PODCAST - my 3 levers to increase your elearning profit margins by 20% or more
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Today I'm gonna share with you my three levers on how to increase your e-learning profit margin by 20% or more in your business. Some of you may know that I started my professional career as a certified public accountant working for PricewaterhouseCoopers as an IT auditor for large enterprises, and one thing that I [00:02:00] really got excited about when I was in accounting.
Was how businesses spend their money and how you can increase your profit margins and I believe that e-learning can be one of the most powerful things that you integrate into your organization to not only increase your revenue. By increasing passive income at your organization, but can also decrease expenses by upskilling your employees, by making your employees more efficient and effective at your organization.
But when we look at an e-learning program in general, a lot of people think, oh, I really wish we could have an e-learning program, or, I really wish that our e-learning program was more efficient and effective, but it just costs a lot of money. Well, my first lover. To increasing your e-learning profit margin by 20% or more, may increase it [00:03:00] by that, just by turning this one lever, and that is upgrade your.
Tech stack. What I've seen over my decade of experience in e-learning is that organizations making $50 million a year are typically spending five to. 200 x what they should be on e-learning technology, and here's why. E-learning is a relatively new concept in the world. Let's look back at when the first computer was made.
The first. Computer that was made commercially available to purchase was in the 1950s. And how much did it cost? It cost $1 million. That is over $12 million in today's currency. Well, last time I checked. My phone did not cost me $12 [00:04:00] million. It didn't even cost me a million dollars. It may have cost me a thousand dollars, but I'm pretty sure that the contract I signed with my phone provider gave it to me either at a discount or free because of the two to three year contract that I signed, and this phone does exponentially more exponentially more.
Then that first computer and it costs a fraction of the price. Same thing with e-learning. When we're looking at e-learning software, I see that organizations, when they first purchased the e-learning software that is running their e-learning programs or learning experience programs at their companies, helping you sell your online course at your company, you probably purchased something that was top of the line when you got it.
10 years ago, 15 years ago, even five years ago, but now it has fallen behind. It is outdated, and most importantly it is way too [00:05:00] expensive because just like our cell phones are way better, exponentially better, then that first computer, the new E-learning technologies that have stayed up with the tech that are the cutting edge.
Are significantly less expensive. So you may be spending 50 K all the way to 1 million or even more per year just on the software at your organization, and you can apply this by the way, outside of e-learning, if you're. Companies making $50 million a year. You probably have a lot of different software and technology in your tech stack, and you probably have a lot of legacy systems that can be upgraded, and the upgrade could actually be a benefit, a win-win to you, higher value.
Lower cost. It's the same thing I tell people about Costco Gas. If you go get gas at Costco, I [00:06:00] personally put premium gas in all my cars and the premium gas at Costco is less expensive than the mid grade gas at at a gas station. And guess what? The gas at Costco is higher value and is actually better for your car.
So first of all, we're putting a higher level. Gas in our car premium instead of mid grade. And the gas overall at Costco is better on your car. There are win-wins in the world, and this is one of them where if you're spending 50 K to $1 million a year, you should actually be spending 5 2 10 k. A year or actually less.
I'm just estimating the worst case scenario. Well, Johnny, how does that even work? Well, I invite you to check out two platforms, Kajabi and Talents. I have links to both [00:07:00] platforms below this video and in the show notes. If you're listening to this as a podcast, and not only are you going to get access. To both of these systems, and by the way, Kajabi is best for selling online courses.
It can be used for internal training as well. It has lower functionality on that side of things and talent teles. But Talent Teles is for training your employees. I don't recommend using Talent LMS to sell your online courses. I do recommend having Kajabi sell your online courses, and you can try out both of these systems absolutely free.
By clicking on the link in description below and in the podcast show notes, I'm also gonna give you access to a full course of how to get Kajabi up and running for you and your team. Same thing, you go down the talent, talent mess route. I'm gonna give you a full course teaching you and your team how to get talent, talent mess up and running for your team and.
[00:08:00] When you start paying for either one of these platforms, which you don't even have to pay it yearly, you can break this down into monthly payments. So once you start paying your monthly payments, your low monthly payment of less than $500 a month for Kajabi and less than a thousand dollars a month for talent, LMS.
