Training is typically something known as a cost center. It doesn’t directly generate income like an organization’s sales team. Instead, its impact on a business’s bottom line is a great deal subtler and a lot more challenging to convey.

You need to be able to both track and demonstrate that impact, and not just because it’ll help you justify your training budget. When properly contextualized, a training program’s return on investment (ROI) can help you identify where you might be overspending and underspending. It can also be used to guide future spending decisions.

For example:

• Focusing more of your budget on programs that have demonstrated higher success rates or a greater impact
• Choosing different training software on the basis of both direct and indirect costs
• Exploring ways to make content delivery more cost-effective

Related: How to Maximize the ROI on Your LMS Investment

Key Training ROI Metrics to Track

Before you can start measuring the impact of your training and planning to optimize ROI, there are two questions you need to answer. First, what are your training objectives? Second and more importantly, how do these objectives align with your overall business goals?

Work with other departments in your organization to define what value looks like for your company. Next, examine your training content to ensure it aligns with your culture, brand, go-to-market strategy, and business objectives. Once that’s finished, which set of metrics you choose depends largely on whether your training is focused on customers or employees/partners, though there are a few metrics that apply to both:

• Post-training utilization
• Learning progression
• Time spent on specific activities
• Behavior patterns 
• Helpdesk ticket frequency
• Attendance rate
• Course completion rate
• Engagement score

Customer Training ROI

To measure the ROI of customer education in your organization, you should first ensure you understand the difference between ROI and time-to-value.

The latter is a product-focused metric quantifying how long it takes new customers to begin seeing tangible benefits from a product. The former is broader and more general, comparing the cost of your training against its returns. Bear in mind that effective customer training demonstrably improves time-to-value, as well. 

With that out of the way, potential customer training KPIs include: 

• Customer satisfaction score, which has participants rank their overall satisfaction on a scale from one to five
• Net promoter score, which asks customers how likely they are to recommend a product to a friend or colleague on a scale from one to ten
• Retention and churn, which respectively measure how many people remain customers and how many terminate their relationship over a given timeframe
• Customer acquisition cost
• Product adoption rate, which identifies the percentage of customers who start gaining value from a product
• Feature utilization rate, which measures how much customers engage with an individual product feature

Related: The Power of Customer Training Analytics: Unveiling Valuable Insights

Employee Training ROI

Key performance indicators in employee training, whether for onboarding or professional development purposes, typically focus more on performance and productivity. Their goal is usually to determine whether a training program has successfully conferred new knowledge or skills. Unsurprisingly, these metrics can take a wide variety of forms, since each department and role has its own idea of competency. 

Examples include, but are not limited to: 

• Number of sales
• Sales cycle length
• Number of helpdesk resolutions
• Project completion rate
• Average deal size
• Customer satisfaction score
• Incident resolution time
• Internal software utilization

 

How to Calculate Your Training ROI

Once you’ve identified your KPIs, find a way to map them to revenue generation. Provided your training is properly aligned with your business goals, this should be relatively simple. Record the total cost of your training and then measure the pre- and post-training value of each metric.  

From there, it’s simply a matter of using the following formula:

ROI = [(Training Benefits-Training Costs)/Training Costs] x100

If you’d prefer not to tackle everything manually, CloudShare offers a training ROI calculator to help you estimate costs, define returns, and more effectively plan out your training budget.