company. If this is introduced as it is in Japan, even if they have actually had a dissatisfied experience, the response "I filed a complaint" will be extremely low, and the model will not be able to estimate properly. Recently, the environment has changed considerably with the development of review sites and SNS, but Japanese and Asians tend not to complain directly to companies compared to American consumers. Therefore, our group changed this part to a question that measures "recommendation intention", such as "Do you want to recommend this service to your friends?" Simply put, it is whether or not a customer wants to share the product with friends or strangers. While we continued to implement these technological innovations, we also organized a corporate advisory group made up of people from various companies, and developed a system to measure customer satisfaction in a way that is in line with Japanese tendencies.

Rather than simply replacing the ACSI, we set out to create a new index suited to Japan. The JCSI was developed over a period of three years. Since its official launch in 2009, it has been privatized and removed from the national budget, and the survey has continued every year. As of 2021, the survey covers 32 industries, approximately 400 companies and brands, and approximately 120,000 people, making it one of the largest customer surveys in Japan, and is used by many companies for a variety of purposes.

The "JCSI" data, tuned for Japan, has revealed many things about Japanese service. In the summer of 2021, we published "Service Excellence: Visualizing Customer Experience [CX] through CSI Diagnosis" (Productivity Publishing) as a guidebook and commentary from diagnostic systems to insights. In it, I think it was shown how the meaning of service excellence in Japan, that is, excellent service, has changed and must be understood in multiple dimensions. For example, "omotenashi" is a keyword that describes Japanese service. When it comes to services that create customer satisfaction, it seems to be implicitly thought that it is solely about the fulfillment of "omotenashi" services through people who are fully attentive to everything, and I had some doubts about that. In fact, it was common for people from first-class hotels and luxury inns, which have a high reputation for hospitality, to take the stage at lectures and seminars on customer service.

Certainly, excellent hospitality is a wonderful thing. Service that is detailed and full of thoughtfulness creates high levels of satisfaction for users. However, it is not necessarily the case that only attentive, human-assisted hospitality leads to customer satisfaction. There are probably some people who feel that "the service is great, but it's not worth the price," or that "I just want to be left alone without any service."

The JCSI aims to bring to light various aspects of customer psychology by continuously surveying customers who have actually experienced the service. One of the most important keywords is that consumers have become more strict in their evaluation of services, placing emphasis on "cost performance (cospa)". Online travel agencies (OTAs), banks, and securities companies that do not have physical stores have higher satisfaction than traditional human-mediated businesses, and the driving force behind this is "good cost performance", including low fees. Business hotels and emerging airlines have also consistently been highly rated for their good cost performance. Some customers are satisfied with the hospitality of first-class hotels, while others are satisfied with the cost performance they get at budget hotels, and others are satisfied with affordable services at reasonable prices. Rather than thinking of luxury hotels as luxury hotels and budget hotels as budget hotels from the start, the JCSI comprehensively analyzes the same industry. Some people have pointed out that there is no point in comparing things that are in different genres or of different rank, but I believe the problem lies not in the ranks that experts see, but in how customers see them. What do customers expect from the services offered by a certain brand, and was the quality of the service provided to meet those expectations, at an appropriate price? I think we have become somewhat better at grasping service excellence from this perspective and visualizing it with data.

By identifying service quality and value for money, the JCSI has revealed various aspects of Japan's service industry. As in the previous example of hotels, perceived value affects customer satisfaction in many ways. Particularly impressive were the services of companies that entered the industry from different sectors. Examples of increasing customer satisfaction through unconventional innovation were seen in various places.

In the financial industry, new online banks are generating high levels of satisfaction compared to traditional megabanks. This trend can also be seen in the hotel, insurance, and travel agencies industries. Of course, there are advantages to a company that has built a long track record in one industry. However, companies that enter from a different industry may be better able to grasp the trends of the times. In addition to "high-touch" services that provide detailed contact with customers, cost-effective services that utilize the Internet and minimize contact with customers also generate high levels of satisfaction. This trend has emerged from the visualization of perceived value (consumers' overall value judgment of a product in terms of its quality and cost).

What has also become clear is the existence of hidden popular service businesses in local areas. There are cases where locally rooted convenience stores, drug stores, or transportation companies have very high customer satisfaction even if they are not well known nationwide. This does not necessarily mean that huge chains with headquarters in the center have high customer satisfaction. It has become clear that even local companies with smaller operating scales can generate high customer satisfaction. This is surely a great encouragement for similar local companies.

Of course, the higher the market share of a company that is known nationwide, the more consumers use it. It is easy to think that this will lead to higher customer satisfaction, but this is not necessarily the case. Rather, looking at the results of the JCSI survey, there is even an inverse correlation between market share and customer satisfaction, where as one factor increases, the other decreases. Many people seem to think that brands with high market share also have high customer satisfaction. They believe that because many people support them, sales will increase and market share will increase. This can happen if people have the same needs for services. However, in reality, this is often not the case. Why? Selling a lot means that while it is supported by many people, it also means that it must cater to people with a wide range of tastes from one end to the other. For example, when looking at the communications industry, the name recognition and number of users of the three major companies (three brands) are overwhelming, but in fact, the satisfaction level is not that high when you look at the survey results. Brands in the category of cheaper smartphones tend to show higher satisfaction. The larger the market, the more diverse the desires of users become, and it becomes difficult to provide a service that satisfies everyone. Some people want "kind, face-to-face service that's convenient, even if it's expensive," while others want "the peace of mind of a famous brand," and others think "value for money is the most important thing." Companies with large market shares must meet such diverse needs, but there will always be a certain number of customers whose expectations cannot be met, which leads to low overall satisfaction.

