August 14, 2006 Sales training is one of the most critical and demanding applicatiion for e-Learning. This is even truer when a company’s success rides on the performance of the sales teams in its channel partneers You can enhance success with a carefully crafted certificatiio program within a strategic framework supporting knowledge transfer, through both formal and informal learning. Read this week’s article for an in-depth understanding of the channel sales training challenge, and how e-Learning and Learning Management Systems play key roles in meeting it. Certification Drives Performanncebased Learning By John Zonneveld In industries requiring extensive knowledge to effectivvel sell and service a product, business success depends greatly on the sales and distribution channel. Sales personnel must be familiar with many different offeriings Service technicians for an automotive dealership must be familiar with complex assemblies, subassembliies and electronic systems, as well as the equipment and systems used to diagnose and service the vehicle. Software VARs (Value Added Resellers) must be able to troubleshoot a product that can be as complex as an automobile but composed of bits and bytes. Regardless of the industry, high-performing channel partners must have accees to the knowledge they need to satisfy customers, including: • Best practices in managing and operating a business in the enterprise’s market • Expertise in delivering customer service that maximizes customer satisfaction and retention • Selling points and product features that will interest customers, increasing likelihood of a sale • Compliance issues, both regulatory (e.g., Sarbanes-Oxley) and mandated by A publication of THIS WEEK: Management Strategies The eLearning Guild’s Practical Applications of Technology for Learning SMManagement Strategies2 LEARNING SOLUTIONS | August 14, 2006 the enterprise (e.g., branding rules) In both the automotive and software industries, and other markets with knowledge-intensive products and services, the sales channel operates in the extended enterprise outside the company’s four walls. Insurannc and real estate agents are independent brokers. Automotive dealerships are franchises. Software VARs are independent businesses reselling another company’s product. Since the enterprise does not own its independent sales channel, it often lacks direec visibility into the day-to-day activities of the channne partner, and cannot apply the same management controls used to improve the performance of corporaat operations. In a large community of partners, performance progrram set standards to ensure that each channel partner delivers the same high level of service as anothher How does State Farm Insurance, General Motoor Corporation, or Microsoft Corporation structure a program that increases performance with its channel partners? The traditional approach One common approach used by companies that sell a knowledge-intensive product through a decentrallize infrastructure has been to build a field organizattion Corporate teams work directly with channel partners. Depending on the size of the extended enterprise, the field organization may consist of a handful of teams or reps, or the organization structure may be a hierarcch of district and regional managers overseeing groups of channel partners. Geographic area, specific job functions, or both may define the hierarchy. (For example, a team assigned to all the service techniciian in a particular regional area.) The field organization should provide visibility into channel partners and be positioned to address the challenges of each partner. However, in practice the field organization is not always equipped with the infrastrructur and processes it needs to deliver. The partner channel as musical composition Latitude (my company) has used the metaphor of partner channel optimization as a musical composition to understand channel performance. A composer arranges different notes to create a composition that results in a musical performance achieving a desired quality. An extended enterprise wants to coordinate Learning Solutions e-Magazine™ is designed to serve as a catalyst for innovation and as a vehicle for the dissemination of new and practical strategies, techniques, and best practices for e-Learning design, developmmen and management professionals. It is not intended to be THE definitive authority... rather, it is intended to be a medium through which e-Learning professionals can share their knowledge, expertise, and experieence As in any profession, there are many different ways to accomplish a specific objective. Learning Solutions will share many different perspecctive and does not position any one as “the right way,” but rather we position each article as “one of the right ways” for accomplishing an objective. We assume that readers will evaluate the merits of each article and use the ideas they contain in a manner appropriate for their specific situation. 