How To Calculate The ROI Of Online Retail Sales Training Programs
By Bob Phibbs
Most businesses see a sales training program as a cost when it should be seen as an investment. This post is about ROI calculation and advantages of such a program.
After all, learning is the source of competitive advantage. And that's not just product knowledge, it is the soft skills of how to engage, build rapport, and create a customer experience that is second to none.
I had just finished one of my speeches on the differences between Millennials and Baby Boomers and their approaches to customer service.
A 20-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 calculate 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 in revenue. If the metrics don't meet their needs, they pass. That goes double for a sales training program because most CEOs have never received training and feel skills development is a nice-to-have not a must-have for their staff.
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You have to begin any potential learning program by looking at the customer service benefits you expect to receive and create a scorecard to measure exactly what you want the sales training program to produce - increased number of items per sale, higher average ticket, you get the idea.
Of course 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, your ROI calculation should also include a drop in your turnover rate. In addition you want learning 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, one retailer bought the training program understanding that her sales people would be taking the online sales training off the sales floor in the back for 10 minutes a week, but her store manager never got that directive, so he was using the materials on the floor between helping customers.
That never works.
Before a CEO agrees to purchase an instructor-led training or online sales training program, they have to be assured their employees will actually use it and that the new learning will work to achieve sales goals.
These are their biggest fears - that sales associates will either ignore or fight the training program. And no, a single one-day training program won't make your retail sales associates into retail sales professionals.
That's because they can be exposed to training but for training effectiveness to stick, it takes role-playing and enough time to master what is taught.
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 and in fact the training investment is making for a better customer experience and higher conversions of lookers to buyers.
What are the components of a retail sales training program that are most essential? How to greet a shopper, how to qualify them as to what they might purchase, and how to present the features and benefits of a product in such a compelling way that the shopper wants to purchase. The program should create a customer experience that moves product.
To Calculate The ROI Of Retail Sales Training:
Look at your key performance indicators (KPIs)
Look at the cost of your training program for one year.
Look at how much your sales training program would have to grow revenue to break even.
Divide your expected gross sales by your cost of training. The result is expressed as a percentage.
For example, your retail store does $750,000 per year. Your 20 sales reps on a program like SalesRX for a year would run $6500. 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 ROI you can get that will deliver back that kind of lift in your brick and mortar sales.
There’s no discounting so gross margin is maintained.
No fulfillment or shipping costs.
And unlike a promotion, your sales training initiative can and will help every sale, by everyone that entire year.
With such a minimum investment and minimum needed in extra sales to pay for your training program, the impact on your participants and 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 your sales associates 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 sales training the soft skills of customer engagement.
Typically it takes about three months to see the results in sales and performance indicators. That is because a retail sales training program needs time for your sales staff to extinguish their poor customer service skills and develop your new customer experience skills.
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To learn more about online retail sales training, check out these posts:
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