In recent years, companies have been trying to respond to this diversification of tastes with certain strategies. Just as the three major mobile phone companies operate low-cost brands, major companies in various industries are now adopting "multi-brand" strategies. For example, in the airline industry, both Japan Airlines (JAL) and All Nippon Airways (ANA) have LCCs (low-cost carriers) under their umbrella, and have built a system that can respond to both users who want traditional full service and users who want simplified services and cost-effectiveness. In the hotel industry, it is not uncommon for companies that operate ultra-luxury hotels to also operate multiple hotel brands with a price difference of five or six times that of other mid-range and reasonable hotels. I'm sure you are all well aware that apparel companies operate multiple brands with different price ranges. For service users, it is no longer a matter of "definitely this brand," but rather they can choose the service they want to use when they want to use it.

In business management, it is believed that there are several orientation patterns in corporate management. The first is "technology orientation." Simply put, it is the idea that a company will develop if it produces high-end and advanced technology and services. The second is "financial orientation." The idea is to value profitable work and profitable customers. And the third is "customer orientation." This is an approach emphasized in marketing, which is to think from the customer's perspective and develop new users into repeat customers. In the case of "hospitality," which I mentioned at the beginning, one could say that the marketing idea is to ask, "Is hospitality really customer-oriented?" Perhaps sticking to hospitality may seem to some customers as if you are forcing the high level of your company's customer service skills on them. Pursuing only technology and profits is not customer-oriented marketing. It is very important for a marketing strategy to think about what users want and then realize and provide the service.

For the past 10 years, the JCSI has been limited to the service sector, but it has carefully collected the voices of Japanese consumers and users to visualize service quality. This has highlighted the level of customer satisfaction for each company and brand, and it has been used as an important indicator for improving productivity. However, I think there is also a risk. That is, it may lead to a uniform way of thinking, such as "the way this company with high customer satisfaction does it is the right way."

As we have discussed so far, there is no single correct answer for services. People have different needs. In marketing research, this is called "market heterogeneity," and markets are often made up of people with different needs. The ideal market is one in which people can reach out for the services they want and be satisfied. It would be no fun if the quality of services were simplified and the market became uniform.

Tokyo is packed with so many restaurants that it is unparalleled in other major cities around the world. There are high-end ramen shops that are listed in the Michelin Guide, as well as old-fashioned, everyday shops. In addition, there are shops where the owner pursues his own unique style, and chain shops that you can always visit with confidence... Of course, there are also shops that are written about on review sites as being more focused on the atmosphere and not so good in taste. People's tastes and values regarding food are diverse, so it is not possible to give a general ranking, but perhaps foodies and people who go on cafe tours enjoy discovering their favorite shops from among the various options. Especially in major metropolitan areas such as Tokyo and Osaka, there are many such shops, and we have the fun of visiting the shop we want at any time. Also, when tapioca drinks and fried chicken become popular, new shops open one after another all over the country, competing for originality. The restaurant industry has a high rate of openings and closures and is an industry with a high turnover, but I think that this is the dynamism that creates diverse services.

By the way, there is a view that services such as providing multiple foreign language menus for foreign tourists should be standardized and certified. Hygiene, safety, and privacy protection are the bare minimum requirements, but they are often not met. Some tourists want to experience the atmosphere of local restaurants that are not aimed at tourists, and some people think that the fun of traveling is ordering randomly while looking at a menu in Japanese that they cannot read and imagining the taste. On the other hand, what would we think if we were to travel to Italy and a restaurant served us a menu in Japanese? Of course, some people would be grateful, while others would think negatively that it is for tourists. Which option to choose is also a matter of the management policy of the store or company.

The medium-sized and large companies that I research are the subject of customer expectations to carry the brand name and provide reliable service with few hits or misses. When you go to an unfamiliar place and are unsure of which restaurant to go to, being able to use a fast food restaurant or convenience store with a familiar sign is an extremely important value to consumers. In order to establish such customer trust and expectations, so-called "chain" service providers need a system to manage intangible services such as consistently consistent customer service, taste, and store atmosphere. Of course, this is not limited to the food and beverage market, but applies to a variety of industries as well.

While the JCSI survey focuses on large companies, my future research topic is to promote research that also takes into account the many small and medium-sized service businesses, including SMEs, micro-enterprises, and privately run businesses. It is precisely because of this diversity that services that are perfectly positioned for any user can be found, allowing a wide range of services to flourish. The JCSI has visualized part of the greatness of Japan's service industry from the customer's perspective. I intend to continue to look at the nature of customer experience in many more service industries. (Published October 2021)