Educating the Market

The idea of educating customers is a bit of a conundrum. First of all, businesses survive on an asymmetry of information or of capability – because I as a business know something or can do something you can’t, you as a customer have to pay me for my product or service. Why would a business expend resources to reduce that asymmetry by educating customers at all, even in the most minor way?

Getting from Baffled to Buyer

That question is answered for me every time we participate in a product exhibition, which we are doing over the course of 3 weekends this month. As purveyors of solar lighting, we use these exhibitions to showcase our wire-free solar-powered lighting for homes, gardens, parks and municipalities. Most customers can understand that solar lighting is a convenient and cost-saving solution, but when we remind them that there still remains the necessity of changing the batteries within the lamps every 1 to 3 years (depending on the application), many a time they return a blank stare which reads: “you mean there are batteries in there? I thought this was solar.”

This requires a short lesson in photovoltaics, the process of solar electrification and charging of batteries for use at night, when the sun has set. Most Malaysians reference solar technology with water heaters, which use a different solar thermal process using vacuum tubes that does not require batteries.

Education therefore is a must, because while one can never underestimate the ignorance of people, one should also not underestimate their ability to learn quickly, given proper information! For new product category openers especially, to convert the universe of ignorant prospects to knowledgeable customers, education is therefore required and can be quite a large expense. The usual route is to sponsor workshops or buy advertorial space or ply the convention route, educating customers face-to-face.

Getting from Cheapskate to Snob

There is another case where it serves a company’s interest to invest in educating customers, and that is to educate them on how to be more discerning when it comes to the product category. Premium suppliers tend to do this a lot more. Ever notice that, within the diamond trade, those who extol and are eager to teach the “4 C’s” – cut, clarity, colour, carat – are the premium retailers? Naturally, they would be more eager to highlight to you such factors, which help to differentiate and price their diamonds higher.

Sometimes, though, you don’t have to go overboard on this process of education. Oral-B toothpaste, for example, is so expensive it boggles the mind: a 100ml tube costs over RM10 when other brands, weighing in at twice the volume or more, cost about RM5. A phone call to the company hotline yielded 2 explanations: the Oral-B brand name is “trusted and respected” (uh, okay), and that each tube has a 0.375% content of “stannous fluoride”, which presumably is great for teeth and very expensive.

While the phone call didn’t leave me very convinced, one cannot doubt that the marketing formula works. Unlike the competition, the Oral-B packaging is subdued, with no cartoon elements, no big bold letters, just simple, plain, almost medical themes. Coupled with the high price, it should be sufficient to signal to discerning customers its better quality.

Forums - the new frontier

Nowadays, customer education can happen even with no effort made by the company. Curious customers congregate voluntarily on the Internet in online forums, sharing what they know about your product and searching for clues or tips on using them. A friend of mine who recently bought a German car discovered a rattling noise emanating from the passenger door and decided to go online to a forum in search of answers. The good news is, he discovered a community of others with the same problem; the bad news is, all off them reported it would cost too much to fix and were grousing about it!

For those businesses in a position to do so, creating an online forum alongside their usual standard web site is a simple and cost effective way to manage the education of and communications to their more enthusiastic customers. (It sure beats having them complain elsewhere!) Just be prepared to interact more with potentially unhappy ones.

The ultimate business differentiator

There’s an old saying in business that goes: “The more you tell, the more you sell.” The willingness to educate your customers so that they can make informed decisions is the true mark of a responsible business that is confident its products and services bring value to its customers. In that sense, it does not matter whether the company is at the premium end or not, it should invest in education as long as its wares are competitive in the marketplace.

Appeared in "The Sun", April 16th 2008. PDF version here.