The ROI of Sales Training

All companies base their decisions on profitability (higher revenue + lower cost). A common formula for doing this intelligently is “Return on Investment” or ROI. It’s not the only way to measure success or justify spending. (“Net Present Value” or NPV analysis comes to mind.) But it’s certainly the easiest to explain:

“If I spend X dollars on something for my business, how soon will I see increased profitability that equals or (hopefully) exceeds X?” ROI depends on changes in revenue and/or costs that are the direct, traceable, and measurable results of the thing being paid for. It sounds simple, but rarely is.

Measuring the Right Thing

Good ROI requires actual measurement. For sales training, there are very specific measurements needed to produce a meaningful answer. First and foremost: Have sales actually increased, compared with pre-training levels? The second major metric: What are the TOTAL costs of sales training?

This may seem blindingly obvious, but I’ve been surprised by the disconnect on both metrics. In a non-sales-specific checklist about Accessing the ROI of Training, behavioral change (e.g., sales made) was dead last in a list of criteria for measuring training success.

The problem is that training metrics are too often from the training company or HR department perspective, where test scores and subjective trainee evaluations are common. However, these are NOT a measure of anything that would factor in an ROI analysis. They typically reflect immediate impressions from the training, without factoring in the strong tendency to forget material over time—the infamous forgetting curve.

For sales training ROI, the meaningful benefit measurements must include individual improvements in prospect engagement—not just the number of conversions. A sale includes a well-practiced sequence of events, from the initial call to handling objections to closing, and everything in between. The actual sale numbers are paramount, but these don’t improve without measurable performance improvements through the entire process.

Another misbegotten measurement involves the cost of training. Direct costs are usually factored in, and they can be substantial for, say, a live, on-site event involving travel and accommodations. However, the real killer is indirect costs. For sales training, those include lost sales incurred when the salesperson is not out selling. This can easily add up to millions.

Making ROI Meaningful

Even if you’re measuring the right things, a sales training ROI only works if BOTH major factors (net positive sales and optimal training costs) are clearly present. Live, off-site trainings can meet this standard, but only if coaching and practice reinforcement are available to turn the learned techniques into daily habits.

An even better ROI is likely if good sales training—AND practice reinforcement, AND live coaching—is available online. This reduces drastically the direct and indirect costs of taking salespeople out of the field, and lets them develop permanent, effective sales habits.