How to Prove that Sales Training is Worth the Investment

Use these steps to measure and quantify the return on investment (ROI) available from sales training or coaching.

Sales Training Return on Investment

How good does sales training or coaching need to be for a reasonable return on investment?

Participants will need to sell less than 1% more to make up for the missed opportunity cost of two days away on a sales training course. An average amount would be £2150 of gross margin. Add to this the cost of a course at £670 and expenses of £150 to reach a total of £2970 or about 1.2% of a typical sales person’s gross margin target.

Just a 2% increase attributable to sales coaching or training is a 66% return on investment.

Missed Opportunity Cost Calculations

Based on 234 working days in a year and dividing the sales effort equally among them, the missed opportunity cost of a day's sales training is 0.43% of the sales persons target.

Seven ways to calculate concrete sales training R. O. I.

1. Morale – does it affect sales? All the research says ‘yes’. How is morale? How much does it affect sales?

Use your experience to rank yours or your team’s morale on a scale of 1 to 10 for each of the last six quarters then compare your estimate with results. If you identify higher performance when morale has been high, halve the difference and halve it twice more to arrive at a suitably conservative estimate of the value of improving morale. Have others do the same exercise and compare results.

Training lifts moral because people value the opportunity to grow and learn new ways to succeed and recognise the investment being made by their employer.

2. Prospecting - What is the new customer acquisition rate? Has it been higher? What has changed?

In a normal market, marketing generates more leads. In a downturn, marketing is less effective and starved of funds. Salespeople have a greater need to find their own leads. What is the difference in prospecting activity between the best and the worst. Compare the number of new prospect contacts made by each person in a team to assess the difference between the most active and least active. How does this compare with new business results for each person?

In your estimation, how much could the gap be closed by training? If this led to a corresponding increase in business, how much would results improve? Halve your figure and halve it twice more to arrive at a conservative estimate.

Sales coaching and training removes or diminishes prospecting reluctance by providing solutions to the obstacles encountered in the effort.

3. Pipeline Management - Those in selling roles should know how many calls they must make to achieve their allocated target.

Determine how many calls or customer contacts are necessary for a team to achieve its target as follows:

Take the average order value from last year (total revenue divided by the number of orders).

Divide this year's target by the average order value from last year to determine how many orders must be booked this year. Adjust the result for any significant changes in pricing, products or services.

Calculate the call to order ratio for last year by taking the total quantity of calls or customer contacts made by all sales staff and dividing it by the number of orders won last year.

Multiply the number of sales needed this year by the call to order ratio achieved last year to determine the quantity of calls necessary this year.

Finally, divide the total by the number of people in this years team to arrive at the average amount of calls or customer contacts that each salesperson should be aiming for to make.

Estimate the impact of monitoring and communicating call or contact rate results on business performance.

Sales training can explain the benefits of pipeline management and equip people to apply it for themselves.

4. Qualification - doing things right is a waste of time if we don’t first choose the right things to do.

Choosing the right prospects makes a major difference. Salespeople work much more efficiently if they avoid working on opportunities that don't happen, can't be won, or won't be worthwhile. Compare the ratio of sales forecasted to sales won for all individuals in a team. What is the difference between the best and worst ratios?

In your estimation, how much could the gap be closed by training? If this led to a corresponding increase in business, how much would results improve? Halve your figure and halve it twice more to arrive at a conservative estimate.

Defining best practice qualification questions for your market and training salespeople to use them systematically, improves performance significantly because people spend more of their time working on opportunities that will happen, can be won, and will be worthwhile

5. Up Sell and Cross Sell - it's nine times easier to sell existing customers than new prospects. Are your customers realising the full potential of your products or services to help them succeed in their business?

Assess your top three customers use of your products and services. Rate their use on a scale of 1:10. If they squeeze as much profit as possible from using what you sell, rate them high - a 9 or 10. If they could make more or better use of what you sell, rate them lower. Next, rate some of your less profitable customers. If there is a notable difference then you have identified a concrete opportunity to increase results through cross selling and upselling.

Appropriate sales training can equip you or your team to realise this opportunity. What is the value of the difference? Halve it and halve it again to be safe.

6. Calling High - Providing it contributes worthwhile business value, the product or service doesn't matter.

Do your salespeople have high level relationships within customers and prospects? If they had more, would they sell more? If so, how much more? Select three customers where the salesperson has high level relationships and compare the results with three similar customers where the salesperson doesn't have high level relationships.

Training helps salespeople understand how to get the attention of senior executives and how to communicate to maintain the relationship.

What would be the value of two more high level appointments out of every ten prospects you approach?

Ho much more would you expect to sell? Halve it and halve it again. Training increases options, develops C-level confidence, and improves access success rates.

7. Trusted Advisor - This status commands influence and grants access.

Some people achieve this status with some of their accounts. Those that do and use it to support the aims and agendas of those who grant it, can take accounts with them if the change jobs.

What is the value of a salesperson being considered a trusted adviser? Compare the results of people who have attained this status with those of people who haven't to estimate its value.

This ability can be taught. Training equips people with the understanding, methods, skills, and tools to achieve trusted advisor status.

If you need to increase sales and are unsure about the return on investment available from sales training or sales coaching, we can help. Telephone +44 (0)1392 851500. We will be pleased to learn about your needs and talk through some options. Alternatively Send email to custserv@salessense.co.uk for a prompt reply or use the contact form here.

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