If your CEO walks into your office and asks, “What is the ROI of our training program?” How would you answer?
Most of us could fumble through completion stats, or some certification numbers. But so what? If you are unable to tie your job to real business growth, how is your CEO supposed to value it as mission critical.
As of 2014, $70 Billion were spent on training in the US alone, and the number is only growing. With such a massive investment; what was your return?
Linking a single training directly with revenue is a fool’s errand in the same way that claiming because you brushed your teeth once you will be under your cavity quota for the year. The good news that in the same way you [hopefully] keep up your dental hygiene; there are some systematic and measurable ways to link training with real business outcomes.
Here is what you need to get started:
- Establish current baselines
- Isolate key leading and lagging indicators
The best way to establish current baselines is to take a dive into your current data. Your CRM is the best place to start. Now, let’s dive into leading and lagging indicators.
Using Leading and Lagging Indicators to Measure Training ROI
If revenue is the goal, then leading indicators are far from goal influencers like number of meetings set, number of phone calls, or amount of outbound activity. Lagging indicators are measurable behaviors that directly influence the goal like pipeline generation, number of proposals sent, or number of opportunities created. In general, leading indicators influence lagging indicators which influence your business outcome.
Not only can this approach be used to measure sales training initiatives, it can be used to measure training programs across the entire organization. Let’s walk through some tangible examples.
1. Sales Training ROI & Revenue Goals
Every sales leader wants to link their training efforts to revenue. Instead of just tracking the total investment in training and the total revenue and making dangerous generalizations, organizations can use leading and lagging indicators to breakdown performance applications.
Examples of critical leading indicators would include how many outbound calls were made, or the number of calls that converted into opportunities. Lagging indicators would include the number of proposals generated, or the change in pipeline.
Ok let’s put this all together: Let’s say your goal is to increase revenue per rep and your baseline is $50K per month. You target a bump of 10%, pushing your revenue per rep to $55K per month. Your leading indicator is number of meetings created, and your lagging indicator is number of proposals sent. Your training should focus on activities and behaviors that can influence your leading indicator, and ultimately affect your goal. In this scenario you would focus on topics like how to leave a great cold call message, handling a first time call, and transitioning an initial call into a qualified opportunity. This type of focus will increase the number of meetings created (your leading indicator), which should ultimately increase the number of proposals sent (your lagging indicator), and your revenue goal.
Breaking down larger organization goals into measurable key indicators allows leaders to identify importance cause and effect outcomes that come directly from their training initiatives.
2. Account Management Training ROI & Cross Sell Goals
Training initiatives aren’t just for sales. Cross sell opportunities generated from account management teams represent a huge opportunity for additional revenue. Account management reps are trained to build deeper relationships with clients to create those opportunities, but just like sales training, it can be hard to link success directly to coaching initiatives.
In this scenario important leading indicators would include number of client outreach attempts and customer engagement. Lagging indicators would include average deal size generated from the cross sell opportunity and customer satisfaction.
Let’s say the goal is to hit 120% net churn (+10% growth post sale on top of any deals lost) and our baseline is 110%. Our leading indicator is the number of admins active per month, and the lagging indicator is the end user adoption and engagement. Here we would focus training initiatives around how to analyze data and have a renewal conversation, skills that would help influence the leading indicator.
By identifying more specific metrics, account management leadership can break down where their training efforts are working, and where they might need a more effective investment.
3. Employee Onboarding ROI & Performance
A successful employee onboarding program can make or break an employee’s first experience at a new organization, and greatly affect the number of company resources used as they get acclimated. It can be nearly impossible to measure the effectiveness of new employee training as whole, but breaking down the process into key indicators make measuring ROI much more attainable.
When it comes to successful employee onboarding, leading indicators would include metrics like number of hours of onboarding completed, and new employee training completion rates. Lagging metrics might be examples like the number of support requests within a certain timeframe, or employee satisfaction survey results.
Our goal in this scenario could to reduce average time from new hire to first sale, with an existing baseline of 45 days. We would set out leading indicator as the employee’s onboarding assessment score, and the lagging indicator as number of new sales opportunities. Our training would cover onboarding topics like product messaging and marketplace analysis, which would help boost the employee’s assessment score, our leading indicator. Their improved understanding of their new role, the organization’s products, and the marketplace, would help them get more sales opportunities, and ultimately reduce the number of days it took to hit their first sale.
Measuring ROI for training initiatives within your organization is all about mapping your programs to goals, and then using leading and lagging indicators to break down those goals into measurable key indicators.
Using this cause and effect approach will bring better data, and valuable insights into what you’re actually getting from your training. And keep in mind, tackling this new initiative will take time. It’s a calculation many leaders and organizations have, and still, struggle with, so don’t expect perfection right off the bat. The important measurement is that you’re making progress. With at least $70 Billion being spent every year, can you afford not to at least give diving deeper into your training ROI a try?