I'm gonna give you what I call my platform to profit strategy session where we sit down, I sit down with you and your team, and I help you put a plan together of how to get the most ROI out of your chosen platform. And in your e-learning program, we focus on the highest ROI. Initiatives in your program together, and I help you map that out in the strategy session.
And maybe you want a more personalized look at what the right platform is for you, and that's why I've created my e-learning platform finder, which is gonna match you and your team with the best fit e-Learning platform in a matter of seconds. And you're gonna get all the things that I just listed in [00:09:00] addition to getting matched with the system.
You're gonna get that free trial. That free course and once you start paying for the platform, that free strategy session platform to profit session with me, so this on its own may have bumped that profit margin up by 20%. My clients who invest in my enterprise learning accelerator program find that even after paying us, they end up saving six figures or more on their e-learning.
So in addition to increasing revenue, they're saving six figures or more even after paying us. And this is one of the levers that we pull with them to increase their profit margins and to give that six figure savings even after paying us, I highly recommend that you pull this lever to lever number two, to increase your profit margin for your e-learning by 20% or more.
Let's do. An 80 20 [00:10:00] analysis. Prioritize your profit producers. Reason why we wanna do this is because what I have found in my own programs and in the programs of my enterprise Learning Accelerator partnership clients, where I'm literally the e-learning partner, me and my team at e-Learning partners, or the e-learning partner for these organizations.
S and P 500 company, CoStar Worldwide Company, they get the majority of their online course, their e-learning. Profit, their e-learning income from two programs. Two programs. That's the 20%. That's the 20% that drives 80% or more of results, and that's what this is. An 80 20 analysis is the same as the Pareto principle, meaning that.
80% of results come from 20% of efforts and vice versa. 20% of results come [00:11:00] from 80% of efforts. So what I highly recommend you and your organization do is figure out. What is the 20% and then you can start eliminating the 80%. A lot of this can be costs. You can do an 80 20 analysis of the costs related to your e-learning program.
You can do an 80 20 analysis related to the expenses and the costs in your entire organization. And double down, triple down, quadruple down on the 20%. What you should really be able to do is get rid of the 80% and then take all of those efforts on the 80% and put 'em into the 20%. That could be money that you're spending on the 80%.
That could be time you're spending on the 80%, and you can actually take this one step further even what is. 20% of 20%, 4%. What is 80% of 80%? 64%. What does this mean? This means that 64% of [00:12:00] results come from 4% of efforts. So within the 20%, there's another 20% that you can really be focusing at your organization.
With CoStar, there's one program that makes up. 64%, give or take a couple percentages. Of profits related to their e-learning business and what have we done together? We have tripled down, quadruple down, put most of our efforts in the 4%. We have put some additional efforts into that other 16%. That makes up the 20% informing the 80%, but really we have put the majority of our efforts into the 4%, and this is what I want you to do too.
Then eliminate. You can eliminate a lot of cost here. When you're looking at your financial statements, you can really look at why are we spending so much money on that? What is that driving in our business? Well, why aren't we spending more money [00:13:00] on this more time? Why do we have staff focused over here on this part of our business?
This part of our e-learning program that only makes five 10% of our total revenue for the program when this part over here is making 64 to 80% of the revenue. For looking at internal programs, why are we focused on building all of these new programs? If we really just have one or two programs that create exponential results in upskilling our employees that make our employees more efficient and effective, let's focus on those courses and just get more people to take 'em Ask.
Our employees, what else we could add to those courses? Why build 15 other courses when we have one or two that are driving the most results in our organization? Lever 2 80 20 analysis, or better yet, 64. For analysis, and I do all of this not only with my clients but with my own business as well. I looked at this office [00:14:00] space that we have had for the past 10 years, and at one point it was a good investment, but now I only found myself going into the office once a week because I serve all of my clients online now all over the world.
I don't actually have the need. For an office space to serve my clients well that equated to $18,000 a year at one day a week. That's $18,000 divided by. 52. This equates to approximately $350 per day in the office that I was spending. 'cause my team is all over the country and world as well is the only person going into the office.
And this is what I was spending per day in the office. $350. So what did I do? I got rid of the office and immediately increased my profit margin by $18,000 a year. What? Is your company spending money on that? It doesn't need to, but maybe at some point you did and you just haven't let go and [00:15:00] eliminated that piece.
