Training is a big part of any sales-focused business. Your sales representatives are the face of your company! They're the ones who are directly responsible for generating revenue and supporting your corporate bottom line. If you want to see success, you have to invest in your sales team.
All that said, training isn't cheap. It's an ongoing investment to run a sales training program, and critical stakeholders likely want to see quantifiable proof that it's worth it. But how do you know that your sales training budget is paying off?
Calculating the ROI of your training efforts isn't easy. Sure, you could turn to increased profits as proof. But many other factors come can affect revenue and overall business success. Measuring the return of sales training requires you to look beyond standard figures and focus on the bigger picture.
Here is a simple step-by-step guide to help you calculate the ROI of your training program.
1. Define North Star Metrics for Training
One of the easiest ways to look at a program's success is to define a North Star metric. This figure is different from other metrics and key performance indicators (KPIs). It's not something you'll see in standard reports. Instead, it's something you develop on your own.
Many expert sales coaches say that it's a good idea to give your team a single metric to gauge their individual success and to understand the overall efficiency of a sales training program. It's a much easier way to look at things and doesn't require the help of a data scientist to understand!
Essentially, a North Star metric is a figure that reflects long-term success on a broader scale. It's a singular metric that should guide sales managers and sales leaders can use as a guide moving forward.
So, how do you define a North Star metric? Generally, it has to measure progress and reflect value. The goal is to use the metric to focus on growth and measure ROI. There's no "standard" measurement to use. But, it's a good idea to stick with something quantifiable.
You may have to add assessments into your sales training program, but the addition is well worth it to prove ROI. Some good examples include:
- Attendance figures
- Quiz scores
- Training evaluations
2. Formalize Your Sales Training Program
You can't learn how to measure the ROI of a program if you don't have anything formal in place. One of the first things you should handle is formalizing your training and making it an official part of your company. You can't understand the cost of training if it's not well-defined.
For many organizations, training sessions are nothing more than learning new techniques, adopting new skills, or reinforcing best practices when you have some free time. That's impossible to measure. To understand how a program impacts your company, there needs to be a formal process with thought-out plans and activities. Otherwise, you have no way to track costs or gather data.
3. Identify Sales Rep Productivity KPIs
How do you plan on measuring success if you don't know what data to collect? The entire point of calculating ROI is that you have clear, quantifiable proof that your training efforts are worth the time and resources. Throwing everything you can at your sales reps and hoping something sticks is not the way to go. The best course of action is to have clear KPIs beyond standard sales figures.
With defined KPIs, you can monitor progress and gather evidence to support training expenses.
What KPIs should you track? That all depends on your organization's needs. But here are a few ideas worth trying:
- Qualified leads
- Sales per rep
- Sales targets
- Lead-to-win rate
- Close rates
- Cost per lead
- Cost of sale
- Value of deal
- Ramp times
- Number of monthly demo calls
- Sales cycle length
- Customer lifetime value
- Retention rate
4. Track and Maintain Training and Sales Data
Your work doesn't stop with determining what KPIs to follow. Those KPIs are just the start. Moving forward, you must keep track of both sales and training data. Advanced sales analytics software can simplify tracking, maintenance and visualization of sales data, so this may be a valuable place for investment.
The goal is to gather as much information as you can. Measuring ROI is about having reliable data. Monitoring those KPIs paves the way for in-depth analysis and valuable insights.
5. Establish Performance Baselines
One of the biggest mistakes companies make when starting new training initiatives is failing to gather baseline data. You can't determine the ROI of sales training without knowing where your salespeople started. There's nothing to compare to, and it's impossible to derive actionable insights.
Do a few assessments before your sales reps begin a new training course. Get a baseline for the KPIs you defined earlier and see where your team is now. After completing a class, you can take additional assessments and compare the data to the baselines to get a clear picture of the difference the training made.
6. Integrate Training Data with Sales Data
Another way to gain insight is by integrating the training data with the sales data. Your sales team isn't going to stop working to participate in training. There's a good chance it'll occur in tandem, allowing your salespeople to put their new skills into action quickly.
Weaving current sales data with training data helps you see the bigger picture. You can analyze how training directly impacts a learner's performance.
7. Analyze Integrated Data to Derive ROI Insights
Once you have your KPIs set and understand your baselines, you can send your sales teams off to learn. As they progress through training modules, take every opportunity to analyze the data you gather. See how it's making an impact in real-time and collect insight as the programs progress.
Here's where having reliable training tools and LMS platforms come in handy. Instead of guessing and letting your biases get in the way, you can look to quantifiable data to measure the program's success. Hopefully, you'll see a noticeable change in the data.
8. Modify and Improve Your Training Process
Tracking KPIs is about more than just measuring ROI in the end. That's the ultimate goal, but it comes much later. Right now, you can use the insights you gather to make improvements and optimize your training efforts.
Let the data show you what works and what doesn't. You might notice that the sales reps who made the most significant improvements spent more time on a specific module. Trends may appear, making it easy to connect the dots and determine which lessons leave a lasting impact and which don't.
There's no one-track method to sales training. It's complex and unique to how your company does things. Regular adjustments are a must. Use those insights to fine-tune your training courses and do what you can to make the learning process worthwhile. Be proactive and improve the elements that you need to address. Doing that now can make your ROI findings much better.
9. Track Training ROI Improvement Over Time
Contrary to what it might seem, calculating ROI is not a one-time task. You might compare data points between two specific dates, but measuring success is about looking at the long game. How does the program improve performance over time?
Even after you justify training costs, you'll need to track how ROI changes. Always push for improvement. Sales are constantly evolving, and the new skills your team gained a few years ago might not apply now.
Use your KPIs to track progress well into the future, and keep your data points for as long as possible. Eventually, you can see how years of training can turn novice representatives into killer SDRs!
10. Improve Your Training with Data-driven Insights
Don't let your insights go to waste. Use them to optimize sales training programs and push its ROI to the max!
The great thing about learning how to calculate the ROI is that you lay the groundwork for years to come. Putting in the work to determine KPIs, gather baselines, and set up training platforms makes a huge difference. It helps you collect actionable data you can put to good use.
Instead of going with gut instincts, you can make data-driven decisions about your company's training efforts. Make changes with confidence and refine every aspect of your sales training to help every representative reach their full potential.
Optimize Sales Training ROI with the Flockjay Platform
Understanding how to measure sales training ROI can give you plenty of leverage. It's not always easy for sales managers to convince higher-ups that their investment in sales education and training is worth it. But when you have data to back up your case, it's hard for leaders to ignore. Use data to your advantage and prove that training is a valuable necessity!
Ready to bring your sales team to the next level and optimize your training ROI? Check out Flockjay! The Flockjay platform is a fantastic way to encourage learning and collaboration. It can empower your team to take their sales capabilities to a brand-new level, benefiting your organization more than you can imagine!