Calculate the true ROI of a Learning Management System (LMS) for your business.

by Adam Heath on Dec 2, 2021 9:52:43 AM

21 min read
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The return on investment (ROI) for a learning management system comes down to how your business and its bottom line are impacted by your training programmes.

When introducing a new LMS, this can look like immediate cost savings (fewer travel expenses and lower administrative costs), and can cut down on employee turnover, time spent in onboarding, and much much more. It’s a powerful tool to improve your current learning strategy and processes.

However, evaluating your LMS ROI is key for your business because it saves money and time to the business that otherwise might have been wasted through slower processes – something that would no doubt be appealing to all levels of the business.
But how can you prove that your LMS investment is going to be cost-effective and revenue generating for your business?

There are a few things that you will need to consider whilst working out the ROI of your LMS…

1. New revenue generation

This is one of the easiest ways to prove the value of an LMS. Being able to extend the reach of training to partners, customers, or members is one of the ways LMS solutions drive positive effects that turn into a funnel of untapped revenue.

By offering additional material or services through an LMS, you’re able to unlock untapped revenue and engage multiple audiences to drive more cash flow. The LMS you choose in this case, though, is especially important. You need to make certain that when people are coming in for sales training, new product training, or training on your offerings, that people have the best experience. This unbeatable experience will ensure that they continue to see value in the partnership or business relationship.

More and more businesses are starting to see the value in providing training beyond the “four walls” of their internal employees, consequently turning their LMS into a revenue centre.

Expanding training to nonemployees (also known as extended enterprise learning) can provide several business benefits, such as increased revenue, decreased costs, and improved productivity. According to Brandon Hall Group’s Extended Enterprise 2017 survey, 30% of those surveyed say that extended enterprise learning covers over 50% of the costs of their learning technology.

Some examples of extended enterprise learning include partner training and certification, dealer/franchise onboarding, a customer training academy, contract workforce compliance training, and so on.

Launching learning for the extended enterprise isn’t as difficult as you might think. You’ll need learning content targeted to your external learning audience, an extended enterprise LMS, which can offer variable charging, and most importantly, a business case to gain buy-in from your executive team to support your extended enterprise learning initiative.

2. More members equate to more money

Elevating your brand and what you can provide your members with is essential to growing revenue.
Implementing a new LMS can increase the satisfaction and the perceived value that members get out of their business relationship and can even attract new audiences. If your members are trying to monetise eLearning but are not getting a grade A selection of content or a wonderful learner experience, this could be where you get to step in. Member training, when done well, can easily make up for the cost of your LMS, and then some.

The evolution of cloud computing, mobile devices and social media changed the learning and development market in ways that no one could have predicted. While progressive L&D experts have been leveraging these new technologies for their employee learners, the greatest beneficiary has been opportunistic organisations who maximise their interaction and training contact with their corporate extended enterprise learners.

Are you impacting your business with extended enterprise training? If not, you are behind. Organisations in every industry globally use extended enterprise training as a strategic tool to grow and improve their business and profitability.
Extended enterprise learning is any training, knowledge, certification or performance support provided to your non-employees such as channel distribution partners, resellers, dealers, franchises, members, customers and end-users of your products and services.
Winning your competitive race is a matter of percentages and few organisations outdistance everybody for a long period of time. Continual investment and growth in training your extended audiences and providing them targeted performance support has a proven positive impact on core business metrics. Smart organisations use this fact to their advantage.

LMS is the Backbone of Extended Enterprise
Extended enterprise learning is facilitated by a Learning Management System (LMS) to keep track of all your users, content and the relationship between the two. For over twenty years corporate organisations have been using LMSs and eLearning to provide mandatory and self-service training to their employees. Historically, LMS systems were successful in reducing training delivery costs and ensuring regulatory compliance, but they fell woefully short in engaging learners, being easy to use or facilitating ecommerce. They were all about saving money.
The new cloud LMSs leverage the advances in technology to finally facilitate engagement with global extended audiences at a fractional cost in comparison traditional LMSs. With these hurdles removed organisations are focusing on delivering a measurable impact through external training and they can prove it.

Training your corporate extended enterprise audiences is all about making money, impacting business change and winning your competitive race.

