ROI for Sales Training Programs

Learning and Development (L&D) programs are increasingly being evaluated by their ability to deliver an ROI to the parent organization.  For many L&D programs, such as those related to compliance or new employee onboarding, the process for determining an ROI can be complex and difficult at best.

The positive effects and the ROI of sales training programs, on the other hand, are much easier to identify and track.  In this article we will explore some of the different types of sales training programs that are available, how best they can be used, and best practices for calculating an ROI.

There are essentially four types of programs for sales training; Sale Process Training, Product Training, Motivational Training, and Soft Skills Training.

Sales Process Training

These programs focus on the sales process or the mechanics of selling.  They include end-to-end programs that teach many or all of the steps in the selling process such prospecting, making an elevator pitch, agenda setting, how to ask questions, giving presentations, closing, etc. Or, they can focus on a single activity in the selling process such as closing or asking for referrals.

There are literally hundreds of sales process training programs to choose from.  Some of the better-known programs include SNAP Selling, SPIN Selling, and The Sandler Approach.

For many organizations these types of programs work straight off-the-shelf with little or no customization or supplementation required.  However, as industry specific buying and selling styles differ, L&D executives should check for a track record of success in their specific industry or one that is closely related.

Likewise, not all approaches work in all cultures.  For example, in many Asian countries, some of the more progressive sales processes used in the West haven’t caught hold yet. This is because selling in many areas is still considered to be more of a relationship driven activity as opposed to a process driven one.

Product Training

Product training, regardless of industry or culture is vitally important. Both product knowledge and product belief are key factors in the ability to sell something. If your salespeople don’t understand your existing or new products, they will lack the confidence and ability to properly introduce them.

Therefore, many companies spend a fair amount of time, energy, and resources on product training.  And, as product training is mostly company specific, most of the training programs are custom developed for that particular company or product.  This can make them, on average, more appropriate and effective than off-the-shelf sales training programs.

However, when done in-house, it can become more challenging to allocate true costs and thus difficult to get an accurate assessment of the ROI.

And, while in-house development teams will often have superior knowledge of the product, they may not have access to platforms and tools that can make the program more engaging and effective for the learners.

For example, I was recently involved in a product training initiative that spanned several times zones and countries.  The program included weekly live training sessions in each time zone.  The trainers were skilled experts on the product that was being launched.

The problem was, the team that was doing the training hadn’t made any plans to capture the sessions on video or audio.  Thus, if a salesperson missed the weekly training session, there was no way for them to make up that session.

So, if you are creating your content in-house, it may make sense to receive some input from external L&D consultants to see if there are any tools, platforms, or techniques that you might possibly adopt to improve the effectiveness of your training.

Motivational Training

Motivational training is designed to create some additional excitement and momentum in your sales team.  Often times the training is provided as part of a larger event such as product launches or annual awards etc.

Motivational training is usually delivered by external specialists.  This is due to requirements related to variety and the appropriateness of the content.  Variety is important because most motivational training is more of an event than a process. And, if the same training or event is repeated, the positive effects of the training can rapidly dissipate as the intended audience loses interest.

Appropriateness to audience is critical as some messages just don’t travel across cultures.  For example, I once participated in a highly effective motivational program that was provided by an ex-NFL player who structured his program around American football.  If that same program were delivered in countries that aren’t familiar with the rules and customs of American football, it probably wouldn’t resonate with the audience.

The costs for motivational programs are typically very clear and seen as one-time or single program fee.  However, the quantifying the actual benefits can challenging.

Soft Skills Training

Soft skills such building rapport and asking questions are important in almost all types of selling, and are critically important in industries such as private banking and financial services.

As soft skills training focuses on behaviors related to interpersonal communication that have been learned over an individual’s lifetime, the training takes time and practice to become effective.

