An answer to the eternal question: What’s the ROI on sales training?

by on February 19, 2014 · 0 Comment POSTED IN: Top Sales Dog
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“So what kind of ROI can you demonstrate for this sales training program?”

Just about every sales trainer and sales manager has been asked that question by some hard-nosed CFO or CEO, who presumably would rather take your training budget and blow it on new bookkeeping software or a private jet. It’s a bit of an unfair question — not because sales training doesn’t work, but because, like so many things in business, it’s hard to draw a straight line between any given activity and the bottom line.

For example, you could just as well ask, “What ROI can we demonstrate for what you do all day, boss?” (On second thought, maybe you shouldn’t.) The point isn’t that CFOs and CEOs don’t earn their keep. They do. But it’s hard to boil down that value to a spreadsheet.

One reason it’s so hard to show an ROI within a company is because there aren’t enough data points. One big sale (won or lost) can skew an entire year’s results. Other factors muddy the waters as well: the economy, the industry, the product, competing priorities.

But when you aggregate data across a bunch of companies, there is some powerful evidence that sales training leads to more sales — if it’s done the right way.

Research conducted by CSO Insights in 2012 examined sales practices and results among more than 1,500 companies. The findings are compelling, and are backed up by earlier research, including a CSO Insights study published in the Harvard Business Review.

The study showed pretty conclusively that the impact of sales training depends in large part on how it’s done. For example, commercial training programs yielded better results than home-grown ones. Skills training gave a bigger boost than product training. But more important than the content was the training process itself.

The researchers identified four levels of process:

  1. Random — which really isn’t a process at all. The company provides no training. Every salesperson does his or her own thing.
  2. Informal — a company provides skills training and encourages salespeople to apply what they’ve learned. But they don’t monitor or measure the training.
  3. Formal — the company provides skills training and reinforces the use of those skills. It regularly reviews its training processes and adjusts them accordingly.
  4. Dynamic — the company monitors salespeoples’ application of skills and provides continuous feedback, and it proactively modifies the training process when market conditions change.

The results
The differences in results for these four levels is significant. For example, 60% of the salespeople in Level 1 (Random Process) companies met quota. The numbers go up slightly for Levels 2 and 3, but jump to 72% for Level 4 (Dynamic Process)– a 20% increase.

That’s a good starting point for a discussion with training skeptics. What would the ROI be for your organization if 20% more of your reps were making quota?

In next week’s post, we’ll take a closer look at these Level 4 training programs and learn exactly what makes them so effective.

Source: Optimizing the ROI of sales training, by CSO Insights.

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