Measurable Benefits of Extended Enterprise Learning
Unlike internal employee training it is easy to measure the business impact of extended enterprise learning. An extended enterprise learning management system will allow you to report on the training completions of your extended audience groups. Compare trained vs. untrained groups or individuals in any metric you are tracking such as renewals, support calls or channel sales performance to determine the measurable impact.

The measurable benefits of extended enterprise learning can be grouped into three main categories:

Increase Income
Extended enterprise learning is about making money for an organisation. If you train your channel partners about your products and how to sell them, channel partners will sell more. Similarly, if you train your customers on how to use the software they just purchased, they have a better chance to get a good start, use the product as intended, be successful and renew their subscriptions. Organisations also sell their content and certifications and create a new stream of revenue from the sale of content and channel partner certifications.

Decrease Costs
Educating your partners, prospects and customers increases customer satisfaction and decreases the cost of customer support. Extended enterprise learning technology also decreases overall training delivery costs through the reuse of learning materials and elimination of travel and instructor costs and reduces the regulatory compliance risk. Finally, the cost to build and support a growing and global network of partners and customers is greatly reduced through extended enterprise training and performance support.

Accelerate Timelines
Through the use of extended enterprise training organisations can shorten timeframes for many activities. Rolling out new products, expanding into new global areas, ramping up external sales are all measurable impact areas. Onboarding new customers to successful customers is dramatically decreased with focused training and just-in-time learning interventions.
Few activities in the corporate world can impact so many of the above business metrics. Deploying an ever-evolving extended enterprise outreach and training initiative can provide you a sustainable competitive advantage to outpace your competition.

3. Data maintenance costs

The reason the cloud has so much clout is because the cloud makes dealing with data way easier. This is because when an LMS is a cloud-based system as opposed to an on-premise solution, the vendor keeps hold of all the data.
Older and more dusty solutions require extra resources that are devoted to the maintenance of this LMS data, instead of it just living easy and breezy in the cloud. Fewer people and less hardware are needed to upkeep data, which means a reduction in maintenance costs for you!

4. Training expenses

DIY is all fun and thrifty until we’re talking about training efforts, because in this vein it can actually make training more expensive.
For organisations still doing some or all training in-house, the cost adds up quickly (and it’s not cheap). Paying for physical training materials, the distribution of those materials, and instructors to facilitate training results in a large amount of expenditure.

To cut these costs, you need an LMS that allows you to create courses, store and replicate materials, quickly send them off to the relevant parties, and host training sessions and recordings that can be stored and re-watched. For example, instead of paying someone to give the same lesson eighty-three times, they can give it just once, while it’s recorded. They can then focus on other areas of the business where they’re needed, and your organisation benefits from them using their time more wisely.

We are seeing a phenomenon where eLearning penetration in corporations is increasing, regardless of the company’s size. Since class-based training is more expensive, proportionately, for small and medium-sized firms, these firms are increasingly recognising eLearning as being convenient and cost-effective.

When training is mostly delivered in person, firms with more than 10,000 employees spend less while reaching more, owing to the scale-based savings involved. This data changes completely when training is delivered through eLearning projects. Market acceptance of eLearning has resulted in its increased use for both large and small companies.

Top Drivers
General budget constraints appear to be the main drivers of the shift towards using eLearning. Efforts to reduce travel costs and reduce the cost of training per employee point to key economic benefits arising from using eLearning materials. However, there is another key driver: eLearning tackles time constraints. In other words, eLearning is not merely a solution which is attractive during an economic downturn, but it is also an efficient and cost-effective solution when workers — especially those in Organisations with a widely geographically distributed workforce — need to be brought up-to-speed quickly on relevant knowledge and skills.

5. Travel expenses

As much fun as traveling to offer face to face training can be, we all know we’ve missed that freedom since the pandemic, organisations do better financially when they are able to cut out unnecessary travel at large (as long as it doesn’t harm the business). COV19 has forced many businesses to review how they need to ensure training and continuity to their workforces, when you have teams that are mostly or entirely remote, or offices that are globally spread, training options that are available on-demand are easier and cheaper to maintain. With a solution that doesn’t require airfare, hotels, meals, and other expenditure, the savings add up.

Sales teams everywhere return to their office from the annual sales meetings, ready to tackle those annual revenue goals.