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Learning Solutions e-Magazine™ is published weekly for members of The eLearning Guild, 525 College Avenue, Suite 215, Santa Rosa, CA 95404. Phone: +1.707.566.8990. www.eLearningGuild.com Delivering training is only half the battle. To maximize the success of a channel certificatiio program, the supporrtin processes and systems must identify success measures and continuously improve the program.different dealers to create a dealer channel that meets strategic performance objectives. Composers can achieve their desired quality becaaus they understand music theory, which provides a structure to analyze, understand, compose, and perfoor music with predictable, consistent results. The theory works because it embodies scientific theories of sound and physics that explain the interdependenciie between different waveforms. Those in charge of channel operations do not have a channel optimizatiio theory because they do not know all the interdependeencie of all the relevant variables in the life of a channel partner. What the extended enterprise needs is a good theoor that provides a structure to analyze, understand, control, and optimize partner channels. A field organizattio does not provide this structure. Just as some dealers operating independently may perform better than others, some branches of the field organization may achieve better performance improvement than others. A theory of the channel would identify the criticca variables in all areas of interest, and how those variables affect business goals. The extended enterprise must coordinate efforts throughout a field organization or directly with the partner channel. Often, effort is uncoordinated. Withoou a channel theory, the extended enterprise is playiin random notes instead of a song. Performance at some dealers may sound OK, but without a theory there is still a lot of noise in the channel, and strategic objectives are not being met. Results and insights from a dealership study One automotive dealership study contained a detaiile analysis of an evaluation system used by an automootiv manufacturer to measure dealer compliance to the manufacturer’s standards. Independent of the compliance scores, the study obtained eight dealer performance measures, including unit sales, part sales, market share for two different vehicles, and customer satisfaction with the sales, parts, and serviic departments. Out of more than 107 items used in the manufacturer’s dealer evaluation system, only 17 showed consistent relationships with business results. The relevant items fell into three categories: • Certified training (Non-certified training did not appear to affect dealership performance.) • Social capital (Participation in professional organizatioons • Anticipatory behavior (For example, prior to arrangiin a service appointment for a customer, a service manager verifies that a required part is in stock, and orders it if it is not.) Management Strategies3 LEARNING SOLUTIONS | August 14, 2006 ì Figure 1 The channel optimizatiio framework The channel optimization framework Latitude Consulting Group developed a strategic framework based on the key findings of the study. Knowledge transfer — both formal (if certified) and inforrma (peer-to-peer learning) can play a strategic role in channel performance, and with statistical methods it might be possible to develop the beginnings of a theory of dealership. The framework integrates five key areas of dealer channel optimization with knowleddg transfer as the foundation: • Channel performance objectives focus on clearly defined, consistent results. • Causal network provides a basis for understanding what factors have the greatest impact on performannce • Balanced scorecard, where metrics correlate to performmance tracks progress against objectives and provides a single point-of-truth for the enterprise and all its partners. • Channel portal with single sign-on and common processes and data increases operational efficiency and visibility. • Knowledge transfer through an extended, enterprisewiid learning and certification system ensures that channel partners can easily acquire the understandiin and information they need to meet objectives. The framework (see Figure 1, below) provides a modular approach that helps identify where making selective information technology investments will yield the greatest benefit to the extended enterprise and its channel operations. Latitude developed the framework to address the challenges of the extended enterprise A channel theory would provide a structure to analyze performance and course completion data and understand how they affect each other. While a single organization is unlikely to develop a comprehennsiv channel theory any time soon, it can develop a model to understand its own channel.Management Strategies4 LEARNING SOLUTIONS | August 14, 2006 and to provide a roadmap to improve the performance of large, knowledge-intensive, partner channels. Certification becomes a strategic objective To achieve consistent and predictable business results from a partner channel of geographically disperrsed independent entities with dissimilar business practices, certification must become a strategic objecttive Top-down training, certification, and incentive programs support performance objectives. The performmanc objectives for the channel should be measuraabl (e.g., unit sales, revenue, profit margins, custoome satisfaction index, or any other relevant measuremment) (See Figure 2, below.) For example, if the enterprise believes that customer satisfaction must increease the certification and incentives should support this objective. Certification might include a “Listening to the Customer” component for sales staff. Incentiive for sales staff might support repeat customers, rather than unit sales. Administering such programs, however, can be time-consuming for both the enterprise and the channne partner. The enterprise must establish and maintaai the certification requirements, communicate them to channel partners, measure program performance, and provide training content. The channel partners, in turn, must be able to identify and schedule training appropriately to meet the program requirements while not hindering day-to-day operations. Extended enterprise processes and knowledge transfer While the products in use today to manage performmanc programs vary widely, the technology that supports various types of programs is the same. From a technology perspective, regardless of whether you are implementing a certification track, a compliance program, a career development path, or a job skill or competency curriculum, the basic