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Most retailers are in "survival mode." So says a report entitled "How to Win Fans and Influence Profits" sponsored by Convergys Learning Solutions, an e-learning outsourcing provider. American retailers are trying to find a way to survive in today's tough sales environment since they have already focused "on the obvious expense and revenues levers" like inventory, supply chain, and real estate optimization; staff reductions; CRM initiatives; and increased business process efficiencies.

Unfortunately, says the report, retailers don't have the luxury of saving money on labor costs, since they can't send in-store customer service representative jobs offshore or even significantly cut payrolls. As the 2003 report states, "Many tactics for cutting costs can have significant negative consequences regarding customer profitability and loyalty." Specifically, the report points out staffing cuts reduce payroll expenses but are offset by less favorable consequences such as loss of knowledgeable, experienced associates and mangers; low productivity and poorer performance of new hires versus experienced employees; additional expenses for training turnover-related replacements; and customer dissatisfaction because of lower quality customer experience.

The key to survival, it seems, is placing trained, knowledgeable salespeople on the sales floor. The report states "few products are vastly superior to their competitors. Since customers can buy from a variety of merchants, they will tend to choose those who make the shopping experience valuable in and of itself, apart from the worth of any product purchases," says the report. Curt Carlson, Director of Customer Research for J.D. Power and Associates, agrees. He told the Convergys researchers, "Department stores continue to rely on sales and promotions in the battle to attract customers. However, customers are saying that it takes more than good prices to make them happy. The stores that are providing value in the context of a highly satisfying shopping experience are winning the war for customer loyalty."

Training Retail Salespeople Does Pay

The report says if retail customers "aren't met with consistently competent, knowledgeable, and service-oriented employees when they visit your stores, how can you expect to hold on to them, much less win their loyalty and preference?" Fortunately, the report posits "delighting customers is not an innate talent. It is a learned ability based on a set of teachable skills."

But teaching those skills can be a challenge; retailers have a unique training problem. They do a large share of their business during the holiday season. The National Retail Federation estimates US retailers will sell $219.9 billion worth of goods during the Christmas season this year. Yet they did only $12.8 billion on Valentine's Day, the nation's No. 2 retail holiday. Training competent, knowledgeable seasonal workers for this crunch period is a key component in the survival mix.

Training retail employees does pay. A 2000 "State of the Industry Study" by the American Society for Training and Development discovered companies that invested the most in workplace learning enjoyed higher net sales per employee, higher gross profits per employee, and higher market-to-book ratios than those that didn't invest in developing their staffs.

The Convergys report said traditional training--instructor-led, video-based, or paper-based "hasn't worked well." Instead, it discovered "e-learning boosts sales and cuts costs." The report found e-learning:

• Lowers operating expenses
• Increases productivity
• Raises revenues
• Creates compelling, sustainable brand differentiation

The Circuit City Experience

One advocate of e-training is Circuit City. Its e-learning initiative reduced the cost and time to train new associates from 200 to 68 hours of training, a gain of more than 130 percent. The bottom line: Circuit City increased revenues with fewer sales staff.

The retailer, who outsourced its e-learning to Convergys Learning Solutions, rolled out more than 200 hours of custom e-learning courseware for both managers and associates. It deployed the courses across 650 stores in days without IS intervention.

Jeff Marshall, Senior Principal and Regional Vice President, Convergys Learning Solutions, says technology-based solutions are a good bet for retailers who typically have a large, geographically-distributed workforce. E-learning is especially helpful for retailers in the growth mode because they have entire stores to train every time they open a new one. And it is a necessity as they gear up for the important holiday season when they generate "the lion's share of their revenues," he notes.

Convergys Learning Solutions has assembled various pieces of its standard offering to launch an e-learning package this summer. There are two categories to the offering:

• Sales force readiness ensures the sales team has the product knowledge and selling skills to function effectively. It helps salespeople find the correct product on the shelf as well as teaching them the features and benefits of the products they are selling. It also teaches the customer service people how to sell, from how to greet the customer to how to craft a solution to the customer's challenge so he or she will buy right not and not leave to purchase the item elsewhere.
• Workforce optimization targets others in the sales organization like store managers and operation staffs.

Marshall says e-learning provides consistent training that is easy to update. The retailer can track each employee's progress through the modules. For example, if a particular employee is having difficulty with one module, the system will notify the store manager to give the employee more one-on-one help. "Employees may need to role play with their managers to improve their selling skills. This is a more expensive training method. E-learning lets retailers use role playing in a very targeted fashion," explains Marshall.

Retailers who don't want to get voted off the retail map may have to outsource employee training to survive.

Publish Date: November 2004

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Copyright © 2004 - Everest Partners, L.P.

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