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New twist on the old school

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E-learning isn’t exactly a new idea. Over the past few years, more businesses have been moving employee training onto the Web, offering classes that cost less, save time and offer consistent material. In fact, the online training market is expected to nearly double in size every year through 2003, reaching approximately $11.5 billion by that time, according to International Data Corp. research.

But while e-learning has until now been considered a source of internal value for companies, it is beginning to evolve as a marketing tool. The idea is that marketers can make their Web sites more useful for clients or partners by educating them about a product or service.

According to Mike Brennan, senior analyst for the U.S. corporate e-learning research program at IDC, dollars put toward e-learning will increasingly come from marketing budgets rather than from corporate training budgets. "A lot of interactive advertising can almost be considered e-learning because they are really attempting to engage the person," Brennan said. "I think it’s a widely held belief that a knowledgeable customer is a loyal customer."

The returns for businesses offering e-learning to partners and customers can include reaching a broader audience, adding "stickiness" to their Web site and strengthening relationships, said Stephen Gentile, VP-marketing for Web-based training developer Instruction Set Inc., Natick, Mass. "As [companies] continue to look for differentiation in value-added services, e-learning is proving to be one of the natural add-ons for the business-to-business world, said Gentile, whose company recently finalized a couple of deals with clients looking to use Web-based training as an external marketing tool. One of those is online computer products vendor Egghead.com Inc., Menlo Park, Calif. [See sidebar, below.]

Egghead plans to use the coursework to expand its customer base, enhance customer loyalty and garner additional sales, said Merle McIntosh, Egghead’s senior VP-product and site management. "We believe that it is a strong value-add to our targeted customer set."

Jerry Nine, VP-sales and marketing for Nashua, N.H.-based SkillSoft Corp., an e-education vendor, said that though the company’s primary business is courses for employee training, clients have expressed interest in training for external use. "Some of [our clients] now are starting to talk about taking e-learning up and down the supply chain," he said. "We’re seeing a number of large companies that have proprietary content that might be [interested in] educating the dealer channel on how to be more effective in a sales situation."

Customized for clients

While companies such as Instruction Set and SkillSoft are obvious developers of e-coursework, interactive agency SixtyFootSpider, Dallas, formally launched a Web-based training practice in December to create customized e-learning projects for clients.

The agency, a unit of True North Communications Inc., Chicago, began building those capabilities last May, through the purchase of Minneapolis-based Juntunen Media Group’s Communications Solutions Division. The CSD unit had been working on

e-education projects as early as 1995, said Geoffrey Sass, director of training and education solutions for SixtyFootSpider. Current b-to-b clients using the Web-based training practice include 3M Co., St. Paul, Minn., but Sass declined to discuss the project.

Sass also views the marketing and e-learning connection as a natural. "There are some very interesting links between training, learning and education, and marketing, bottom-line, selling and branding," Sass said. "We think of online training as just another one of the tools in our communications arsenal of sorts."

SixtyFootSpider foresees clients using Web-based training courses to market their goods. For example, Sass said, an e-course offering could help companies sell products or services, such as respirators, that operate in a regulated environment. "With respirators, there are OSHA requirements that people be trained on how to use them," he explained. "So in order to sell that product, many companies have found training to be a way [not only] of marketing the products, but will make it so easy for you to satisfy these OSHA requirements that you wouldn’t want to go and buy from someone else. I would anticipate that [trend] becoming pretty de rigueur here in the next year to two years."

Marketing a marketer

SixtyFootSpider not only expects its e-learning unit will help its clients market themselves, but it will use it to market itself, too. "You probably don’t run across a lot of people in agency fields that are doing this stuff," Sass said. "It’s a big differentiator for us."

The agency hopes to be viewed as more of a one-stop shop, said Ray Terrill, SixtyFootSpider’s senior consultant and executive producer. "It’s a total offering. It’s a benefit for [clients] because you can leverage your knowledge about them and access more resources in terms of talent that understands the client, the brand—the whole bit."

Brennan said it is likely that other communications agencies will develop similar e-learning capabilities for exactly that reason. "It makes for a more complete offering and a more satisfied customer," he said.

E-learning projects have already brought in new business, Sass said. "We started out with clients where we were strictly doing learning projects," he said. "These are often pretty complex projects, pretty big projects, so we often have a chance to demonstrate some of our real skill and execution."

The result: Pleased e-training clients have given SixtyFootSpider additional communications work.

Still, the idea of a communications unit providing e-training remains somewhat obscure, for the moment, Sass said.

"We live within this giant agency umbrella where a lot of people really haven’t even considered it," he said. "And a lot of potential clients haven’t considered some of the power of combining this core competency with some of the agency value and experience."

