Consumer electronics companies and retailers are finding out the hard way what happens when you don't educate
customers. Take, for example, the recent situation involving the purchase of popular high-definition televisions (HDTVs).
According to Forrester Research Analyst James McQuivey, 20 percent of the sets sold have been returned in some
U.S. regions, in large part by consumers who didn't realize what they were buying. Per an ESPN/Knowledge
Networks/Statistical Research Inc. study, only 64 percent of homes with an HDTV have HD programming via broadcast
or cable, and 13 percent of people who own an HD set do not know if they receive an HD signal.
McQuivey forecasts the 20 percent figure will drop moving forward, as more retailers see the need to educate customers about the format if they want to avoid such massive returns. However, as Henry Choy, senior analyst at Jon Peddie Research, says, "that's still not great."
Who's responsible for customer education?
The situation gives rise to a pair of interesting questions: Did manufacturers and retailers drop the ball with HDTV,
and when is it the responsibility of those same groups to educate consumers about their products?
"Whenever you see people buying a product and a lot of people returning it, that means there's either a problem
with the product itself or with managing expectations," says Peppers and Rogers Group cofounder Martha Rogers,
Ph.D. "In this case it seems more the latter."
Since HDTV was mandated by government regulation, the government should have provided the first line of
education -- which it did, to some degree, Rogers says. "I've seen a couple of articles in magazines that explain
what HDTV means to consumers," she says. "But it also makes sense for the manufacturer to educate the consumer
and the retailers. If I'm Panasonic, I'm selling tons of plasma screens, but when I want to get into HD, I
should be sure the salesperson gets a whole new education to answer questions from customers before the TVs start
walking out the door."
Choy agrees. "You should be able to go to a store and have a salesperson who's educated enough to counsel
you in buying an HDTV. But there's such a high turnover at these stores that it's hard to retain that training."
Even though companies like LG, Sharp, and Sony provide seminars and courses for different stores, Choy says,
usually those salespeople have moved on by the trainer's next visit. "And even beyond that," he says, "if you have
five manufacturers who each have their own training points, that just makes it all the more confusing for the salesperson."
Even some networks have gotten involved with trying to explain HD to consumers, via their websites (e.g.
ABC). But McQuivey and Rogers both believe that ultimate responsibility for consumer education lies with manufacturers. "Pharma tries to do that like crazy," Rogers says. "They try to educate patients and the patient intermediaries, the physicians. So you don't really need to look all that far afield for an example of an industry trying to do it right.
"A lot of people don't understand HDTV, and if you tell that to retailers -- and that if they don't educate salespeople who then can educate consumers, you'll get a lot of returns -- that's something the retailer gets right away," she continues. "They're not only dealing with the loss of a sale, but also with the cost of processing returns."
Choy agrees, but feels retailers themselves must take more responsibility. "The store should do a better job of
educating customers, the documentation inside the box must be better, cable companies can get more involved,"
he says. "But it's the retailer who should be the frontline -- they're the ones who see the customers."
He goes so far as to suggest that retailers might consider providing a pamphlet for prospective HDTV customers to read, though he admits that if in-store signage isn't getting the message through, such an effort might not either.
Still, he says, "With the margins that retailers have, you'd think they'd be pretty motivated to educate customers."