How To Calculate Return On Investment Of A Retail Sales Training Program
By Bob Phibbs
Most businesses see sales training as a cost when it should be seen as an investment.
After all, learning is the source of competitive advantage. And that’s not technical knowledge, it is the soft skills of how to engage, build rapport, and sell a stranger.
I had just finished one of my speeches on the differences between Millennials and Baby Boomers.
A twenty-something woman approached me and said, “You’re right. We do look at things differently. I won’t pay a lot of money for a dress because I figure if I pay $100 and only wear it a couple times, it’s too expensive and not worth it. Your generation is always surprised we’re unwilling to pay for apparel but willing to pay for an expensive smartphone. That’s because we use it like you use an appliance.”
She was right, of course, to look at her return on investment (ROI). After all, any smart businessperson has looked at capital outlays, new locations, and even hiring as a cost versus what is gained. If it doesn’t meet their needs, they pass.
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You have to begin any potential training program by looking at the benefits you expect to receive and create a scorecard of what exactly you want the training to produce.
Of course it is higher sales, but other key performance indicators should include number of items per transaction, average sales, and average sales per employee per hour of work. On a longterm basis, you should also expect to see a drop in your turnover rate.
In addition you want training to be in every executive meeting. Each time you need to be asking, How are the learners progressing? What are some bumps that can be fixed?
For example, Jane bought the training understanding that her crew would be taking it online off the floor in the back for ten minutes a week, but her store manager never got that directive, so he was training them on the floor between helping customers.
That never works.
Before a CEO agrees to purchase a training program, they have to be assured their employees will actually use it and that it will work. These are their biggest fears.
So while the employees are using the training and getting results, there have to be frequent updates to everyone including the CEO to show those fears were unfounded.
To Determine Your Return On Investment Of Retail Sales Training:
Look at your key performance indicators.
Look at the cost of your training program for one year.
Look at how much your training would have to lift sales to breakeven.
Divide your expected gross sales by your cost of training. The result is expressed as a percentage.
For example, your store does $750,000 per year. Your 20 employees on a program like SalesRX for a year would run $6960. Divide that into your total yearly sales. In this case, it is 9/10ths of one percent. A 1% increase in sales would be $7500.
There’s no marketing program you can offer that will deliver back that kind of lift.
There’s no discounting.
No fulfillment or shipping costs.
And unlike a promotion, your sales training can and will help every sale, by everyone that entire year.
With such a minimum outlay and minimum needed lift, your return on investment is huge.
While you can hope for a 5, 10, or even 20% lift in your key performance indicators, your cost of training doesn’t have to meet that threshold to be a sound investment.
If you are looking for increasing your conversions of lookers to buyers in your retail store, there’s nothing that can increase the average check of every sale, nothing that gets more merchandise at a higher price, nothing that can alter your profitability as much as retail sales training the soft skills of customer engagement.
Typically it takes about three months to see the results in sales and performance indicators.
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