1. Interactive Training Skills: Evaluation Study Executive Summary Presentation Service Merchandise Company Date: Wednesday, April 6, 2011 CONFIDENTIAL Consultants: Nancy Donovan David Soltis Rick Clarke

2. 2CONFIDENTIAL Meeting Objectives During this session we hope to achieve the following: a. Present the background and rationale for the ROI Study of the Customer Interactive Selling Skills Program b. Identify key issues encountered during the study c. Explain our ROI Methodology d. Present the findings on 5 levels of evaluation e. Present final conclusions and recommendations for the program f. Question and answer period

3. 3CONFIDENTIAL Business Problem and Background Business Problem: Service Merchandise Incorporated is currently experiencing low sales growth. Diagnosis: Based on business analysis the problem can be attributed to a number of key factors including behaviour of sales associates and customer interaction. Training Solution: Pilot program developed by third party supplier which focused on enhancing the customer interactive skills of sales associates. The program was implemented across three stores (16 Learners Per Store) and included: a. Two days of in class training b. Three weeks of on the job application c. One Day Discussion Session

4. 4CONFIDENTIAL Rationale for ROI Analysis The ROI Study was implemented to address the following issues: a. Reaction and Learning - Validate the level of reaction and learning that took place during the training b. Behaviour Change - Determine if the program augmented the behaviour of sales agents (Engage in Up Selling/Positive Interaction) c. Validate Linkage of Program to KPI - Isolate the impacts of the Program to validate the linkage of the program to specific KPI’s d. Return on Investment - Determine if the program benefits exceeded the costs and generated a positive ROI e. Continuous Quality Improvement – Identify if there are changes that can be made to enhance the learning experience and transfer of knowledge on to the job f. Program Expansion - Determine if the program should be rolled out to all stores

5. 5CONFIDENTIAL Key Issues in the Original Study The following is a list of key issues that our team encountered during the evaluation process: a. Small Sample Size – The sample size consisted only of 3 stores. A stronger size of about 150-200 would have been more statistically significant. b. Employee Turnover – Within the target learner group there is a high level of turnover.

6. 6CONFIDENTIAL The Alignment Process 80% 5 Simple Skills 50% Use Skills Increase in Sales 50%

7. 7CONFIDENTIAL Our Methodology: ROI Process Model

8. 8CONFIDENTIAL Our Methodology: Isolation of the Effects of the Program Key Question: When sales data is collected three months after the program, how much of the increase in sales is directly attributed to the program Method: Control Group Analysis Process: a.Group Selection - Three groups selected to be trained, three groups to be compared against (Control Group) b. Sales Influence – Identified criteria that could influence sales including store size, store location, customer traffic and store performance

9. 9CONFIDENTIAL Results at Level 1 ActualTargetStatus 84.8%80%

10. 10CONFIDENTIAL Results at Level 2 Learning and Confidence: Observation: Skill Demonstration Instrument: Questionnaire Process: The facilitator would observe the learner and indicate if they have successfully demonstrated the skill. This provided evidence that the learner had actually learned the 5 key skills/behaviours. ActualTargetStatus 5 Simple Skills Learned (Passed) 5 Simple Skills Learned

11. 11CONFIDENTIAL Results at Level 3 I utilize the skills taught in the program. Strongly Agree AgreeNeither Agree Nor Disagree DisagreeStrongly Disagree 78%22%0% ActualTargetStatus 100%50%

12. 12CONFIDENTIAL Results at Level 3 (Continued) Frequency of use of skills With Each Customer Every Third Customer Several Times a Day At Least Once Daily At Least Once Weekly 52%26%19%4%0% ActualTargetStatus 52%50%

13. 13CONFIDENTIAL Results at Level 4 Trained Group: Avg. Weekly Sales = $12,075 Control Group: Avg. Weekly Sales = $10,449 ActualTargetStatus $1,626.00+15.56%Increase in Sales

14. 14CONFIDENTIAL Annualization of the Benefit Output AVG Weekly Sales per Employee Trained Groups$12,075.00 AVG Weekly Sales per Employee Untrained Groups$10,449.00 Increase$1,626.00 Profit Contribution (2% of store sales)$32.50 Total Weekly Improvement (x 46)$1,495.00 Total Annual Benefits (x 48 Weeks)$71,760.00

15. 15CONFIDENTIAL Program Costs ItemCost Facilitation Fees, Three Courses at $3,750$11,250.00 Program Materials, 48@$35 per participant$1,680.00 Meals and refreshments, three days @$28 per Participant$4,032.00 Facilities, Nine Days @ $120$1,080.00 Participants' salaries plus benefits (35% Factor)$12,442.00 Coordination and Evaluation$2,500.00 Total Costs$32,984.00

16. 16CONFIDENTIAL Results at Level 5 BCR = $71,769 $32,984 = 2.18 ROI (%) = $71,769 - $32,984 $32,984 = 118% X 100 Actual ROI (%) TargetStatus 118%50%

17. 17CONFIDENTIAL Conclusions and Recommendations Conclusions: a.The program had a positive impact on Average Weekly Sales (15.56% Increase between Trained and Non-Trained Groups) b.For every dollar spent on the training program, there is a a dollar returned and an additional $1.18 c.There was an increase in a number of intangibles including job satisfaction, teamwork, confidence, customer satisfaction, corporate image, etc. Recommendations: a.Roll out the program throughout the store chain b.Collect sales data for the three target stores for the remainder of the year c.Consider online tools/job aids to support and sustain behaviour d.Share Results with stores e.Provide a presentation of the data to training staff, along with a workshop to educate on the ROI Process

18. 18CONFIDENTIAL Part B: Study Critique

19. 19CONFIDENTIAL Strengths and Weaknesses Weakness: a. Do not gather specific data on intangible impact of program (Only 1 level 4 metric) b. Level 2 (Learning and Confidence) – Pass or fail utilized, does not indicate how many pass/fails resulted, were participants given multiple attempts, if so, how many? This data could have been used to modify delivery of future training events if required. c. Level 3 – Was collected after three weeks after the first two days of training This is a temperature check, but a second follow up would further validate that the behaviour has been internalized. The level 3 target has not been met for level 3 (52%). A more credible source of data would have been using observation by a Store Supervisor, or a customer survey. Given the small sample size, this could lend strength to the recommendation to implement. e. Employee Retention is not addressed – this is not considered as a cost. Weak link to intangibles. This business impact could have been analysed in L4 by measuring % turn over in the control group and trained stores, using business performance monitoring 3 months after the program, and throughout the year of data collection.