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So This research goes back gosh 10
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years to uh when I was working with
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Sergey nison who was then a faculty
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member at Warden now at ncad and Sergey
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and I were in touch with some retailers
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who collected customer satisfaction
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survey data when you left the store you
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were given the opportunity to fill out a
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survey and they had millions of
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responses on these surveys and we're
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wondering what to do with that
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information and so what we proposed and
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they liked was that we would
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correlate how and customers would rate a
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retailer on a 10-point scale that if a
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retailer store in a month was getting
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tens uh versus another store that was
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getting sixes did you see a difference
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in Revenue so did doing good by your
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customers meant you did well on the
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sales
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line what that correlation showed was
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that there were four factors that stood
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out as important for these retailers m
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not apply to all retailers but you could
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think about what matters to you when you
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shop number one most important could you
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find somebody to help you number two if
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you found someone were they
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knowledgeable and number three could you
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find what you came for and then number
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four when you wanted to pay for it was
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the line at checkout of reasonable
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length on three of those four factors
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if we wanted to tell a retailer how to
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do better uh there was lots of research
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available so a lot of theory about
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inventory that would avoid stockouts
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that would mean people found what they
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came for queing Theory could keep line
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links
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reasonable but on employee knowledge
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there was nothing really that we could
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say there was nothing we knew about the
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theory of employee knowledge or how to
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develop
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it and then
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um gosh two years ago I was actually
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visited at ncad working with s got
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contacted by a company called
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experticity um and what they did was
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develop uh training modules for brands
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that would be taken by retail Associates
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their first customer I think was
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Northface and other outdoor product
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brands that put tons of energy into
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developing great products and felt a lot
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of that energy was neg
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by store associates who couldn't explain
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the features of this great new product
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they develop so at the point we uh Tu
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with experticity they were working with
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hundreds of Brands thousands of retail
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stores and hundreds of thousands of
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store associates were taking their
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modules um and they had happy customers
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uh they felt like they were doing good
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but they couldn't prove it they couldn't
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prove that if a store
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associate uh trained on their system
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that they were more effective and more
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effective would mean uh close more deals
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with customers sell more product uh than
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the people who didn't
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train so ser and I uh teamed up with
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Santiago Galino who was at the time in
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the PHD program at Wharton working with
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me and some other faculty um San Diego
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is now on the faculty at Dartmouth tuck
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um and uh we said to experticity
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okay we'll work with you we can measure
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the benefit of your training we don't
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know if it's going to be positive or not
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and it may well be that you're doing
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lots of good but we can't prove it
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there's lots of instances in life
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where like an MBA degree you think it's
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worth a lot maybe it gets you a
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particular job but there's no proof that
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you perform better on that job um so
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they arranged for us to gather data from
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a large department store with something
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like
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300,000 sales
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associates
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over a I think three-year period week by
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week what the sales was of each sales
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associate and then how much training
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were they doing uh half approximately
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half of the Sal Associates did some
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training and you could see they might
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start that uh the second year in our
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data set and train for a while and some
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trained a lot some trained a little so
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you had data on sales and you had data
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on the level of
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training what that showed was that those
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sales associates who did any training at
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all the half that trained were
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46% more productive 46% more sales per
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hour than those that didn't
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train now does that prove that
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experticity is adding 46% value not
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quite because these people were not
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randomly assigned to training they
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volunteered and so the act of
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volunteering means they're they're
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different from the people who didn't
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volunteer among other things they're
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probably a little more zealous okay so
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then we looked at how much of that 46%
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was due to the individual themselves how
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much to training and we could do that
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because we could compare the individual
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after they train with before they
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trained and we could compare the
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individual who eventually trained but
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before they had any training to those
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who never trained and we found about
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half of the 46% was due to the
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individual themselves uh and the other
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half was due to the training so
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would the other half if they were
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encouraged to train and and began to do
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so uh increased their sales by 46% we
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don't know but uh 23% is still a big
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Improvement so we thought a lot about
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that F and I had an aha moment when I
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was in the local Suburban single store
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Outdoor Equipment chain buying a rain
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jacket for backpacking which I do with
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my son as often as I can and it turns
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out there's a lot of uh attributes to a
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Rain Jacka number one does it repel
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water which varies in varying degrees uh
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how breathable is it what does it weigh
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uh and something like gortex is that
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really better or is that just a brand
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this retailer uh carried a broad
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assortment so I could see all of the
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different versions of those attributes
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they could explain each and every
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product to me the importance of
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differences uh and at the end of the day
