How to Improve the ROI of Your Sales Training

Billions of dollars are invested in sales training every year. With more informed customers, fiercer competition, and the rate of new products introduced to the marketplace higher than ever, the need for effective sales training never has been more important. Yet we continue to see a desire to cut training expenses and the cry to reduce the time that salespeople are “out in the field.”

There is a continual need to defend sales training investments since the return from such investments is frequently hard to quantify and often disappointing. With this as the backdrop, the advisory committee to ASTD’s Sales Enablement Community of Practice embarked on a research study about how sales training can better provide the expected business result.

Developing the model

After studying more than 100 sales training investments and having discussions with providers, developers, facilitators, and frontline salespeople, three themes emerged:

  • Key to any successful outcome is active engagement by sales management.
  • Sales training is successful when it is viewed by salespeople as both relevant to their immediate success and can be immediately applied.
  • There is no single recipe to guarantee success.

We saw how some small and tactical investments led to business returns that were many times the size of the investment. We also saw projects for which significant amounts of money were invested but led to little result.

At this stage, we realized we needed a classification system for the different types of sales training investments so that we could determine what style of training investment best meets each situation. For each of the five categories we identified, we determined the critical success factors that will make the difference between gaining a clear business return versus a lackluster result. This led to the development of the Strategic Alignment Model for Sales Training Investments.

It should be stressed that there is no intention to assert that one category is superior to another. It is, however, vitally important to align the type of investment to the business need.

Level I (ad-hoc)

The first level of the Strategic Alignment Model represents one-off types of sales training. Typically these are isolated activities that someone has undertaken in response to an apparent sales training requirement. It may be a sales manager dedicating time to role plays in a monthly meeting or a marketing manager training salespeople on a new product.

By definition, they are not part of a larger sales training initiative. They rarely need funding—but if they do require investment, it is both a small amount and approved locally.

The initiatives in this category are those that have the highest payback in terms of business results. This is not simply due to the low level of investment usually associated with these programs but more due to the closeness of the sponsor of the program.

The individuals who determine the need often are those who develop and deliver the training, and are usually right about what is required. Many of the investments at this level are highly responsive and meet particular training requirements in a highly specific, and often effective, way.

This often means redundancy and wasted effort across an organization because more than one person is trying to address the same problem. It is usually difficult to capture and share best practices as a result of these ad-hoc sales training activities.

Level II (local)

The second level defines sales training that is conceived, funded, and implemented at a local level. Such initiatives typically are a geographic or small component of the larger organization. They are not funded or sponsored at an organizational level, but rather conceived, funded, and implemented across a smaller team. This type of investment in sales training may be over time, typically contained within a matter of months.

We saw relatively high levels of return on these investments, primarily as a result of the local ownership by the sponsoring, and often funding, management. As with the Level I programs, there is little way to capture best practices, and these sales training investments often can dilute overall organizational investments and, at times, even offer competing sales approaches to those that have been adopted more universally. These types of initiatives often are the “skunk works” that then grow into overall organizational programs.

Level III (tactical)

Level III represents the lowest level of maturity for an organization-wide initiative. Such an investment in sales training is across an organization (either the corporation or a division of a company), but is discrete in nature. It is not a component of a wider initiative and essentially is conducted in isolation of other factors.

This type of investment typically is in response to a perceived need. For example, to address competency gaps such as negotiation skills, to provide information such as a new product launch, or to introduce or reinforce a selling methodology such as account planning. A Level II and a Level III initiative may be similar; however, the Level II program is sponsored by and completely implemented across one segment of the overall organization, whereas a Level III program is across the entire organization.

At this level we noticed the most disappointing results, and yet also saw that a majority of the organizational sales training investments would be put into this category. These poor results are due to several factors.

First, they are, in part, a result of a lack of local ownership. Another factor is that these sales training initiatives usually are implemented in isolation. Without an overall sales competency model adopted by the organization in which the specific skills and competencies are defined, and the gaps between existing and optimal known, the effectiveness of any sales training investment is going to be compromised.

Third, the training is directed at a perceived need, and we often found that the real need is quite different. In most of these cases the training addresses a symptom and not a root cause.

Negotiation training is a great example of this. Just because the salesforce is providing large discounts to customers does not automatically imply that negotiation skills are inadequate. Instead, there could be pricing pressures from new competitors, or more than likely the salesforce is entering the buying process too late and does not have the opportunity to build any value differentiation.

A final reason that also led to poor results is that these training investments often fail to address factors upon which the successful adoption of new practices and skills was founded. Maybe the salesforce requires different technology or tools to successfully implement the new approaches that they were to be trained on, or possibly their compensation needs to be changed, or how they are managed.

There were many instances of training that was sound within itself, but likely would never yield the expected results due to such dependencies.

It is perhaps worthy to note that our research found that the greatest opportunity to increase the return on sales training investments is to carefully look at all sales training initiatives that would fall into this category. It may be best to push the initiatives down a level, where they can be owned by local managers, or move them up a level, so they are included in what we have termed an “integrated program.”

Level IV (integrated)

The fourth level describes a sales training initiative that is integrated with other factors in the organization. Such an initiative usually is in response to more rigorously defined need than a Level III initiative, and identifies other factors that will affect the business outcomes.

A sales training initiative at this level has numerous different components such as a formal management coaching program to reinforce the training, tools, and technologies that support the new skills or application of new knowledge, or a change in the roles of the sales and sales support team.

When designing a sales training initiative at this level, a more holistic

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approach should be taken to define the need and understand critical success factors. Change management factors also should be considered as part of a sales training initiative and, at a minimum, should isolate and address the elements that could inhibit or motivate the required change.

