In the current business climate, where every dollar spent needs to be justified, proving return on investment (ROI) for your internal training programs is more important than ever. It’s not enough to show that your program is helping employees learn new skills; you need to prove that it’s having a positive effect on the company’s bottom line.
At a basic level, this formula is the simplest way to calculate ROI:
This equation is a good start, but how do you put a dollar amount on a training program whose effects seem largely unquantifiable?
We want to help. We’re going to walk you through three of the most widely used frameworks for evaluating the impact of your training programs. Using one of these models, or a combination of all three, will equip you to prove your program’s value to the people who control the purse strings.
Don't forget to try out our free training ROI calculator to help you demonstrate the monetary benefits of your programs.
The Kirkpatrick Model is one of the most commonly used methodologies for evaluating the effectiveness of training programs. You can use it to connect numerical indicators of ROI, like sales numbers or retention rates, directly back to the skills learned during employee training.
It’s not enough to simply tell your superiors that training led to higher employee engagement in the sales process (and, thus, higher sales). You need the data to back you up. The Kirkpatrick Model lets you create a chain of evidence—a path that shows exactly how the training you instituted led to an increase in sales volume.
The model uses four steps or levels of analysis to trace how learning leads to actionable results. Collect data at each of these points:
Before you begin training, use the Kirkpatrick Model to map out the business result you hope to see from your training program. It might sound odd, but we recommend you start at Level 4, then work backward to identify the steps that would be required to get there.
Here’s what we mean. Say you have a sales training program designed to help call center employees increase their average order value (aka upsell customers). To prove ROI, you’ll want to start by mapping out KPIs, then evaluate the program like this:
A collaborative learning platform like 360Learning encourages employees to give instant feedback, making it easy to gauge their responses. If you don’t have those capabilities, a survey would also suffice, but make sure to poll participants immediately after course completion.
Now you’re ready to move forward with your training program, collecting the relevant data as you go. Later, when you discover that since the training cart sizes have increased by an average of 10%, you can use the data you’ve collected to clearly show that the sales training was directly responsible.
A major shortcoming of the Kirkpatrick Model is that it stops just short of providing a true training ROI cost-benefit analysis. You can show that the training produced measurable results, but how does that stack up against the costs of running the program? To fix that, we can look to the Phillips Model, which builds on Kirkpatrick’s framework with a fifth level: ROI.
The five levels of the Phillips Model are based on Kirkpatrick’s Model, with a few tweaks meant to create more data, and context around that data, to ultimately help determine ROI.
To calculate training ROI, you would collect the data for levels 1-4, creating your chain of evidence, just like in the Kirkpatrick Model. The only major difference is that instead of calculating one number for Level 4, you would attempt to capture impact figures for a variety of metrics and would convert them into a monetary value.
So, for our sales training example from the first section, let’s say we were able to connect our training program with a 10% increase in average order value across the company, translating to an $80,000 increase in sales over the next year.
How much did it cost to run the training? Let’s run the numbers:
So, in this scenario, our total cost of training was $17,500, and our total benefit was $80,000.
From there, we can plug the numbers into the equation we discussed at the beginning of the article:
So, our ROI is 357%. A pretty impressive number that shows we got a healthy return on the money we spent.
Remember that when it comes to calculating ROI, timing is everything. Don’t wait until the program is completed to start calculations, or you may find that your ROI is smaller than expected or nonexistent.
Instead, do the math at intervals throughout the training process, so you can adjust training or implementation to make sure you’re getting the maximum value.
When it comes to calculating ROI, timing is everything. Don’t wait until the program is completed to start calculations, or you may find that your ROI is smaller than expected or nonexistent.
“Data backed” success doesn’t always equate to hard numbers. While the two methods above focus on gathering quantitative data that proves learning effectiveness, Brinkerhoff’s Success Case Method aims to gather qualitative evidence.
This method is perhaps most on-trend with the state of L&D today. LinkedIn Learning’s 2022 Workplace Learning Report shows that qualitative feedback from employees is the most effective method for workplaces to properly evaluate their programs.
Brinkerhoff’s Method focuses less on proof of learning and more on the actual impact of education, so you don’t have to spend so much time compiling statistics and tying actions to outcomes. Instead of calculating a dollar value for training, you’ll create compelling examples and case studies to help sway decision-makers toward favoring your programs.
Here’s how the Success Case Method works:
So, to evaluate our sales training, we would start by picking our goal metric. Let’s stick with our example of average order size per call.
While the average increase in cart size was 10%, five salespeople went above and beyond and boosted their numbers by upward of 20%. There were also five salespeople who showed no improvement or even showed a drop in sales figures over that period.
So we sit down and hash it out with both sets of people. We ask everyone the same three questions:
From the top performers, we learn what they found most effective about the sales training and how it helped boost their performance. We come away with some impressive first-hand stories on how useful the training was.
From the poor performers, we learn that they were confused by some of the sales techniques or that they are implementing those techniques incorrectly. From that, we take away some concrete ideas to improve the program next time around. We pair that knowledge with analytics data pulled directly from the training program to see exactly where users struggled during training.
Putting all of that information together, we can tell a persuasive story of how our training is instilling confidence and knowledge in our top salespeople, as well as provide some concrete ideas on how to make our next round of training even more effective. When presented with confidence, these stories can be just as persuasive as numbers in a spreadsheet.
Brinkerhoff’s Method focuses less on proof of learning and more on the actual impact of education, so you don’t have to spend so much time compiling statistics and tying actions to outcomes.
Still not sure how to best demonstrate the monetary benefits of quality training at your organization? We’ve developed our very own ROI calculator to help your L&D team forecast potential ROI.
Simply plug in your numbers, and we’ll do the math for you. We use this calculator internally, but for the first time, we’re making it available for anyone to use to calculate the impact of your training in various use cases, including:
Our ROI calculator is closely related to Level 5 of the Phillips Model of Evaluation in that it will help you calculate a dollar-based ROI number. You can then use any of these three models to tie those numbers back to your learning initiatives.
Additionally, if you use Salesforce, 360Learning has an integration that can help you measure ROI by drawing direct correlations between training and employee performance data, such as revenue or service tickets.
Which of these three methods is the most effective? That depends on your organization and the kind of data your stakeholders (aka your decision-makers) respond to best.
Some may find a personal narrative more compelling, whereas others require hard data to fuel their decisions. In most cases, a combination of both qualitative and quantitative data will be most persuasive.
When it comes to demonstrating ROI, it’s important to be proactive. By the time higher-ups are asking to see numbers, your program may already be on the chopping block.
Whatever method you choose, be sure to evaluate the effectiveness of your programs constantly. That way, you can show value at the drop of a hat, maintain company buy-in, and keep your programs running.