The ROI of Investing in Bespoke E-Learning for Your Business
Introduction
Picture this: You’ve invested in a training program that promises to upskill your team, boost productivity, and keep your company compliant. But six months later, you're left wondering—did it actually deliver? Many businesses face this uncertainty.
Given the challenges of our current economic climate, recent legislation changes for employers, and the squeeze on everyone’s finances, whatever you invest in has to deliver. And for SMEs, it’s even more critical because cash reserves can be lower, cash flow less predictable and access to credit harder.
But with the right focused learning, you can better compete, retain talent, and stay adaptable to market changes, helping you thrive even when conditions are tough.
Bespoke e-learning can transform the way your team learns and performs, but how can you be sure it’s worth the investment? Let’s be honest, it’s a big investment, not just financially but in time and effort to produce and embed. And then, how much time and effort are your learners investing to complete the training?
In this blog, we’ll guide you through the process of calculating the return on investment (ROI) for e-learning with real-world examples and insights that bring the numbers to life.
Let’s explore how companies like yours have turned training into measurable success.
1. Why ROI Matters for E-Learning
Investing in training is a big decision, and every pound spent should contribute to your business goals. ROI provides a clear lens to:
Align training outcomes with business objectives.
Justify the cost to stakeholders.
Highlight how e-learning outperforms traditional methods in terms of cost and impact.
Real Business Examples:
Take BrightTech Solutions, a mid-sized tech firm. They replaced their in-person training sessions with bespoke e-learning modules and reported a 30% reduction in compliance-related errors within three months (Psico Smart). That’s ROI you can measure.
Effective and efficient e-learning can significantly impact a whole organisation. After implementing e-learning for employees in a pharmaceutical organisation, we were able to track a reduced level of queries to the HR support team, fewer data entry issues, and managers submitting HR transactions faster and more efficiently. Fundamentally, employees could find what they wanted, when they wanted it, because they understood how to access the new systems and processes. Effort could be realigned to more strategic and alternative activities, which also improved performance.
I recently worked with a software house to resolve performance issues in their support team. After unpicking what was happening and what should have been happening, fixing small task activities through focused learning caused a cascade of changes, uplifting performance not just in-house but for the clients as well. Now that’s powerful.
2. Start with Clear Objectives and KPIs
Every success story begins with clear goals. What does your e-learning program aim to achieve?
Boosting Productivity
Ensuring Compliance
Reducing Costs
Set Key Performance Indicators (KPIs) to track progress, like:
Completion rates
Employee feedback
And most importantly, measurable performance improvements.
Before we start identifying solutions to your performance issues, I will always work with you to determine how we will measure the impact of the e-learning. Because it’s not just you that’s invested in a positive result. With the technology available to us, it's become even easier to track those metrics, so it doesn’t need to be even more effort.
And whilst happy sheets do capture an element of feedback which is useful, I want you to know how it’s impacted your business. Whether through employees’ workload, error rate, task time tracking, or chargeability. Fundamentally, it’s all about performance. It might have even impacted your clients, too.
3. Breaking Down E-Learning Costs
Understanding your investment starts with knowing where your money goes. Let’s break it down:
Development Costs
Think of costs for instructional designers, graphic artists, and subject matter experts. For instance, a UK-based startup spent £25,000 on developing a custom onboarding program.
Technology Costs
This includes the LMS, authoring tools, and hosting. Example: An education provider invested £12,000 in their LMS but reduced printing costs by 90% (Elearn Magazine).
Opportunity Costs
Calculate the time employees spend training versus working. A manufacturing firm found their bespoke course, which cut training time by 40%, saved them £15,000 annually.
It’s good to remember that the cost of every training course will be different, impacted by who, what, and how is involved. More money doesn’t necessarily bring better results, but equally, too little investment can dilute potential performance gains. It’s about finding the right solution, at the right price, at the right time to bring what you need.
4. Measuring the Benefits of E-Learning
Quantifying benefits can feel abstract, but using real examples helps bring clarity.
Tangible Benefits
Increased Productivity: A financial services company saw a 20% improvement in customer query resolution times after their e-learning program.
