Does Online Training Work in Retail?

Abstract

Problem Definition: How much, if at all, does training in product features increase a sales associate’s sales productivity?

Academic / Practical Relevance: A knowledgeable retail sales associate (SA) can explain the features of available product variants and give a customer sufficient confidence in her choice or suggest alternatives so that she becomes willing to purchase. Although it is plausible that increasing an SA’s product knowledge will increase sales, training is not without cost and turnover is high in retail, so most retailers provide little product-knowledge training.

Methodology: We partner with two firms and collect data on more than 50,000 SAs who had access to the training. We assemble a detailed data set of the training history and individual sales productivity over a two-year period. We perform a careful and robust econometric analysis based on this data.

Results: For SAs who engaged in training, the sales rate increases by 1.8 percent for every online module taken, which is a much higher benefit than the direct or indirect costs associated with this training. Brandspecific training has a larger effect on the focal brand; however, there is a positive effect on other brands the SA sells. We also assess how the training benefit varies depending on the SA’s tenure, sales rate prior to training, and number of modules taken. Managerial Implications: We present evidence of a novel training mechanism that can be extremely attractive to retailers. Online training tools, like the one we study, have two characteristics that should not be overlooked. First, it is the brands, not the retailers, that create, develop, and pay for the training content. Second, the incentives are such that SAs invest their own time, rather than time on the job, to train, and this makes the retailer’s investment in the training a profitable proposition.

Keywords: Retail Operations, Online Learning, Business Analytics, MOOCs, Empirical Operations Management