According to ES Research, between 85% and 90% of sales training has no lasting impact after 120 days. And yet, companies are still look to spend vast amount of revenue on event-based sales training each year.

Let’s take a closer look at some of the reasons why the training material at your annual sales meeting isn’t sticking.

Your Learning Approach is Too Narrow
One of the biggest issues with event-based training (like an annual sales meeting) is that so much learning is squeezed into a small period of time, making it very difficult to retain information and introduce new skills once your salespeople return to their daily routine. Moreover, studies have proven that a formal learning approach is ineffective.

Effective training is ongoing and supports learning as it actually happens. Most learning occurs through interactions with peers and managers and through on-the-job experiences. As the 70:20:10 model prescribes, learners should be exposed to a combination of formal, social, and experiential learning.

Even if you do host formal learning sessions, fortify them with informal learning approaches (such as scenario-based activities and access to subject matter experts). A consistent, blended approach will help your sales team put the learning material into practice more than a one-off formal session.

Knowledge is “Hidden”
Sales roles often involve a lot of traveling and off-site work. As such, it’s imperative that knowledge is made readily available so salespeople can access information at the point of need. This doesn’t simply mean ensuring that training can be done offline and on mobile devices – it also means that knowledge can’t live exclusively in the heads of a few subject matter experts.
Making knowledge more widely available (beyond simply sharing the slides from your sales kickoff presentations) will help salespeople learn more efficiently and improve their performance on-the-job. Centralise your training resources and make it easy for sales reps to ask questions and get effective coaching.

You’re Not Reinforcing Training
Without coaching or reinforcement, 87% of training is lost within 90 days. If you don’t have methods in place to reinforce training, your sales team will undoubtedly forget what they’ve been taught.

There are plenty of ways to reinforce learning materials, including gamification, quizzes, introducing learning “rewards”, and so on. Reinforcing training with ongoing learning can also help to better understand the learning needs and weaknesses of your sales team so you can continually improve learning effectiveness.

You’ve made a massive investment in your annual sales kick-off. However, the hard truth is that your investment in sales training isn’t likely going to help you achieve the lasting impact you need to achieve your revenue goals for the rest of the year.
The right learning technology can help to facilitate a more engaging and consistent learning experience. It can also help to curate knowledge capital from subject matter experts, implement social and experiential learning, and ultimately, help your sales training programs stick more than an annual meeting.

6. More bandwidth for your money

This is where we talk about getting you more for your money.
We’re all familiar with days on the job that are so fast paced that it just feels like there aren’t enough hours in the day to get it all done. With online training that fits the convenience of the learner, people can fulfil their training needs from home, on the way to a huge on-site sales pitch, or even in the break room at the office.

Making eLearning courses available for whenever people can squeeze in relevant training content means that you’re stretching and optimising employees’ time, bandwidth, and productivity.

Whether it’s on their work laptop, their home office desktop, or in bed on a mobile device before bedtime, training courses that are easy to access give you more from your talent that you’d otherwise miss out on.

Ever since we tossed out our flip phones and moved on to internet enabled devices, content consumption has flipped on its head.
Now, we get sold things we don’t need by ‘influencers’ instead of billboards, and increasingly read the news on our phones during our morning commute, rather than flipping through a newspaper. Such is the power of mobile internet.

Millennials, who now occupy the largest segment of the workforce in North America, can’t put their phones aside. They’re virtually glued to them. It wasn’t long, then, that L&D pros realised that offering a learning environment on mobile devices would replicate how their learners consume content outside of work and increase engagement. As a result, mobile learning, or mlearning, has become an increasingly relevant component of all eLearning programs, and learning management systems in general.

M-learning helps with employee training by giving learners access to learning in the flow of work, as they can reach for their mobile device while out in the field to help them with a query or get clarification on a task.

Social learning platforms can also be made mobile-ready, enabling learners to reach out to Subject Matter Experts (SMEs) and colleagues when they need support. With 64% of learners saying that accessing their training content from a mobile device is essential, mobile learning is here to stay. Here are key reasons mobility is the new reality in eLearning:

The device is already in their hands
If learners can use their devices to better understand job-related knowledge as they are on the field, at their jobs, they will. So why not use the devices they hold in their hands to facilitate that kind of knowledge transfer?