Costs to SixtyFootSpider clients vary according to the project. Sass estimated that it would cost a minimum $200,000 to $250,000 for development of any "meaningful" coursework. A targeted e-learning game on a very specific topic could cost less, he said. Project costs can reach the $1 million to $2 million range, he said, but all are generally one-time costs.

Some SixtyFootSpider clients charge their users for the training programs, others don’t.

Instruction Set currently charges clients for program development costs as well as a monthly fee. Costs vary widely depending on the customer, but Gentile estimated a minimum price of $10,000 to $50,000. Beyond that, the staff investment on the client side is "almost nil," he said. Instruction Set is currently re-evaluating its hosting pricing model to make it a "low-cost entry," Gentile said.

SkillSoft’s courses are leased out, Nine said, and cost is based upon the number of users who will have access to the training, the number of courses to be licensed and the contract term. He declined to give specific costs. Clients then decide whether or not to charge employees for the cost of the courses, but most don’t, Nine said.

IDC’s Brennan said this will be the case with many marketers who offer Web-based training. "A lot of e-learning modules, I believe, will be offered as a value-add, as a free service, [though it may depend] on the product being sold," he said.

The view ahead

The potential benefits of e-learning extend beyond customer loyalty. In the future, Sass also expects e-learning to be used in conjunction with customer relationship management programs. For example, he said, a computer vendor might collect information about a customer’s online order. Then, two years after a purchase, the computer vendor might send the customer an e-course that helps them explore their current and future computer needs. "And [it would] not just make them an offer," Sass said, "but really help them understand the offer—because that’s an area where people are usually mystified."

But before e-learning becomes widespread as a marketing tool, Sass said, businesses will have to change the way they view training. "I think that a lot of people, frankly, have almost a prejudice against it," he said, adding that many people think any sort of training is "boring." "I talked to somebody [last month] who said, 'Just don’t call it training and I’d be more interested in it.' "

That's partly because most Web-based training is very static in nature, Sass said. "It is heavily 'read a page of text,' 'see a picture,' 'maybe do a little interaction,' 'click to the next page.' And for an assessment, users may do a multiple choice or true-false test at the end. And that's really not what we do."

SixtyFootSpider generally creates multimedia courses that work over a 56K modem and incorporate streaming audio, streaming animation, drag-and-drop, interactive exercises, gaming and simulations, he said. Creativity and fun are a must. "It's the lazy, static Web-based training that's going to get left in the dust."

Egghead.com thinks up new way to add value
Last year, online computer products and electronics e-tailer and auctioneer Egghead.com Inc. was looking for ways to distinguish itself in a growing online marketplace.
The Menlo Park, Calif., company began adding features such as office supplies, DHL Worldwide Express delivery service and leasing options. Six months ago, it began in earnest to lay the groundwork to add its newest line: e-learning.
To create the e-learning program, Egghead partnered with e-education vendor Instruction Set Inc., Natick, Mass., to offer coursework to Egghead.com’s customers. They will begin doing so, in a co-branded page on Egghead’s Web site, this month.
The move is intended to expand the company’s customer base, build customer loyalty and drive sales, said Merle McIntosh, Egghead’s senior VP-product and site management.
"The fact is, we’ve got a very, very broad business customer database today and several hundred thousand business customers," he said. "We want to make sure we’ve got everything they need to make sure they keep coming back to us."
The e-learning courses will be promoted through the company’s existing online and offline marketing programs as "another one of the great offers that Egghead.com brings to its business customers," McIntosh said.
While Egghead offers some consumer goods, such as sporting goods and travel packages, its primary target is small to midsize businesses.
Coming attractions
Egghead will feature about 350 of Instruction Set’s Web-based training courses, which primarily focus on information technology. The course offerings will be initially accessed via Egghead’s Business Center area but will be integrated as an add-on offering sometime this month or next, McIntosh said. So, for example, if a customer buys Microsoft Office software, they would be asked if they want to be trained to use the product, he said.
The courses will not be free, though. Instruction Set will set the prices for the coursework it sells through the Egghead site; for every sale that Egghead completes, it will earn a commission. Instruction Set will bill the customer.
"We are constantly looking for different products and services, particularly in the information technology area, that more fully round out our product offering and help our customer base," he said. "Clearly, training in the small- to medium-size business world is a very important aspect of growing [their] business."
And by using an outside vendor, Egghead had to make little investment itself. "With the relationship we have with Instruction Set," McIntosh said, "we’ll do some stuff on our end to make sure that it’s linked properly, and that we’ve got the right marketing going on, but all of the heavy lifting will be done by [them]."
McIntosh declined to estimate sales projections for the coursework. "I think it’s a little early to call," he said. "We’ve been doing some internal studies that indicate this will be very well received by our customer base...We expect good things."
--By Karalynn Ott
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