Developing a training program that is both impactful and a high-quality learning experience is a critical part of operating a top-tier sales organization – it can also be very, very expensive. The traditional live, instructor-led training event requires a significant investment of time and money, but the true costs go well beyond the dollars spent on content and training facilitation. There are also many hidden costs that can eat up training budgets, costs that often outpace the sum of all other training investments. Analyzing these costs will help you understand your sales training ROI.
The Hard Truth of Hard Costs
To get a sense of what your current training program is already costing you, let’s start by looking at the costs that you are probably already familiar with. Known as hard costs, these expenses can be tied directly to tangible things such as meeting materials, training venues, and transportation costs.Some of the most common hard costs associated with standing up and operating a sales training program include:
Content & Facilitation: For most organizations this comes down to a buy vs. build decision, with many finding it easier and more cost effective to buy. Of course, evaluating training providers and asking the chosen vendor to tailor the content to your company’s unique selling situations generates additional, often unforeseen expenses.
Meeting Space & Catering: As corporations continue to reduce their physical footprint, most organizations are forced to look outside of their existing offices for training spaces that are large enough to house their salesforce for a live event. Hotels, convention centers, and other venues often charge a premium to book their most comfortable spaces, bumping up your overall training budget by a considerable amount. Of course, you’ll want to make sure that your sales people are fed while they are in town. Some venues require that you use their in-house kitchen to provide meals, but even external catering companies can add thousands to your total bill.
Travel & Entertainment: For many companies, the biggest financial hurdle is simply getting all of your participants to and from the training location. This figure grows exponentially for organizations with large salesforces that all require flights and/or ground transportation to get from their home of record to the training venue and back.
Beyond the pure travel cost, most companies also want to capitalize on the consolidation of their sales people by hosting social events during their down time. Whether this takes the form of a group dinner or an evening exploring the city, it is often a pricey investment in bolstering the esprit de corps of your team.
There’s Nothing “Soft” About Soft Costs, Either
While the hard costs are easy to quantify and often accepted as the “costs of doing business,” the true financial impact of a sales training program comes in the form of soft costs. Soft costs are much more difficult to quantify, as they are generally tied to intangible things such as time allocation, productivity and opportunity cost.
Some of the less apparent soft costs involved in developing and attending the training include:
Program Development Time: Whether you decide to purchase an existing training program or develop one in-house, there will be some level of time required from your internal resources to support the development and implementation of the program – and it is frequently a substantial request. Whether they are strategically supporting the development of training material, standing up the technical structures and processes that will deliver the content, or handling the logistical planning of hosting the events, these individuals are allocating their time to this endeavor over some other workplace project.
Loss of Productivity: Regardless of where you hold your training event, you will be asking your reps and/or managers to trade time in the field for time in the classroom. If done right, this is certainly a worthwhile investment. However, any time out of the field for sales training will have a direct impact on near-term results, regardless of the quality of the program. Sure, building in agenda time for email and phone catch-ups can help soften the blow, but it’s often at the expense of achieving the full training objectives.
Accommodating the Learning Curve: The goal of almost every sales training program is simple – generate behavior change among the sales force to make them more successful. Assuming the concepts being taught are founded on sound logic (which isn’t always the case) there will still be a period of time where reps and managers are working through the process of applying the training concepts they have learned in real selling situations. In the worst cases, reps begin to practice bad behaviors they learned in training, reducing their productivity over the long-term. In the best cases, reps will often see a short-term drop-off in productivity while they integrate the skills into their day-to-day selling practices before reaping the benefits further down the road. Either way, the financial impact of reduced productivity will be reflected in your monthly and quarterly sales reports.
Opportunity Cost: The soft cost impact for those companies that have dedicated sales enablement or training functions must also consider whether there are more impactful activities that these individuals should be doing. Simply, the more time these support resources spend on helping the field prepare for customer conversations vs. managing table arrangements for the next live training, the better the sales training ROI.
Reining in Runaway ROI Conversations
If you have ever tried to lobby for the development and implementation of a sales training program, you know that the conversation will eventually turn to sales training ROI. While it’s certainly not impossible, providing justification for the substantial expenses we’ve covered in this piece is a challenge for most sales leaders. If you’re tired of “getting creative” in order to convince senior leadership that your program has a positive ROI, you should know that there is a better way.
Using a video-based practice solution can significantly minimize these costs while actually improving the training outcomes. Thanks to recent advances in technology, many organizations are saving six-figure sums by implementing video-based training and practice strategies in support of (or even in place of) traditional live event formats. These virtual programs have been proven to generate significant hard cost reduction while at the same time improving overall effectiveness.
The notable reduction in hard costs comes from:
- Streamlining custom content development by leveraging real-life practices and insight from your company’s high performers
- Eliminating costs for travel and entertainment
- Eliminating meeting space and catering costs
More importantly, these programs have vastly reduced the impact of soft costs because:
- Participants can complete their learning objectives and video challenges during non-selling time
- Program designers, sales management or training professionals can easily develop sales training content through video-challenges that are tailored to your real selling situations
- Coaching and feedback can happen asynchronously, allowing managers to provide feedback without interrupting other critical job tasks
Honest discussions around cost and return on investment for sales training have been skirted for far too long. You shouldn’t have to use creative accounting to support the case for a positive sales training ROI for your program. On the other side of the table, executives shouldn’t have to resign themselves to writing off the high price of sales training as a “necessary evil” associated with supporting the long-term success of their sales teams.
New video practice technology now allows companies to marry the benefits of sales training with the need for prudent cost management. Thanks to these developments, there is a new energy around the topic of sales training ROI with many companies achieving the aspirational goal of cost efficiency and program effectiveness.
To learn more about our sales training methodology, find out what it takes to make sales training effective.
About The Author
Ralph is a partner with The Brevet Group, and for 20 years he has led sales performance teams in the United States and Asia. Recently he also served as a sales leader in both the media and technology industries. Ralph’s work has focused on a unique blend of management consulting and sales enablement to help companies execute their sales strategies. Prior to this role, Ralph was the APAC sales effectiveness leader at Mercer.