We used to view all learning opportunities as very separate experiences, but eLearning and mobile devices have changed all that. For example, with the right Learning Platform in place and the right mobile learning program executed, learning can be right at the fingertips of employees in the field, as they execute their daily tasks and procedures. In fact, 71% of Millennials say they connect more with mobile learning than L&D activities delivered via desktop or formal methods.

Knowledge is community-based
With the right Learning Platform and m-learning program, job-related knowledge is not limited to what is prescriptive, according to the administrators of a learning program. Instead, learners have access to the experiences, knowledge, and insight that accomplished learners in their very field have been exposed to, and they can access this community-driven knowledge right at the point of need.

Offline is online
It used to be so hard to reconcile offline data with online, synchronised data, but as best-in-class Learning Platform providers continue to realise, offline is the new online, and we need offline data to sync effortlessly with online data.

This is becoming an increasing reality with progressive LMS providers or modern learning platforms, and it should be a key consideration in investing in any new provider today. For example, there are many industries where offline functionality a part of doing business. An offshore rig or a shipping fleet, for obvious reasons, cannot be “connected” for a period of their operations. As a result, if they desire optimal learning conditions, they need to ensure offline learning is synced with online learning.

Optimising eLearning Content for Mobile Platforms
The relationship we have with our smartphones is rooted in the countless everyday interactions we have with our devices (how it feels in our hands, the way we can customise certain settings to our exact liking), but these interactions happen in short bursts. In fact, the average person looks at their phone more than 80 times a day, according to a report by Asurion. That’s 5 times an hour, or every 12 minutes.
To make any product mobile-ready, it’s necessary to consider micro-use applications that can be completed with a few “taps” to mimic the behaviours we’re used to completing with our phones.

Almost all types of eLearning content you develop can be viewed on mobile devices. To create a strong user experience, you need to make sure that the content is ready and optimised for this possibility. Here are some things to consider:

Compatibility: All videos on your webpages, SCORM, and TinCans should be optimised for mobile devices. Just because they are reproduced correctly by your computer’s browser does not guarantee that they will work properly on mobile devices.

Ease of Use: Instead of forcing people to click on multiple pages, which can be difficult on mobile devices, make mobile learning content scrollable so they don’t have to leave a page to interact with as much content and as many options as possible.

Impact: Use high quality images and edit them carefully to maximise detail with special consideration given to sizing specifications, even when they shrink to fit the smaller screen.

User Experience: All buttons on the screen should be easy for mobile users to use. Paradoxically, it often happens that users with big fingers have trouble handling smaller devices. For reasons like this, it’s a good idea to try to reduce the number of clicks necessary to complete an action: focus on one action at a time, removing unnecessary screens changes or clicks. Take a cost-per-click approach from your average digital marketer – clicks cost you money!

Attention to the device: Choose interactions carefully – not all the actions you do naturally on a PC are as simple on a smartphone for example drag-and-drop operations can quickly become a nightmare on a smaller touch screen.

Responsibility: Use a responsive template for everything, including emails. This will guarantee you provide the best possible viewing experience on both desktop and mobile devices.

Shortness of content: Do not use long paragraphs. Remember that people who use mobile devices are often on the go, so they may be disoriented by long paragraphs. Another good idea is to often intersperse text and images.

Engagement: “Bite-size” content is the best solution: analyse how long users will most likely be on the phone. Data based on the analysis of millions of study sessions show that the average duration of the session on mobile phones is 10 minutes. And paradoxically, a user is more inclined to complete a course divided into 20 pills of 2 minutes each rather than a monolithic lesson of 30 minutes. A great approach is to present a concept in individualised pills.

Content indexing: Simplify the way content is formatted so that the most valuable information is easiest to find. Use clear headings, bulleted lists points and images and icons to attract attention. As we move into a mobile-first world, all aspects of our lives will increasingly be based around our mobile devices and learning is no different – learning on the go with mobile learning is here to stay.

7. Time savings

An LMS that is highly collaborative makes the most out of subject matter experts.

Learning socially is a huge part of how we cement new information. Sites like YouTube have been super influential on the way we learn anything from quick fixes, to languages, to in-depth projects – we’re used to looking to other people when we need some guidance.
On the job, people constantly tap more tenured employees on the shoulder for advice or feedback. An LMS that allows subject matter experts to contribute their knowledge to multiple audiences at once (on their own time), keeps people learning from each other without the need for in-person meetings.