structure and algoriith to support these programs is identical. In a large geographic area consisting of many markeets a larger number of learning experiences (knowleddgeintensive products and complex processes) and a larger number of dispersed learners and certification requirements dramatically increases the coordinating effort required to successfully sustain the channel certificcatio program. To mitigate the administrative burdeen the learning and certification processes and management system used for the extended enterprise should decentralize training responsibility within a topdoow channel certification program. (See Figure 3 on page 5.) In addition, you can create seamless businees processes to integrate the LMS and knowledge/learning management with other channel partner operatiions Local needs, standard platform In addition to core LMS functionality, an extended enterprise learning and certification system should provide a wide range of tools. The field organization and dealer managers must be able to use these tools successfully to manage learning in a way that meets the training needs of different audiences operating in all the markets of the extended enterprise’s channel. At the same time, they must meet those needs in alignment with the performance objectives of the entiir channel. In a diverse channel, learning requirements vary accorrdin to the channel partner’s size or location (e.g., rural vs. urban). These types of variation are particularll true for a global channel. Increasingly distinct counttr variations require market-specific learning strategiie and magnify the differences among channel partneers their customers, and the knowledge they must master. One sales training curriculum is appropriate for a more price-sensitive market, but another curricullu better fits brand-loyal markets. Financial, environmenntal or health and safety compliance requirements may require different training in one country than anothher When certification requirements are too generic, training content will also be too generic, or the conteen covers the specifics of all potential audiences. If the content is too generic, learners are inadequately trained to perform their job function to meet the speciifi needs of their customers. If the content contains ancillary information unrelated to their duties, learners must puzzle out what applies to their case and what does not. As a result, they will tune out or miss what is relevant, and even learn incorrect information in-ì Figure 2 Certification, a strategic objective, improves channel performance In addition to core LMS functionality, an extended enterprise learning and certificatiio system should proviid a wide range of tools. The field organizattio and dealer managger must be able to use these tools and successfully manage learning in a way that meets the training needs of different audiennce operating in all the markets of the extended enterprise’s channel.Management Strategies5 LEARNING SOLUTIONS | August 14, 2006 tended for another audience. Training that applies to individualized learning requireement will engage the learner. An extended enterppris learning and certification system can handle this challenge by providing flexibility in defining the structure of the channel, the roles of people within it and the training they must complete to meet certificatiio requirements that have been tailored to their function in the channel, and how that function affects the strategic performance objectives. Driving performance from the bottom with a top-down approach Decentralizing training authority distributes the administtrativ burden throughout the extended enterpriise from high-level management to the field organizattio to channel partner owners and managers and even to channel partner staff. Under this model, the enterprise determines what training will support performmanc objectives for the channel and makes the training available. Channel partners are then responsibbl for taking the training. What happens when the channel partner staff does not work in an environment where it is easy to take training? Inflexible training delivery becomes challengiin for workforces geographically dispersed throughoou a channel. In general, training increases downtime and requires additional resources to cover their duties while in training. Even e-Learning can cause this disrupptio for lower level staff. Service technicians at an automotive dealership, for example, may not have accees to their own PC throughout the workday. To make this decentralized model work, the extendee enterprise must provide incentives that encourage channel partners to manage active work time with training time. Layering certifications in the extended enterprise hierarchy can encourage more training at lower levels. By making certification for managers requuir certain levels of certification of their direct reporrts layered certification can encourage training at all channel levels. For example, a common performance measure in the automotive sector’s retail channel captures vehicle repairs by a dealership’s service department. This metric usually measures the efficiency in repairing customer vehicles by tracking the number of vehicles correctly repaired the first time. (Vehicle does not requuir multiple visits to dealership to correct the same problem.) If the metric is low across the entire dealer channel, an automotive OEM might take a corrective action by layering certification as follows: • To achieve a “Fixed-the-First-Time” certification, service technicians must complete coursework related to diagnossin and servicing vehicles and other best practices that affect the metric (e.g., anticipatory behavior). • To achieve a “Premier Service Department” certificatiion the service manager must have a certain numbbe of service technicians who