Circuit City had a profound challenge to its bottom line. The Richmond, Virginia-based electronics retailer knew it had to recapture share in the face of stiff competition selling products that were continuing to evolve and improve. The company discovered the key to increased revenue and customer satisfaction is an expert sales staff. It needed a program that quickly empowered 50,000 sales associates to become experts in their departments, and, in some cases, more than one area.
This led Circuit City to replace its internal classroom training process with Web-based online learning programs for sales associates designed to boost volume and customer satisfaction while lowering training costs.
Circuit City initiated a partnership with DigitalThink, a San Francisco, California-based provider of eLearning business solutions in early 2000. The pact (recently renewed for another three years) encompasses DigitalThink’s complete eLearning offering, including catalog and customer courseware, along with eBriefings through DigitalThink’s Web-based eLearning platform.
“Digital technology has brought not only a great deal of crossover usage between products that sales professionals need to know, but a greater turnover in product offerings. Shelf lives are shorter, and training is an ongoing process,” says Jeff Marshall, strategic account director at DigitalThink.
Since the program’s inception, Circuit City employees have collectively enrolled in more than 1.8 million individual classes, says Jeffery Wells, senior vice president of human resources for Circuit City. The result, he says, is employees are “better armed with knowledge and skills in half the time and at a much lower cost than traditional classroom-based training.
“Our sales counselors find the eLearning extremely engaging,” Wells adds. “Completion rates are very high, and last December alone our counselors hit DigitalThink’s site more than six million times.”
ELearning to Grow to $17 Billion in 2005
While instructor-led classroom training is still prominent, singular and blended eLearning (the latter combines in-classroom training and eLearning reinforcement) is becoming more popular. In 2001, the total corporate investment in eLearning initiatives was $2.1 billion, rising to $15 to $17 billion in 2005, according to Gartner Research.
“When you look at some of the vendors that are beginning to incorporate it in their offerings such as SAP, PeopleSoft and others, it certainly speaks well of eLearning’s future,” says James Lundy, vice president and research director at Gartner. “More efficient employee training is a key enabler to faster turnaround times, and traditional classroom methods can be a bottleneck in launching new business initiatives or retail products and services.”
Additionally, a recent study conducted by Mirus Inc., a Boston, Massachusetts-based investment banking firm, concludes that eLearning is an emerging and increasingly mission-critical component of an enterprise’s infrastructure.
The Circuit City solution encompassed a broad curriculum of Web-based eLearning courseware. DigitalThink employed the system across 650 stores in less than a week, with no technology installation. It virtually eliminated traditional “classroom-based” training and focused on individual instruction. Both firms have jointly developed more than 110 online courses since forging their almost three- year partnership.
Circuit City’s eLearning is used for vendor and product specific information as well as launches and promotions. Courseware instruction encompasses in depth product information, sales scenario contexts and real-world, decision-based environments.
Progress Reports Available on the Web
Testing involves randomized, multiple-choice questions, a weighted score across product categories and the ability for employees to retake examinations at leisure. Summary progress reports and the percentage of learners who have completed their required certifications are available to senior management via the Web with a few clicks.
“This is an extremely efficient way for corporate employees to monitor progress, and helps them make more informed business decisions,” adds Gartner’s Lundy.
“Traditional classroom training isn’t considered BPO, adds DigitalThink’s Marshall. “But eLearning changes the view because it’s turning training into a strategic initiative that can be directly managed and monitored by corporate level decision-makers. It’s become an operational solution rather than just a commodity.”
An additional benefit to the retailer is that many vendors often fund their portions of courseware development, which represents even further savings.
“Outsourcing eLearning development makes a lot of sense because it can cost an awful lot of money if done internally. That’s why the content training market is a vibrant growth area,” says Gartner’s Lundy.
Ultimate Benefit – Better Profits and Satisfied Customers
Since the program began in 2000, annual training costs have decreased almost 30 percent. Time in training and training pay has also decreased 30 percent and hiring costs are dramatically down because employee retention is higher.
Revenues are up 10 percent and sales per employee are up from 15 to 49 percent, with the larger increases realized in the more focused eLearning categories. This has led to increased customer and employee satisfaction. Employee tenure has also improved almost 20 percent.
According to Wells, “DigitalThink eLearning is a key part of our strategy to increase sales per sales counselor, decrease turnover and increase customer satisfaction. As we move rapidly to a learning culture, where learning equals earning, our employee satisfaction is increasing. Much of the success has to do with the teamwork established between our two companies.”
Some of DigitalThink’s other eLearning clients include Kinko’s, Thrifty Car Rental, American Honda, DaimlerChrysler, Mazda, BearingPoint, Inc (formerly KPMG Consulting), Northwest Airlines, Palm, Intuit and Charles Schwab & Co.
Lessons from the Outsourcing Journal
- ELearning is forcing its way into the back office, with projected growth over the next three years of over 700 percent.
- Rapid turnaround, fluid courseware techniques and cooperative curriculum development between client and partner empower ELearning over more traditional classroom instruction.
- ELearning offers not only pronounced savings in instruction, but added value of faster education in areas that require ingoing instruction, which translates into higher employee productivity.