The sales team is always at the forefront of generating revenue and profit, and any investment in optimizing sales productivity usually has an immediate and direct impact on the organization’s bottom line. This is not the case when investing in other corporate functions. A new ERP or accounting system, for example, might save you some money, but it’s unlikely to generate additional income. Similarly, enhancing the manufacturing supply chain may reduce inventory costs, but it’s not going to extend the breadth or length of your product line.
It hardly comes as a surprise then that high-quality, efficient, and timely sales team training can result in impressive ROI, it can improve your sales reps’ confidence and motivation, and even reduce your sales team churn. Most of all, however, it will efficiently convert your qualified leads to opportunities and paying customers.
The ROI potential of sales and product training has remained well-hidden, however, mostly due to the lack of a proper, widely accepted method for calculating the financial impact. If you are already convinced of the benefits of sales training and your task is to now successfully persuade your management team, you’ll need to go the extra mile to clearly show how ROI can be measured. By presenting hard, scientific evidence that the sales training that you introduced in the company has generated a verifiably impressive return on investment (ROI), you could become the hero of the day.
Sales training ROI
In the past, sales managers used to measure ROI by comparing the performance of a sales group that got trained against the performance of another that didn’t get trained. That approach, while simple and convenient - both groups are operating under similar marketing and sales conditions (the state of the economy, the customer buying habits, competitors’ new product launches, massive discounts, and so on) – eventually proves inefficient down the road as you miss on sales opportunities by not training part of the sales team.
Luckily, those days are long gone and today every sales manager has access to various Learning Management Systems and any large geographically dispersed sales team can be trained simultaneously. But how can you filter out all the factors that might have an impact on your pipeline? It’s simple – just keep on training your sales team frequently and all marketing and sales variables will even out and all metrics will compensate each other over time.
Measuring ROI from sales training
In the context of measuring the effectiveness of sales training on an organization’s bottom line, there are four methods of formulating ROI:
- Net revenue/profit over a given period of time
- Average net revenue/profit per sales rep
- The payback period
- Return over a given period of time.
Most arguments weigh in favor of measuring ROI in terms of profit, as you are surely aware that sales reps can close more deals by simply offering bigger discounts. All the above methods will do the job, however, the most common one is to measure the ROI as the average net revenue/profit per trainee. All you need to do is divide the net profit by the number of trainees and this straightforward approach will give a deeper “per sales rep” insight on your team. While it is up to you which of the four methods to use - as all of them will bring you to similar conclusions - don’t forget that you can boost the average marketing and sales performance over time by regularly using your Learning Management System.
Naturally, measuring the impact of sales training includes more than just registering the changes in the company's bottom line. It’s important to understand the factors that led to a bottom line increase and to know what works and what doesn’t in order to refine the sales training process in the future. Another way of evaluating the results of your sales rep training is to analyze how many new leads (number and quality) you have in the pipeline compared to a previous period. Higher conversion rates, shorter sales cycle, increased profit margin are all different ways to measure the success of your sales training. Using such specific metrics to measure the results will show you the true ROI of your sales training program.
Calculating the ROI of a sales-training effort has one other hidden advantage too: you may sometimes find yourself competing internally with other teams for training dollars. Being able to provide an accurate picture of the ROI of sales and product training, however, will serve as proof for your management that investing in an online learning platform is worth every dollar spent. This way, it will be more likely that you secure as much training budget as your sales team needs.
Improving sales reps’ skillset has a great impact on their attitude too. They become more positive and motivated to exceed their managers’ expectations. Training affects their willingness to be better team players, coach and mentor the newly-hired, and create and maintain a culture of knowledge sharing, all attributes of a sales team that succeeds in the long run.
The positive shift will reverberate within the company and the success momentum will be felt in other departments too.
Ready to give Melon Learning a try? Not only does it help your sales force accelerate product knowledge while minimizing cost and time spent on training, but it also accommodates ongoing training and helps sales reps increase revenue through repeated learning.