hold the ‘Fixed-the-First-Time’ certification. This certification becomes an incentive by providing a marketing tool to the managge that can help generate more business. • To become a “Five Star” dealership, the dealership owner must have a “Premier Service Department” and meet other requirements, some certificationbassed others based on business results. • As an additional incentive, the automotive manufactture can give bonuses to the field organization based on how many dealerships have attained “Five Star” status. In order for this layering to work effectively, the varioou levels of the extended enterprise must have accees to a tool with real-time gap analysis capabilities for both managers and employees to track their progrres towards various individual and organizational performance objectives. The managers and employeee must be able to close the identified gaps as quickly as possible. In addition to providing an interface that would make it easier to identify the learning (service discipliines needs of dealerships and the markets they beloon to, an extended enterprise LMS also reduces the burden on both managers and dealership staff to schedule training. Needs or interest-list features, combiine with auto-enrollment, provide a mechanism to automatically schedule individuals according to trainiin needs, preferred training locations, or delivery methods. A manager who determines training needs can match whoever needs training with a list of the courses they need. Courses added to an interest list ì Figure 3 The Learning Management System must support and coordinnat the learning and certification processes in the extended enterprris — the framework foundation. In addition to providing an interface that would make it easier to identiff the learning (service disciplines) needs of dealerships and the markets they belong to, an extended enterprise LMS also reduces the burden on both managger and dealership staff to schedule traininng Management Strategies6 LEARNING SOLUTIONS | August 14, 2006 can follow the requirements set forth in a predefined certification, or they can form unique learning objectiive for each employee according to their needs. Interest-based registration saves time for both the training program administrators and the employees. If desired, managers can add their employees to interees lists once, on a quarterly, annual, or other routine basis (“set-and-forget”). Managers set training requiremennts and then let the system manage schedules and enrollment. This type of arrangement not only proviide set-and-forget planning to channel partner manageers but to district managers and field managers as well. For managers in the field organization, resource allocation and planning and budgeting can be made easier by reviewing submitted needs, forecasting demaan for training content, and making arrangements to meet demand. Interest-based auto-enrollment capabilities also reduuc the burden to the employee and manager by automatticall alerting students by email upon their enrollmeen in a class. The employee no longer needs to deterrmin their learning needs, locate the appropriate courses offerings, and then enroll in the class. Anothee level of automation would use job function, locatiion data feeds from other systems, and other factors to determine the timing and types of training needed, and automatically enroll the employee in relevant courses. An extended enterprise learning and certification system pushes a wide range of courses, aligned with performance objectives through certification requiremennts and embedded in automated processes through a LMS, to all staff in relation to their job roles and learning needs. This push streamlines the coordinatiin effort of knowledge transfer and resource allocatiio across the channel and the field organization. Reduccin this administrative effort ensures increased consistency of training outcomes. From a resource allocaatio perspective, staff can be transferable from one channel partner’s facility to another with the ability to locate the individuals who are qualified to perform various jobs in the channel. An extended enterprise LMS can provide this information by measuring individdual against predefined job descriptions, even if those requirements are not part of the candidates’ current jobs. Understanding and measuring success Delivering training is only half the battle. To maximiiz the success of a channel certification program, and to continuously improve the program, the supporrtin processes and systems must identify success measures. In a blended learning approach, online assessmeent are completed both prior to and after a courseManagement Strategies LEARNING SOLUTIONS | August 14, 2006 to determine whether the individual’s knowledge of that particular topic has improved. Online assessmeent can also occur on a routine basis to determine if an individual requires a refresher course to reinforce knowledge. You can evaluate competencies by includiin scenarios in which staff must respond to targeted questions. If employees are monitored through direct observatiion an LMS could even be used to flag whether individdual are able or unable to demonstrate a competeenc and, regardless of their assessment scoring, enrool them in the corresponding training course if requiired This use of behavioral and training data can serve to assess training efficacy, and determine if the competencies employees develop actually relate to completion of training courses. (Competencies may develop primarily from peer-to-peer knowledge transfeer for example.) The causal network However, these individual measures do not identify success from a channel optimization perspective. To measure success of a channel optimization, it is necesssar to determine how certification impacted performmanc metrics. What technician