Soft skill training is usually provided by external trainers. There are hundreds of providers soft skills training in the market.  And, as industry context is especially important, many training providers focus on a particular industry such as private banking, or hospitality.  There are also some well-known providers of generics soft skill training such as Dale Carnegie and Franklin Covey.

The costs and resultant ROI of soft skill training is relatively easy to track. The cost is whatever you pay the trainer, any internal support staff and venue costs, and the participant’s time.  The benefits typically become quite visible in terms higher conversion and client retention rates, as well year-on-year increases in revenues for individual participants.

Internally Developed Programs vs. Externally Sourced Programs

For all sales training programs you will need to decide on either a custom program, designed and delivered by an internal team, or an off-the-shelf solution.  Customized programs tend to more relevant and effective.  However, true costs, which are typically higher than off-the-shelf programs, can be more difficult to calculate.

Off-the-shelf programs can be easier to evaluate in advance in terms of actual pricing and a track record of success.  But, they may lack the relevancy to your specific company, industry, or current training needs.

Regardless of whether you go with a custom or off-the-shelf program, it’s always helpful to conduct the training in the context of your specific industry.  So, for example, if you are training private bankers, make sure the examples and exercises are similar to those experienced by people doing that job.

Calculating an ROI 

Calculating an ROI on sales training programs is part art and part science. In reality there are many factors that will affect your sales team’s performance including the condition of the economy, competition in the market, and the value of the product or service you are selling. Training is just one factor in the overall mix and thus shouldn’t be seen as the sole cause of increased or decreased performance.

That said, there are some key metrics you should consider when calculating the ROI of your sales training.

Cost of the Training Provided

If the training was developed and or delivered in-house, you will need to tally all the costs included the number of hours spent, the cost per hour, material costs, and any venue and technology costs. This can be challenging since many of the staff involved with the training will also have other responsibilities and deliverables.

It’s usually easier to get an idea of the cost for externally sourced programs. However, even with externally supplied programs there will often be requirements for your internal team to provide support in preparing or following up on the training.  So be sure to include all related costs.

Effect on Performance

Effects on performance can be broken down into two areas, revenues and activities.

Many companies like to make a year-on-year or quarter vs. the previous quarter revenue comparison. So, if sales go up, the training is judged to have been a success. And if sales go down, the perceived value of the training is reduced. Of course, there could be many other factors that contributed to the sales results and we can’t be sure how much can be attributed to the training program.

Therefore, an alternative approach is to compare metrics for sales related activities such as the number of prospect meetings held, the closing rate, the rate of growth of an individual or team’s pipeline etc.  Under this approach, if an individual increased the number of meetings by 20 percent and improved their closing ratio by 20 percent, we could confidently attribute these improvements to the training they received, especially if this effect were seen across a large percentage of the participants.

Personally, I prefer a hybrid approach whereby we compare financial and activity results with past performance numbers.  I like this approach because there is a strong causal relationship between activity and results, especially if the activity such as drafting proposals or closing deals, is done in a more skillful manner.

Whatever approach you take, I would strongly recommend that you define your method for calculating ROI on a sales training program in advance of the training. Doing so will help you to select an appropriate program, and then track and monitor the results.  It will also help other stakeholders to know what they should be expecting as a result of the training.

Contributed By:

Mark Shriner |  Mark.Shriner@ROI-Asia.com | ROI-Asia.com

Mark Shriner is a leadership and business development coach and an expert on sales and sales management. He has authored two books on the subject that are widely used in the training of salespeople and sales managers, and is the co-creator of the ‘Leading and Coaching High Performance Sales Teams’ program with Marshall Goldsmith and Will Linssen.  He authors the blog: www.thensidegame-sales.com that provides advice and tips on how to become a top performing salesperson and enjoy every step of the way.

To learn more about Mark’s leadership and sales training programs please contact:  Mark.Shriner@ROI-Asia.com

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This entry was posted on Friday, April 17th, 2015 at 11:57 am and is filed under Learning & Development. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.