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I was felt comfortable buying because I
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felt like I'd gotten the very best train
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jacket for me uh and on a hunch I said
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hey have you ever heard of a company
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called
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experticity and they said oh yeah yeah
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we do their training all the time so the
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light bulb kind of went off that when a
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customer walks into a store they want to
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get the right
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product if the retailer carries a broad
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assortment and the store associate can
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explain the differences uh in the
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attributes of the various products so
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that you feel assured that you're buying
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the right product for for you uh then
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you're going to then they're going to
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close the deal and you're going to walk
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out having having made a purchase if if
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not
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uh you may well want to continue
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shopping either online or a different
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store there were two things that
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surprised Us number one was that the
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magnitude was so big 46% and half of
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that due to training a sales associate
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who spent an hour on
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training uh saw a 5% gain so from the
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sales associates standpoint being paid
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on commission that's huge impactful you
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you take an hour out of your day and
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you're getting 5% more commission you do
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the numbers and it's tremendously
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beneficial to a sales associate as well
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as the retailer uh the other interesting
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surprise was that since all this
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training is on particular Brands and
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maybe there were a couple dozen brands
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that the associates could train on we
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also had sales by brand so we could look
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at if you trained
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on um brand and
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XYZ what happened to sales of XYZ we
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also looked in aggregate what was your
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total training across all brands and
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your total sales turns out that training
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on a particular brand you can think
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about what you would guess I know what
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we would have guessed had no greater
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impact on that brand than any other
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brand crazy huh we thought about why is
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that well well when you walk into a
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store you're you want the associate be
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able to compare across Brands so among
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other things you're trying to figure out
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what brand you want to get if they train
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on brand XYZ and they can tell you about
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that that helps you also get information
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about about brand ABC so apparently
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just breadth of knowledge that would let
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associate compare across Brands um was a
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rising tide that lifted all boats
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well I think the big practical
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implication is that retailers it pays to
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invest in your people right it pays to
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have the store adequately staffed uh to
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hire talented people pay them well and
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train them well um why doesn't that
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happen I think uh for most retailers the
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benefit of higher Staffing level more
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talented people that you pay more to and
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and training is hard to measure and
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often in the future whereas the cost of
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that is often immediate this month if I
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have more people I write more checks for
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payroll or if I give people a raise and
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hire better people I write more checks
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for payroll um so I think that that
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would be one finding and I think it's
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broader than just retailers I think it
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applies lots of service industries that
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uh if you
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have associate that's dealing with one
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of your customers
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uh you want that person to be talented
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and engaging and you want that customer
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to have a good experience you can think
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about call centers and the experiences
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we've had which are sometimes good and
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sometimes not so good in call centers
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seems like the person on the other end
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of the line is trained to use your name
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four times in one sentence Rachel I'm so
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glad you called Rachel it's so great to
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talk to you Rachel uh but they don't
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know answers to your questions so I
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think that's one clear implication is
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that if you measure the value of
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investing in your people in this case
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training it turns out to be much higher
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than people tend to
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believe uh it's also interesting to me
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as a business school Professor um you
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know I I'm not sure I could ever measure
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or approve the value that students have
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gotten out of the courses I teach uh
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it's a very hard thing to do but in this
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fairly controlled context
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you could prove that education had a
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very high positive value I'd like to
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believe that also transfers to Business
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Schools so showrooming has been in the
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news
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clearly uh and it's a little odd if you
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think about it that someone has gotten
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in their car driven to your store walk
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through the door they're in your
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crosshairs talking to a sales associate
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they've invested in all of that
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why wouldn't you have the best chance of
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anybody in the world of closing the deal
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with them so I had a chance to reflect
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on this I told my raincoat story where I
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bought one uh because they had what I
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wanted and could explain it um I went
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off to buy shoes for
00:12:17
backpacking uh at another retailer that
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I won't name fully intention intending
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to buy them there cuz we were leaving in
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a couple days I needed them right away
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but uh they didn't have my size I wasn't
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clear even what my size was they
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couldn't explain differences to me
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so without intending to showroom them I
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was more or less forced uh to to go back
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home and and shop online so I ended up
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buying from zapo because if I wasn't
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sure about my size I could buy two pair
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and return one so I think an implication
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for
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retailers is
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this if your sales associates are well
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trained and can answer customers
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questions
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knowledgeably that's one weapon in Your
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Arsenal against showrooming I think
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customers oftentimes don't intend to
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showroom but are end up shopping online
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because they get better information
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online than they're getting in the store
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retailers can defend against that
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through better training of their sales
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associates
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[Music]