skill levels increeas customer satisfaction? Did sales training increeas unit sales? Did soft-skills training increase anticippator behavior? Returning to the musical composition metaphor, music theory provided the structure to understand what sound will result from a playing a particular singgl note, combination of notes, or sequence of notes. A channel theory would provide a structure to analyze performance and course completion data and understtan how they affect each other. While a single organizzatio is unlikely to develop a comprehensive channel theory any time soon, it can develop a model to understand its own channel. Structural equation models (SEMs) provide one method to develop such a model. (See Figure 4, at right.) Building a structural equation model involves measurrin all the factors that might affect a performance metric and then bringing their joint effect together usiin advanced statistical methods. In Latitude’s channne optimization framework, this process corresponds to the definition of a causal network, essentially a statisttica model that provides a structure to understand cause-and-effect relationships in a specific channel. The resulting model provides coefficients for each measured factor that describe how much the factor impacts the relevant performance metric. For example, in the previous layered certification exammpl with the automotive service department, the channel’s causal network might show that a dealershhi attaining “Premier Service Department” status 7 will increase its customer satisfaction index (CSI) by 150 percent. It might show that attaining “Five Star Dealership” increases unit sales by 120 percent. Conversely, it might show that “Premier Service Departtment status had no effect, but a closer analysis revealed that having technicians trained in a “Listening to the Customer” sales course did increase the CSI. The “Premier Service Department” requirements would then change to include the sales course. By integrratin data feeds from corporate and channel partnne systems with an LMS’s course completion data, you can correlate certifications with performance metriic to evaluate success, and to continuously refine the causal network and certification programs. The channel scorecard A Web-based channel scorecard provides a single point-of-truth where both the channel partner and the enterprise obtain a valid picture of where the partner or a segment of partners stands regarding the key metrics. The scorecard becomes a tracking and reporrtin mechanism that guides all levels of the extennde enterprise — individual, channel partner, field organization, and corporate. The interface design should group metrics into distinct categories and proviid an easy-to-use “drill-down” capability that allows channel partners to identify areas requiring improvemeen or attention, and restricts access to sensitive data depending on the user’s access. A channel partnne only has access to its data, but a field manager has access to multiple partners’ data, and corporate decision-makers can access reports for all partners, as well as aggregate reports. Ideally, the drill-down capability should provide a ì Figure 4 The causal network and scorecard link the strategic certification objectives to the supporrtin processes in the extended enterprise. ...[C]ertification drives performance in a knowledge-intensive, difficult-to-manage channel, allowing the extended enterprise to achieve improved, consissten business results.Management Strategies8 LEARNING SOLUTIONS | August 14, 2006 link between the channel’s certification structure and the performance the structure intends to optimize. A scorecard can create this link by referring channel partners and the field organization to actionable items that can improve performance. These actionable items include best practices and training to incorporate into certification requirements. From the service departmeen example, the channel partner should be able to see that CSI is low, and drill down to see what metriics such as Fixed-First-Time, contribute to CSI, and then drill down further to see what certifications will impact the metrics that influence CSI. Conclusion Appearing in the scorecard where performance is tracked, defined in the causal network where performannc is understood, and managed by a learning and certification system, certifications become containers for best practices and technical or business knowleddg that drives performance. As a result, certification drives performance in a knowledge-intensive, difficultttomanage channel, allowing the extended enterprise to achieve improved, consistent business results. Author Contact John Zonneveld is a senior technicca consultant with Latitude Consulltin Group, Inc., an e-Business consultancy based in Saline, Michigan. John has over ten years of experience in corporate training and development and related functioons He has delivered comprehensive online solutiion for clients in the automotive industry, financial services, and many other sectors. He applies his experrtis in e-Learning strategies, learning management systems, certification, compliance, and automotive retail business processes to Latitude’s applications and services. Contact John at john.zonneveld@latitudecg.com. Additional information on the topics covered in this article is also listed in the Guild Resource Directory. This publication is by the people, for the people. That means it’s written by YOU the readers and members of The eLearning Guild! We encourage you to submit articles for publication in Learning Solutions e-Magaziine Even if you have not been published before, we encourage you to submit a query if you have a great idea, technique, case study or practice to share with your peers in the e-Learning community. 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