Manufacturers are turning to the web to help their customers figure out complex products
By Kurt Peters
One of the biggest problems retailers face is the issue of returns—especially consumer electronics. Many consumers who buy complex products-both online and offline- can’t figure out how to set them up, so they return them.
But as the web becomes more sophisticated and consumers’ home computers become more able to handle complex programs and are connected to the web via broadband communications, some technology companies are betting that manufacturers will want to encourage consumers to turn to the web for assistance in assembling or operating a new purchase.
They pitch the service to manufacturers by noting that a video-based demonstration of how a product operates will reduce returns as well as calls to the manufacturer’s customer support center. “How many people try to read the manual that comes with a product and still can’t figure it out?” says Henio R. Arcangeli Jr., president of Los Altos, Calif.-based How2TV, which produces product videos. “One in 10 consumer electronics products is returned because the consumer is dissatisfied; the product is too complex. A small reduction in product returns makes a tremendous impact on the bottom line.”
Furthermore, a positive experience with an online user manual can save a customer relationship that might be soured by a bad experience with live customer service. “When a customer hangs up after a bad customer support experience, they’re hanging up on the brand, it’s brand abandonment,” says Ross Glatzer, CEO of OneCare Inc. of Pleasantville, N.Y. “The next battle for customer loyalty will be fought on the product support front.”
Significant market opportunity
How2TV, e-Sim Ltd.’s Live Products Division , based in New York, and OneCare are competing for the burgeoning market in interactive, web-based user manuals. Called by some self-service customer relationship management and considered a subset of CRM, the technology is poised to play a major role in retailers’ and manufacturers’ use of the web. The measure of the self-service CRM market is hard to come by, but OneCare, for one, estimates it could reach $7 billion a year, depending on what is counted. The user manual portion is a further subset of that. “This is a significant market opportunity,” says Chris Martins, research director at Boston-based Abderdeen Group, information technology consultants and researchers. “The technology supplier who has the sophistication to do this will provide real value to retailers and manufacturers.”
Two major issues face would-be suppliers to this market, Martins says. “One of the challenges will be providing decent production values in a cost-effective fashion,” he says. The other is to deliver the information in such a way that a consumer can access it in a non-PC format. “If you’re looking at a program like this to repair your washing machine, chances are your PC will not be in the same room as your washing machine,” he says. “One of the questions is how proximate the information is to the piece of equipment you’re trying to repair.”
E-Sim’s LiveManuals, which offers an interactive display that is a combination of slide show/voice-over/user interaction, announced deals with Nikon USA and Seiko Instruments Austin Inc. in April, and has deals with Maytag, Amana, Kenwood, Zenith, Samsung, Sony, Hitachi Power Tools and others. “We are not video,” says Bill Sims, CEO of the Live Products division. “We are using a proprietary technology that allows us to bring these products to life.”
How2TV has produced a video demonstration of the features of a new Sanyo cell phone for the salespeople who will be selling the phone to consumers, and marketing videos for Yamaha Electronics, Compaq Computer and GE Appliances.
OneCare has produced online user manuals, which it calls Smartmanuals, for Zapworld, a manufacturer of electric-powered scooters, and Caterpillar.
Users of interactive, web-based user manuals say the benefits they get are fewer product returns, fewer calls to customer support centers and greater customer satisfaction. “This is a great customer service benefit,” says Jerry Grossman, vice president of Internet development and marketing at Nikon USA, which has just signed on to the LiveManuals product for a line of digital cameras. “You’re practically in the customer’s living room telling them how to use the camera.”
No more plug-ins
The competitors in this market are taking similar yet different approaches. How2TV and LiveManuals emphasize video/voice-over/interactivity while SMARTManual employs pictures and animation with a high degree of interactivity.
LiveManuals this year revamped its approach to providing information on the web. Until mid January, it required users to download a plug-in to view the manual. “Plug-ins are a barrier to use,” Sims says. “Consumers don’t know what it means to download a plug-in and they’re afraid of them.”
The Nikon and Seiko deals are the first to offer LiveManuals products that do not require a plug-in. Consumers click on the product they want demonstrated and they can either play with an image, pushing buttons here and there to see what they do, or they can request a guided tour in which a voice-over and dialogue balloons walk them through the features. A full-featured LiveManuals demonstration costs $10,000 to $15,000, depending on the number of products LiveManuals produces and how complex the product is. In addition, LiveManuals charges a software license usage fee of about 50 cents per click, although the price is negotiable based on usage.
In the case of Nikon, the price of developing a LiveManuals application is incremental and does not represent a huge additional investment, Grossman says. “We are producing manuals anyway and they’re all produced in a digital format, so we’re building on the existing manual,” he says. “The cost is in building the demo and linking to the manual.”
