A Profitero study showed Target’s online prices were 25% more expensive than Wal-Mart’s, which were just slightly more expensive than prices on Amazon.
If customers will buy on the web, producers of web-based user manuals are betting they’ll also go to the web for advice on product set-up, repair and troubleshooting.
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.