Cost Savings: Replacing in-person sales training with e-learning saved a software firm £20,000 in travel and accommodation (Vorecol).
Reduced Training Time: E-learning cut training times by 30% for an engineering firm, freeing up 500 hours for project work.
Intangible Benefits
Employee Engagement: Flexible learning improved satisfaction scores for a retail chain by 15%.
Retention Improvement: After implementing leadership training, a consultancy firm saw a 10% drop in turnover.
5. The Balanced Benchmarking Approach
For organisations seeking more precision in measuring ROI, balanced benchmarking offers an advanced analytical method. Originating in the 1970s, this approach quantifies relative performance by analysing input and output variables, providing a clear efficiency metric.
Case in Point: In a legal services firm, attorneys were treated as individual business units. Inputs like salaries and non-billable hours were compared to outputs such as billed hours, fees, client referrals, and satisfaction scores. This monthly analysis identified underperforming attorneys and informed targeted training initiatives. The results? A 15% annual increase in billed hours and nearly £1 million in additional revenue, yielding an ROI of over 950% (HBR, 2023).
Key takeaways from the balanced benchmarking method:
Baseline Data: Always collect pre-training data to establish performance benchmarks.
Variable Selection: Choose variables tied directly to controllable and training-relevant factors.
Outlier Awareness: Remove outliers to ensure accurate relative comparisons.
6. Collecting and Analysing Data
Data is your best ally when demonstrating ROI.
An LMS will give you basic data, such as completion rates, and potentially indicate engagement levels. Example: A healthcare provider used post-training feedback to tweak their modules, increasing user satisfaction from 70% to 90% (Elearn Magazine).
Other HR data can contribute, such as performance review ratings and feedback, skill gap analysis, etc.
But consider sourcing wider afield. Use operational data- time tracking, error rate, call handling rate, and even repeat sales. Having defined during analysis, the metrics that may be affected by performance change, from the training, and a baseline in place, the next step to calculate your ROI will be straightforward.
7. Calculating ROI: A Practical Example
And for those that need the numbers, let’s apply the numbers.
The ROI formula is straightforward-
ROI Formula: ROI (%) = [(Total Benefits - Total Costs) / Total Costs] x 100
So let’s look at an example:
For a large project:
Total Costs: £57,000 (development, LMS, and maintenance)
Tangible Benefits:
Increased productivity: £30,000
Compliance savings: £12,000
Training cost savings: £20,000
Time savings: £8,000
ROI Formula: ROI (%) = [(Total Benefits - Total Costs) / Total Costs] x 100
Calculation:
This translates to a 22.8% return on your e-learning investment.
But consider, if your e-learning can be used next year or for the next five years, what will be the ROI then?
8. Long-Term ROI Considerations
Some benefits take time to materialise. For example:
A pharmaceutical firm saw sustained improvements in regulatory compliance two years after implementing training (Psico Smart).
Regular updates to content keep courses relevant, as shown by a marketing agency that refreshed modules annually to stay ahead of industry trends.
9. Reporting ROI to Stakeholders
When presenting results, focus on the story behind the numbers:
Highlight real gains, like increased revenue or reduced costs.
Share qualitative feedback from employees to underscore the program’s value.
Capturing and sharing the story of your journey is essential. I will frequently work with project leads to bring the journey to life for stakeholders, whether through presentations, show reels or case study write-ups. It’s not just a means to show your results but an opportunity for growth.
10. Continuous Improvement
Treat ROI analysis as a foundation for growth. Use it to:
Identify gaps in training or tweak existing solutions.
Experiment with new formats or technologies.
Enhance engagement strategies.
Finding what works and also what doesn’t, gives powerful data and insight into improving what you are doing and identifies your next move.
Conclusion
The return is what it’s about. If you are not going to get an ROI that brings the positive change and impact you need, don’t do it. E-Learning can be a powerful tool that brings effective behavioural change, offers knowledge on-demand and can amplify your company culture. Take the time to identify and measure your ROI, so you can be sure that your investment delivers.
If you want support or help with your organisation’s learning ROI, please contact me. It’s a particular area of passion for me, either email me directly or book a free chat.