How much does your organization spend training your sales people to sell? How many sales occur as a direct result of that training?
Some sales leaders will attest their sales training adds real value. But most claims are based on hunches or casual observations; rarely is perceived value based on measured facts and data.
You must quantify your sales training ROI in order to ensure it adds value and fully maximizes your investment. This is not as difficult as it sounds or as some make it out to be.
Let me demonstrate a relatively simple method below which I used effectively in the past. This model not only validated the training investment and facilitated better organizational sales forecasting, it also shielded training budget cuts during down markets.
Establishing Your Baseline
Assuming you already have in-house or vendor sales training in place, first determine how much your organization is spending on sales training – per course, quarterly and annually. Then gather current sales rep revenue data (trending graphs per sales rep are best) and your consolidated, sales revenue number.
Track these metrics moving forward then turn your attention to your sales rep measurements.
Start by measuring what your sales reps currently know. Now add what they need to know to achieve or over-achieve their sales targets.
There are five additional measures needed to effectively gauge sales training ROI:
- Pre-Training Assessments
- Post-Training Assessments
- Training Content Application
- Training Content Retention
- Sales Revenue Correlation
The pre-training assessment tests the important learning points from the training the sales rep is about to take. It is a closed book (including any electronic devices), multiple-choice assessment taken at the beginning of the first day of training. Alternatively, this assessment can be taken a few days before the training so the trainer can effectively use the results to further focus their content delivery. However, to ensure ROI measurement accuracy, sales reps must only answer assessment questions using their current knowledge and not seek assistance elsewhere.
The length and depth of the training will determine the number of questions on the assessment. Regardless, it is best not to make it too long or too daunting to avoid discouraging your attendees prior to the training. Somewhere around twenty questions is ideal. Scoring the test will determine what the attendees currently know and what they will need to learn during their training.
The results of the pre-training assessment – what questions sales reps got right or wrong – are not shared until the end of the training. Instead, the training instructor uses the results to shape the course accordingly.
Once you have the score results, log them by sales rep and calculate an overall, roll-up percentage (all the test results combined into one percentage with 100% being a perfect score. For example: examining the entire class, the pre-training assessment indicates attendees know only 50% of what they were about to learn).
With the exception of the order of questions and the corresponding answer choices being shuffled, the post-training assessment is the same as the pre-training assessment, only taken after training completion. It is important for the question and answer wording to remain exactly the same. This will avoid skewing your comparative assessment results.
Score and record this assessment as you did the pre-training assessment. Log the results side-by-side for each sales rep then also for the overall score roll-up. The difference between the two columns is the participant’s knowledge improvement.
This measure is best captured in a simple two bar chart:
- The first bar showing the overall assessment percentage score out of 100% prior to the training.
- The second bar showing the same percentage after the training.
The sample chart below provides a simple visual gauge, indicating the training knowledge improvement results. Note the leap in knowledge gained.
Training Content Application
Training content application is often seen as a softer metric, but it provides concrete value in supporting your training ROI findings. Training content application is the capturing of sales rep and customer feedback and field observations – when possible and appropriate. It indicates how training received by the sales rep resulted in a sale.
Past sales rep feedback I collected under this model included comments, such as:
- Because of the sales training I recently attended I was able to up-sell one of my customers, resulting in a sale 80% greater than I would have achieved in the past. The training I received taught me when and how to introduce an up-sell. Prior to the training, I was not up-selling my customers.
- The sales training I recently received gave me the confidence to approach a large competitor customer I had not spoken to in the past. I was able to sell the customer on trying our products resulting in a sale of . . .
As you will most likely agree, such comments are invaluable. They can be directly tied to the training attended and easily quantified into an ROI metric. In turn, these comments validate the training expense and brings upper management on board for the cost of additional training.
Track this metric by logging the feedback highlights. Then work with accounting to define a single number which reflects your sales as a direct result of training.
Training Content Retention
This measure utilizes a similar, sales rep assessment given at the pre- and post-training stage, but performed six-months after training completion. This third assessment must be only slightly modified from the first two to keep the essence of the original questions and answers, but not reflect a simple memory test for attendees who already took the assessment twice. Subtle changes in formatting will help determine if true retention occurred.
Once all the sales reps who attended the training complete the assessment again, add a third bar to the knowledge improvement chart. That new bar would indicate knowledge retention after six months.
A quick look at this three bar gauge will illustrate how much your sales reps retained since training – the difference between the first bar and the third. If the training is effective, the third bar should not drop too much below the second one. Note that it will drop; do not be discouraged by this. Knowledge loss is a given. The amount it goes down and how much it stays above what the sales rep knew prior to attending the training is key here.
The graphic metric below presents a clear measure of your results (Remember to adjust your charts based on any sales reps who leave your organization during the six months period so your numbers remain accurate.).
Sales Revenue Correlation
At this final stage of measurement, return to the individual sales rep sales charts. Examine whether there is a consistent and correlated pattern between a sales rep attending the sales training and an improvement in his/her sales revenue and achieving/over-achieving sales targets. Track this on an on-going basis (I recommend month-on-month, year-on-year) to discover and record long term trends or issues. You may find adjustments or fine-tuning of assessment questions is required. Modifications in future training to boost knowledge retention and sales revenue numbers can also be made based upon your findings.
Once these trends are captured, quantify the sales training ROI for upper management. For example: “Whenever we provide sales training, the organization experiences, on average, an extra lift of 5% in sales revenue.”
A visual metric could look something like the below.
Sales Training ROI Dashboard
The visual metrics on your sales training ROI dashboard can be displayed in various ways. It should reflect what is most intuitive for those receiving the information. Like a car dashboard, it should be easy to read and helpful in gauging the performance of your sales training at a glance. Whichever way you choose to illustrate your metrics, the following measurements should be captured:
- How the sales revenue increase trend (including the percentage of on-target and over-achieving reps) correlates with training provided
- New sales gained as a direct result of training (training content application)
- Sales rep knowledge improvement at six months compared against pre-training assessment (three bar knowledge improvement chart)
- Cost of training
- Training ROI – all sales achieved as a result of training, minus the cost of training
With your sales training ROI dashboard in place, you will no longer need to rely on hunches or casual observations to assess the effectiveness of this large and important expense for your organization. Plus, the dashboard presents real numbers on how successful your current training is and why funds should be spent upon improvement.
While the above ROI model works well in sales, it can be applied to any part of your business where quantifiable results data is available.
How do you measure the ROI of your employee training? Please let me know in the comments section below.
Also, check out my new book How to Find a Job, Career and Life You Love (Second Edition) at LouisEfron.com.
Published on Forbes, 10th September 2014