Additionally, your people are learning from knowledgeable and trusted sources who are familiar with your brand instead of going to Google.
You might think your high performers or managers help other workers by passing on information to achieve their tasks, or that formal training courses are teaching the right skills.

The reality is, though, knowledge isn’t always so readily shared, or available, and the material taught in formal situations isn’t always retained.
The International Data Corporation (IDC) once estimated an enterprise employing 1000 knowledge workers wastes $48,000 per week, or nearly, $2.5 million per year, due to an inability to locate and retrieve information.

What’s interesting is that this report was published in 2001. You might think the rise of smart tools and searchable company databases would have slashed this inefficiency, but instead, it’s actually added more complexity. With different platforms, channels, devices, and teams all now holding valuable information, employees at big companies spend, on average, 38 minutes searching for a document.
The truth is, knowledge in a company is often hidden and hard to access when needed. It can be buried in various places or even just the heads of a few subject matter experts.

So where do workers go for information that is critical to perform the task at hand? They don’t take formal courses to get this information. Instead, they search around and go to those few individuals that they see as the experts. This isn’t a scalable solution because experts are busy people since nobody else can do their job, so relying on them can quickly lead to burn out.

That approach of searching out who might have the right information is reflective of the 70:20:10 model of learning, where 70% of someone’s learning happens via on-the-job experiences, 20% through interactions with their peers, and just 10% in traditional, instructor-led classroom environments.

The benefits for companies embracing a 70:20:10 approach to learning:
• 5x as likely to be able to attract talent
• 4x as likely to respond fast to business change
• 2x as likely to report improvements in staff motivation

Knowledge Sharing starts with Social Learning
People learn best through hands-on experiences, interacting with peers and managers. They need information at the point of need, not during onboarding or once a course is made available. This is social learning in action; a more common-sense, real-life approach to learning. You can take a deeper dive into social learning in this blog.

Within organisations, this practice promotes a greater uptake of knowledge sharing and it can be encouraged through social learning tools such as Learning Management Systems (LMS).

On the coaching side, the learning platform facilitates knowledge seekers to actively engage with the right subject matter experts, so they can ask questions and get answers at the point of need. But experts can also scale (and share) their knowledge by creating and uploading content about their daily, on-the-job activities, or difficult tasks. This content is then categorised, peer-reviewed, curated, validated, and shared across the organisation in one integrated system.

It’s a place where learners and experts join forces to create best practices and curate knowledge capital, and where top performers are recognised by co-workers.

By building a knowledge sharing and social learning culture using Coach & Share, organisations can achieve:
• A significant decrease in the time spent by experts on content creation
• Faster completion of tasks by workers
• Cost savings through a decreased need for external instructional designers.

8. Reduce your turnover

When people aren’t growing or advancing towards something, they start to feel stagnant. This is usually when they start to explore new job opportunities.

Keeping people invested in their personal and professional development and showing that your organisation is invested in it too, is what keeps people around for the long haul. eLearning Industry affirms that “employee development boosts employee satisfaction and workforce productivity and reduces turnover”. They’ve also emphasised that not only does employee training help reduce turnover, but that employee development is the most pivotal secret ingredient when you’re trying to reduce turnover.

Losing talent, especially top talent, is very expensive. You lose their productivity and contributions until a replacement is found, and then you must wait for the replacement to fully ramp up. And that’s just the beginning. Why go through the whole rigamarole of losing quality people when there’s an easy way to get them to stick around? Training initiatives are the key to making people feel accomplished and affirm that they’re going somewhere positive with your organisation.

Only 31% of employers are focusing on better supporting training among their millennial employees. The millennial generation is no longer a mere dot on the horizon – they’ve fully arrived in the workplace, rising past entry-level roles, and actively changing the way employees are managed and organisations are run. And yet, only 31% of employers are focusing on better supporting education, skills, and training among their millennial employees. Ignoring the needs of millennials could have dire consequences for your business – here’s why it’s important to focus on millennial learning needs.

Reduce Employee Turnover
Millennials have historically held a reputation for job hopping. Gallup reports that 21% of millennials have changed jobs within the past year and 60% are open to different job opportunities.
This is a generation that will seek employment and jump at opportunities elsewhere if their needs are not met. Considering the high cost of employee turnover, organisations can’t afford to lose millennial talent so frequently.