Successful sales training investments at this level always are built on a specific competency model that reflects the foundational competencies, areas of expertise, and roles of the organization. Such programs are developed after conducting thorough assessments of existing competencies and approaches, and when there is a clear understanding of the real issues that should be addressed to reach the expected business outcomes.

Level V (strategic)

Level V is the highest level for a sales training investment. Such a program always is based on a vision that defines the future selling model and a robust competency model that provides a way in which to define existing and requisite sales competencies.

All sales training initiatives at this level are a component of an overall change model that defines both the current and optimal future state. There should be clear linkages between the sales training, the sales process, and sales enablers such as tools and technologies.

Such sales training programs are considered as one component of an overall change management program. Investments being made at this level rely on the sponsorship and active engagement of the executive of the company and are viewed as transformational initiatives.

This level of sales training investment in not cheap, it is not quick, and it rarely would be considered easy. Yet we saw this was the only way to achieve transformational change within a salesforce. When done correctly, the return-on-investment can be significant. Especially when companies are under new or changing market pressures, this level of sales training investment may be the only way to succeed.

Sales training investments

Our research revealed that not all sales training initiatives are, or should be, equal. Great results can be gained from a small and local program, but those results just will be local. However, if the organization needs sales transformation, this must be achieved through a Level V investment. By understanding the need, the appropriate level of sales training investment can be determined. And by adopting this level, an organization can focus on the critical factors that will ensure success.

What becomes clear is that there is a significant opportunity to increase the return-on-investment of most sales training investments. The Strategic Alignment Model should allow an organization to

  • categorize any sales training investment to understand the factors that will affect its success
  • set realistic expectations across the organization for what it will take for a sales training program to be successful, and the results that can be expected
  • examine critically any proposed investment in sales training to question if it is appropriately aligned to deliver the expected business results
  • understand the most critical success factors for maximizing return-on-investment dependent on the nature of the sales training program
  • determine the most appropriate type of investment to meet a specific training need.

For the vast majority of organizations, there is a significant opportunity to directly increase business results through an investment in sales training. That sales training does, however, need to be aligned to the requirement, organizational constraints, and the expected business results.

About the Author:

Martyn Lewis is the Chair of the Advisory Committee to the Sales Enablement Community of Practice for ASTD. In his position of chair of the committee he led the work that culminated in the Strategic Alignment Model for Sales Training. He has a 35 year career in sales and marketing, including founding Market-Partners a sales consulting company, and 3g Selling, a company focused upon the delivery of highly effective live virtual sales training.

Reprinted from T&D Magazine

10 Steps to Capture Learning ROI

Learning programs unable to prove their worth are unlikely to survive in today’s complex business environment. Learning is almost always funded on the expectation that its benefits will outweigh its costs, which makes it ever more vital that return on investment (ROI) be measured.

In the past, those holding the purse strings were often willing to take a leap of faith on learning. But faith is in short supply these days due to an anemic economic recovery, which has led to tightened budgets for all corporate departments, learning included.

Here are 10 helpful tips for incorporating measuring ROI into a learning program.

1. Don’t go overboard. Calculating true ROI for learning can be difficult; learning isn’t always easily quantifiable. Showing ROI does not need to be perfect — it simply needs to provide a reasonable and credible indication of value. If it is too difficult and costly to calculate, it’s probably not the right approach.

2. Shift thinking from a quality mindset to an impact and results mindset. ROI is more than a calculation. It’s a way of thinking. Learning professionals must be aware that a conscious effort to focus on the impact of learning — not just the quality of training — is a critical step.

3. Calculate ROI continuously. Calculating ROI once every couple of years is certainly better than not calculating at it all, but a snapshot approach does not allow for real-time changes to the program. It’s also not always helpful to calculate ROI after the fact — the program may be in the red with little to no room for prevention. Build ROI into the course evaluation process to provide continuous feedback and allow for mid-program changes.

4. Build the case for ROI step-by-step. Producing a single ROI number addresses the question, “How much value?” However, that alone does not provide a credible indication of actual business value. It’s key to demonstrate exactly how and where the learning brings value to the business by calculating data such as percentage of learners who reported that they impacted the business result and total percentage improvement on business result since training.

5. The more data points, the better. Most senior executives — COOs and CFOs — are analytical, and they will likely want an explanation behind the ROI conclusion. Validate findings with as much data as possible, from as many perspectives as possible. That means capturing learner responses immediately after training as well as a couple of months later after they have had the opportunity to apply it. Also, managers’ input should be collected to round out the feedback.

6. ROI isn’t just about dollars. It is equally important to quantify value in training quality and effectiveness, job impact and business results. Determine indicators that tell the story of the program and provide credibility to the ROI number.

7. Be as conservative as possible in deriving ROI calculations. Any self-reported scores that are used for ROI calculations should be factored down — typically by one-third — to compensate for bias that often occurs due to learner enthusiasm. A follow-up survey 60 to 90 days after the course tends to yield a more accurate result.

8. Know the investment outlay. Since ROI by definition is a return on investment, the investment must be determined. Some factors to consider include cost of training development and delivery, student travel and lodging, and student salary (time away from work).

9. Communicate the story behind the numbers. When presenting ROI to stakeholders, don’t just throw out numbers. State program goals as first envisioned, the challenges in delivering the program, and how these challenges were overcome to yield positive results.

10. Don’t be discouraged by low ROI numbers. Low ROI can be improved by taking a proactive stance and a comprehensive view of job support and other adoption practices for learning programs.

Generally, people understand that learning programs bring value to the organization. But the issue is usually how much, exactly? ROI is the best weapon to ensure that valued learning programs remain a critical priority for organizations.

About the Author:

Mark Bashrum is vice president of corporate marketing and strategic intelligence for ESI International, a global training company. Reprinted from Chief Learning Officer magazine

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