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When Your Retail Workforce Resembles Your Customer Base, Everybody Wins

By Gabby Burlacu & Jenngang Shih

Organizations in the sales industry are facing unique challenges. On one hand, sales jobs are certainly not disappearing. In a world of digital disruption, engaging with customers looks different than it did in the past, but human interaction in the sales process remains highly valued. On the other hand, having skilled, capable employees is more important than ever. Customers have greater visibility and options than ever before. If the people they interact with don’t meet or even exceed their expectations, they are easily able to end those interactions—and take their business to a competitor.

Clearly people matter in the sales industry. But what does a “successful” workforce look like, and how can companies build one? This was the question driving our data team’s analysis of workforce predictors of sales organization success. We analyzed financial outcomes, survey data, and workforce metrics in over 500 stores from a large North America-based retail firm in order to determine the aspects of the workforce that matter the most in driving store performance.

The front-running metric? Workforce diversity. Retail organizations with a diverse set of employees perform better than their less diverse counterparts. But this doesn’t necessarily look the same from store to store. We found that a greater representation of ethnic minorities predicted greater store success, but only in the Northeast and Southeast regions of the United States. In the Northeast, the stores with greater racial and ethnic diversity saw gross margin profits 89% higher than stores that were less diverse; in the Southeast, gross margin profits were increased by 87%. Having a greater balance of generations in the workforce, with a higher ratio of older to younger employees, predicted store success, but this effect was strongest in the Central region of the United States. Stores with a greater generational balance in this region enjoyed gross margin profits 75% higher than those of stores that were less diverse.

We hear so much about the importance of having a diverse workforce that we often forget what we’re really driving toward. A diverse workforce can better understand the requirements of an increasingly diverse customer base, ensuring that the products and services your company delivers are the right ones to meet your customers’ needs. When this large retail organization staffed their stores in a way that resembled their respective markets, they saw greater sales as a result.

In retail, your employees are interacting with customers face to face, providing a visible indication of the kinds of people your company values. And research shows customers certainly appreciate companies that appear to value them. 71% of LGBT individuals prefer to buy goods from LGBT-friendly companies. 87% of differently abled individuals are more likely to buy from companies that employ other differently abled individuals. This market is so pervasive that apps have emerged that are designed to help consumers locate diversity-friendly businesses from which to buy. Having a sales force that resembles the market you are selling to communicates to your customers that they can expect to speak to someone who looks, thinks, and considers options in much the same way they do—a key to closing the sale, and driving profitability in the years to come.

About the Authors

Gabriela (Gabby) Burlacu, Ph. D.
Solution Management Lead, UX and Mobile - Solution Management Team

Dr. Gabriela (Gabby) Burlacu leads Solution Management for the User Experience and Mobile applications of SAP SuccessFactors technology. She is an SAP thought leader that has conducted extensive research on effective performance management methods, the increasingly diverse workforce, and the aspects of HCM technology that enable transformational change for organizations.

Jenngang Shih
Senior Product Manager and Data Scientist

Jenngang is a senior product manager and data scientist at the SAP SuccessFactors Machine Learning Product Management group. He focuses on developing human capital management (HCM) products using predictive analytics and machine learning techniques to drive customer success.

About SAP HR Research

Our research team advances the art and science of Human Capital Management by studying the relationship between technology, workforce psychology, and business performance. Our researchers and psychologists uncover trends to keep you on the cutting-edge of technology and thought leadership – and help shape the design of SAP SuccessFactors HCM software.

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