Prepare for the Leadership Talent Shortage
Whether you’re prepared or not, millennials will be leading organisations one day – and that day is quickly approaching. In fact, 33% of the US workforce became eligible for retirement in 2015, and half of them held leadership roles. Organisations who wish to outperform the competition can’t afford any leaks in their leadership talent pipeline.
Millennial learning needs are less obscure than you may have been led to believe. That’s why we created Millennials in the Workplace: Understanding Millennial Learner Needs to Increase Engagement & Retention, a free whitepaper full of curated data aimed to help you accommodate the needs of your millennial learners.
Learn more about how to increase engagement and retention among millennial employees in our free whitepaper, Millennials in the Workplace: Understanding Millennial Learner Needs to Increase Engagement & Retention.

9. More time on high-level strategy

Learning technology makes online learning way easier to stay on top of because it automates a lot of the job.
The right LMS can automate the creation of personalised learning paths, pull real-time reports, send notification reminders, and enrol users, among many more. With less time and human power devoted to keeping training afloat, support costs (that would normally need to be funnelled towards LMS admins) go down, leaving admins to focus on high-level strategy.

If we’re being honest though, everything good comes with critics. How can we guarantee that AI will actually live up to the hype and prove its value? Is it actually capable of making life that much easier, and if so, how?

One thing we have proven is that you can have something that is sexy and also practical. Artificial Intelligence is similar because it is capable of making what we already do much easier, and much less time consuming.

In the L&D world, we’ve seen how AI improves the way admins and learners interact with content in learning platforms by subsidising learning with a more personalised approach.

Personalisation in a corporate environment was once unheard of. Employees were just a drop in the ocean of an organisation’s workforce, and “one-size-fits-all” was the mantra. Now, employee training is a whole new ball game. A personalised learning experience is not only preferable, but simply more effective with AI.

10. Higher productivity from talent

World-class training and course offerings help people reach peak productivity and high-performance faster. Partner training, sales training, customer training, onboarding, and regulatory compliance all have that in common. They all need people to get a job done, get it done quickly, and of course to get it done well. Organisations that invest in quality learning reap more from their talent with programs that make it easier for learners to succeed.

An LMS isn’t just for learning – here’s how you can increase collaboration and productivity Learning management systems are hugely beneficial for increasing an organisation’s productivity. A state-of-the-art LMS can also be especially helpful for improving collaboration among teams that work remotely. Let’s take a look at some of the features and functionalities within an LMS that will help you increase collaboration and productivity on your team.

Centralise Training Materials and Information
This is one of the most important benefits of an LMS, especially for teams that need to improve collaboration. This provides individuals with the opportunity to share and access resources easily and at the point of need.
Documents can be categorised and distributed to specific members of a group as well, which makes it easy to allocate specific online resources to the right individuals. As a result, everyone can easily access the information they need, instead of having to inconveniently ask around and/or sort through an unorganised file of documents.

Streamline Project Management
Managing an online project is no easy task, especially when you’re working with a remote team. Fortunately, online productivity tools allow group leaders to effectively communicate and keep their team on task. They can assign roles, monitor group progress, and share important documents that employees need to get the job done.
Managers can also configure the system to send automatic reminders at a predetermined time to help teams stay on track. Team members can also access group to-do lists, and managers are able to add tasks to the list and categorise them by department, category, and priority. They can also follow up with employees to ensure that they finish the necessary tasks on schedule.

Integrate With Other Tools
Integrating apps, tools, and other add-ons that are compatible with your LMS can also help increase collaboration and get more value from your technology. Don’t let a lack of collaboration impact your team’s productivity. Use your LMS’s collaboration capabilities and your L&D results will almost certainly start to improve.

Conclusion

All of the things on this list have revenue attached to them. Either revenue that’s being lost that could be saved, or revenue that’s not being tapped into yet that could help grow your organisation.

The goal is never to just breakeven – you want to grow profits and stop spending unnecessary time and money on things that bring no value. Not only does revenue generation from an LMS more than offset the original cost, but it’s where growth happens – and believe us, it’s not small change.

Adam Heath

by Adam Heath
Dec 2, 2021 9:52:43 AM