What's the ROI of Your Training? Use this Framework to Find Out
Hi there,
Welcome back to another edition of Training the Frontline, your favorite source for all things frontline training.
Today, we're touching on one of our favourite topics: training ROI.
There's no question that effective training can have a significant impact on your company's bottom line, but proving that value to internal stakeholders is still a major challenge for L&D teams. Read on for our fool-proof framework for calculating the ROI of your training.
Also in this newsletter: get some expert tips on building a business case for your learning strategy, and read a brand new case study showing how one frontline company was able to prove a saving of $600k with effective training.
Happy reading!
The eduMe Team
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Deep dive ??: How to measure the ROI of your training
Before we delve into how you can calculate ROI in training and development, it’s important to understand what exactly we’re referring to.
Whereas standard ROI calculations focus on the net profit versus the total investment made, training ROI looks at the impact that training has on profit.
It’s important to note that, when we’re looking at the ROI of training, we don’t just want to break even. A new training solution should aim to bring in more revenue and drive further growth for your company, which is why your goal should be to achieve an ROI of over 100%.?
Now, let's look at the four steps to proving training ROI:
1. Define your success metrics
It’s impossible to determine whether a training initiative will be successful if you don’t have a clear understanding of what success means to you. Before anything else, you need to decide which metrics are important to your specific goals and will be the signifiers of a great investment.?
Have a think about your organizational and departmental goals. If you’re working in HR, the goal for your training program might be to increase employee satisfaction and retention. If the training initiative is being implemented in the sales department, the objective might be to - you guessed it - increase sales.?
Then, consider which targets each of your employees will need to achieve in order to hit those departmental result metrics. Following on from the sales example, this might be to make ten sales per day or start serving customers two days faster.?
2. Set KPIs
The next step is to establish KPIs for your training. At this stage, we recommend using the Kirkpatrick Model - a key framework used to measure the effectiveness of a training program by analyzing each stage of the learning process and how it produces results.?
The Kirkpatrick Model uses four different steps: Reaction, Learning, Behavior and Results. Considering each of these stages allows you to determine exactly what you’re hoping to achieve with your training initiative, and the steps that will be required to get there.?
Let’s take a look at how you might use this model in context. For example, when setting KPIs for a training initiative designed to improve upselling at a retail store:
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Level 1 - Reaction
Use a survey to measure your employees’ immediate reactions to the training content. Was the training useful? Was it relevant to their roles and day-to-day responsibilities? Was it easy to use and understand?
Level 2 - Learning
Assess what your employees have learned during the training with a brief quiz at the end of the course. Have they come away understanding how to upsell? Have they absorbed the product information you provided?
Level 3 - Behavior
Think about which behaviors you want your employees to take up as a result of the training. In this example, we want to prove that store employees are using the upselling techniques they’ve learned in training and are recommending additional items or services to customers.?You can track this by having managers observe employees as they complete sales, or by using your POS system to track UPT (units per transaction).
Level 4 - Results
Finally, decide on your results metric. In this case, we want to see an increase in average transaction value (ATV). If you are able to prove that the previous stages have led to measurable results - e.g. ATV by 12% - you can be assured that your training has been a good investment.?
3. Confirm the results
It’s all well and good showcasing an uptick in performance, retention or productivity - but how can you prove that it’s a direct result of your training? There are a number of factors at play which might influence these metrics, which is why we recommend running an A/B test.
Create a control group consisting of the same demographic and KPIs, but do not provide them with training. The performance of this group can then be compared against the group who did receive the training, allowing you to give a more accurate and compelling report on the success of the initiative.?
Case Study: How Temco Logistics saved $600k by delivering effective frontline training
In this case study, find out how Temco Logistics - a home goods delivery and installations provider for retailers as big as The Home Depot - were able to enhance their in-person training with microlearning, and make some hefty cost savings in the process.
Building a Business Case for Training Investment
In this blog, find out how to build a powerful business case, including proving the dollar value of your training, and hear some top tips on how to pitch your business case to your boss from APC Overnight.
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