Tuesday, January 10, 2023
How to measure sales training ROI in 2023
If you're in charge of training programs for your organization, you know that proving the ROI (return on investment) of your training initiatives can be a tricky task.
However, measuring the ROI of your training is crucial to demonstrate the value of your program and make data-driven decisions on future training investments.
- What is ROI
- ROI Formula
- ROI Limitations
- 7 ways to measure the ROI of your training
- 10-step guide on how to calculate the ROI of your sales training program
- Wonderway Sales Training ROI Calculator
What is ROI
ROI stands for Return on Investment. It is a financial metric that measures the efficiency of an investment. Return on Investment can be used to evaluate any type of investment, including financial investments such as stocks or bonds, as well as investments in business operations like sales training programs, marketing campaigns, and equipment upgrades.
ROI is often used by businesses to evaluate the performance of different investments and make decisions about where to allocate resources. It's also a useful metric for comparing the performance of different investments and can be used to determine whether a particular investment is performing better or worse than expected.
First, you need to find the profit from your investment. Then, divide the profit gained from the investment by the cost of the investment and multiply it by 100:
Using this formula, you can easily distinguish low-performing investments from high-performing ones, as well as decide whether your investment is worth it or not.
You can also use it to see how the investment has performed to date. Keep in mind that the result is expressed as a percentage because it is easier to understand.
ROI is conventionally used as a measure of success for an investment. It is almost always guaranteed that when you use it, people will know what it means.
While ROI is very commonly used for comparing investments, you have to be careful while calculating it.
ROI ignores the time value of money (the fact that one dollar today is no longer one dollar tomorrow). Only use the ROI formula to compare investments under similar circumstances, holding all other factors constant.
If you’re comparing the investment period of one year with that of three years, it’s more accurate to use other indicators (such as CAGR) instead of ROI.
When calculating ROI, you can take different approaches to measure profit and cost. Because of this, the result is susceptible to manipulation and is only valid if the profit and cost are directly related to the investment.
To calculate the real ROI, you should take into account all possible costs and profits related to the investment, including time.
7 ways to measure the ROI of your training
1. Pre and Post-training assessments
One of the most straightforward ways to measure the ROI of your training is by administering assessments before and after the training. This will allow you to compare the knowledge and skills of your employees before and after the training, and determine the effectiveness of the training program.
2. Employee feedback surveys
Another way to measure the ROI of your training is by collecting feedback from your employees. Surveys can be conducted to gather employees' opinions on the training program's content, delivery, and overall effectiveness.
3. Key performance indicator tracking
Identifying and tracking specific KPIs (key performance indicators) related to the training can provide insight into the impact of the training on the organization. For example, if the training was on sales, track the sales made before and after the training.
4. Cost-benefit analysis
Measuring the ROI of your training program involves considering the cost of the program and comparing it to the benefits it brings. A cost-benefit analysis can provide a clear picture of the financial impact of the training program on the organization.
5. Performance reviews
Performance reviews can be a great way to measure the ROI of your training program. Employees who have completed the training should be evaluated on their performance, and the results can be compared to those who have not yet completed the training.
6. Sales performance tracking:
Track the sales performance of employees before and after the training to measure its impact on their performance. Set specific sales goals and track progress towards achieving them, this will give you a clear picture of how the training has improved their sales productivity.
7. Attendance and engagement metrics
Tracking attendance and engagement metrics during the training will provide insight into how well the training was received and how engaged the participants were. This can be done through surveys or observing participation during the training sessions.
10-step guide on how to calculate the ROI of your sales training program:
Step 1. Clearly define your training objectives
Identify the specific goals you hope to achieve through the training, such as improved sales, enhanced customer satisfaction, and increased efficiency of the sales team.
Step 2. Measure the costs of the training
Gather all the necessary information related to the training costs, including expenses for materials, instructors, and administration.
Step 3. Identify the key performance indicators (KPIs) before and after the training
Identify the key performance indicators (KPIs) that will help you evaluate the effectiveness of the training. These can include metrics such as sales figures, customer satisfaction scores, or team engagement.
Step 4. Track the impact of the training
Collect data on different aspects such as sales performance, customer feedback, employee engagement, and satisfaction before and after the training.
Step 5. Compare pre and post-training data
Analyze the data collected before and after the training. Compare the results of sales performance, customer feedback, and employee satisfaction to understand the impact of the training.
Step 6. Determine the net benefits of the training
Calculate the net benefits of the training by subtracting the costs of the training program from the benefits derived from it.
Step 7. Divide the net benefits by the costs
Divide the net benefits of the training by the costs of the training program to determine the ROI in the form of a percentage.
Step 8. Analyze the results
Interpret the data and analyze the results to understand the value of your training investments.
Step 9. Identify areas for improvement
Identify areas where the training program may not have been as effective, and consider how to improve it in the future.
Step 10. Communicate the results to key stakeholders
Share the results of the ROI calculation with key stakeholders such as senior management or the training department, and use the information to make informed decisions on future training initiatives.
By following these steps, you'll be able to effectively measure the ROI of your sales training program, and make data-driven decisions on future training investments.
Wonderway ROI Calculator
Use our ROI calculator to estimate the potential gain you can expect when investing in sales reps onboarding or upskilling sales reps.