LiveManuals delivers the e-manuals from three servers at its site to manufacturers’ or retailers’ web sites. It also maintains a site of its own where a consumer can access a multitude of demonstrations, find local repair services and register all their products. LiveManuals has recently begun marketing the comprehensive demonstration service to portals, but has had no takers yet.
Pinpointing problems
The SMARTManual product resides on the web host of the manufacturer or retailer. In the case of the Zappy scooter, the manual covers everything a paper manual would cover, starting with unfolding the scooter and charging the battery to troubleshooting. In the troubleshooting application, a series of queries leads a user to the particular problem, and close-up pictures and animations walk the user through the repair. Users can print the repair instructions so they can have them handy to work on their scooter. When they do so, the animations automatically print sequentially so the user can follow the instructions step by step. “We’re not assuming that the customer will have the Zappy on the desk next to their computer,” says Glatzer, former president of the Prodigy Network.
The SMARTManual program also tracks how consumers use the manual. Manufacturers can analyze that information to determine where customers have the most problems with the product, allowing them to address problem areas. The cost of producing a SMARTManual is under $20,000, Glatzer says.
How2TV offers a video demonstration of a user’s manual. The video is created in 30- or 40-second increments and allows users to skip to another topic if they are familiar already with the topic under discussion. “We try to focus it on the questions a customer would have,” Arcangeli says. “We ask the manufacturers to tell us the top 10 things that their customers would be concerned with.” The cost of such a video manual depends on the number of steps that How2TV must produce, but prices start at $10,000.
Traffic spike
As for calls to the customer support center, LiveManuals already has results that web-based assistance can reduce call center calls. Last November, Zenith deployed a LiveManuals customer support feature for remote controls on its web site. At the same time, it changed its call center number from an 800 to a 900 number. Calls to the call center have dropped by 90%, Sims says. “We’ve seen a tremendous increase in web traffic,” he says. “People are willing to help themselves, and will do so when provided an easy-to-use solution.”
Sims cautions, however, that not all deployers of the technology will see similar results. “It’s not clear that other manufacturers are prepared to take the aggressive approach that Zenith took,” Sims says.
E-Sim writes and develops the guided tours and records the voice-overs at a production facility in Israel. A production facility in Bangalore, India, applies the graphics and converts everything to HTML. How2TV creates its products in the Los Angeles area. In fact, How2TV believes that its location in Los Angeles helps it create high-quality video. It can tap into a local pool of experienced cinematographers and video production specialists. And there is a large enough pool that How2TV does not need to hire such specialists permanently. It hosts a seminar it calls How2TV University three times a year and attracts about 75 to each. “One reason we are in LA is that finding people in the film industry is very easy,” Arcangelli says.
OneCare produces the manuals for its users or it licenses the software so the manufacturer itself can produce the manual. The manufacturer uploads the pictures, then provides the content. In addition, the manufacturer can make the smartmanual software available to its component suppliers, for instance, the battery provider in the case of the ZapWorld manual, and the suppliers can update the information.
While OneCare, How2TV and e-Sim have the market to themselves today, that probably will not last, industry participants say. Says Glatzer: “Within 36 months, every manufacturer across every industry will have a significant form of product support like what we’re doing.” That surely will draw more companies into the market.
kurt@verticalwebmedia.com
Video manuals can do marketing duty as well
How2TV and LiveManuals have also made use of their production capabilities to produce promotional materials. In December, for instance, Yamaha Electronics debuted a How2TV video promoting its new RXV1 audio receiver. In the first month, 6,000 customers viewed the video—and that monthly number has held since then.
Yamaha was cautious, didn’t make the video accessible from a lot of places on its web site and has done little promotion, so executives are pleased with the results, says Thomas Graham, vice president of marketing for Yamaha.
Henio R. Arcangeli Jr., president of How2TV, says 25% of customers who viewed the video took additional action—clicked a store locator button, requested more information or requested a catalog—and only 1% pressed the help button.
Graham says Yamaha can’t tell if the video has generated sales. But he says the promotion was priced low enough that there was not a huge risk in deploying it. Yamaha paid $10,000 for the video and 10 cents per download, meaning Yamaha pays $600 a month promote the receiver this way. “Compared to direct marketing and e-mail, it’s pretty inexpensive,” Graham says.
One thing that Yamaha has learned from the video is that it must be kept short. The RXV1 video is two and a half minutes long, with the first half of the video recounting some of Yamaha’s background. Most viewers bail out halfway through, Graham says. 
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