That's lever number two. Let's move to lever number three. Lever number three. This is much more of a mindset lever than anything else. 10 x thinking over. Two x. This is a mindset shift that you and your organization need to do, and it's because you are leaving exponential amounts of revenue on the table and you are spending exponentially more because of this.
Now, hopefully you and your organization, your team members are at the very least thinking two x. What I want you to do is think 10 x and what does this mean? This means that in order to grow your company, grow your business, it's really easy to think two x. Well, if we're selling half a million dollars of this course, all we have to do is double our ad spend and we will sell a [00:16:00] million dollars of this course.
That's two x thinking. If we wanna sell 10 times, won't we just 10 x it? I guess. But what if the question comes down to we need to hire double the amount of people to sell this course. Do you really wanna have to hire 10 times? The people, amazing author, Dr. Benjamin Hardy and Dan Sullivan wrote the book, 10 X is easier than two X.
There's a lot of books out there on this topic. This is, in my opinion, the best one from a theoretical. Perspective. The best overall is the science of Scaling by Dr. Benjamin Hardy. He co-wrote both of these books and. The key here is to change your thinking in your organization from two x to 10 x. 10 x thinking is actually creates solutions that are easier than two X thinking.
It allows you to filter out the noise. So we go back to lever two. When you're [00:17:00] looking at the 80% versus the 20%, two x thinking would be okay. Let's just do more of everything in our business and we'll double our revenue. 10 x thinking is, let's only do the 4% so we can exponentially grow our business.
Let's cut out all the things that we don't actually need. How can we 10 x our revenue with our current team? By 10 Xing your revenue with your current team. You are increasing your profit margin. Let's pretend that you have, we'll call it 10 people in your e-learning department. Maybe you have 15, but let's go with 10.
Maybe you have 20, but let's keep the numbers simple. Let's go with 10, and let's say that you are paying each of these 10 people a hundred KA year. Now, I know that it probably fluctuates a little bit lower, a little bit more, a lot lower, a lot more, but let's go with a hundred K. What does this mean? This means that you're spending 1 million.
$1 million a [00:18:00] year on top of that 1 million you're spending on your e-learning software. I'm just kidding. You're spending $1 million a year and let's say that right now this is creating $2 million of revenue. It's pretty good. If this was your only cost, if you're already spending a million dollars on tech, then you're break even.
Wow. If you're spending a million dollars on tech and you just watched this video and now you're able to cut it to 5,000, you have not only increased your profit margin for your e-learning business by 20%, you've actually increased it by 50%. That is a huge win for you. I wish that for you. I hope that for you.
But let's look at this. If we decide that we want to use two x thinking and we want to increase our revenue. Then in theory, theoretically we could double our staff to 20 people at a hundred KA year, and then we'd be spending two mil a year, and then we just gotta hope that this is going to increase our revenue to four mil a year.
Well. [00:19:00] This is still a 50% pm just based on labor, and this is also 50% pm profit margin. Nothing changed. Yeah. Our revenue increase, that's great, but our profit margin didn't. What if we kept our initial. Team and we instead thought to ourselves, how can we with the same team increase our revenue from two mil a year to 20 million revenue a year with the same team?
Our profit margin has now gone. From 50% to 95%. Now, yet again, this is just revenue versus labor. We're not including the tech, we're not including overhead, all these other expenses, which depending on the 80 20 analysis, you should be eliminating a lot of that anyway. But we've gone with the same staff, and to be fair, you're gonna want give your staff.
Uh, raise and I recommend 15% could [00:20:00] give 'em more. So this would be actually 10 times 115 KA year, which equals 1.15 mil a year. But we test them to figure out how to get to 20 mil revenue a year, and we do that by. Using E-Learning to upskill our employees, partnering with AI to make our employees more efficient and effective.
And guess what? We don't have to spend all this extra money recruiting people. This is just, if we all of a sudden got 10 more highly skilled workers, we may get to four mil a year revenue. But the reality is it costs on average to get one new employee at 100 KA year, $150,000 just to get them up and running.
'cause the first year, they're probably not gonna be productive. Versus giving a 15% raise is gonna cost you with taxes and everything at your organization somewhere around 20 K per person. So really, we'll call this [00:21:00] 1.2 mil a year, but our goal. Is to make them more efficient to bring in that 20 mil revenue.
We do that with 10 x thinking. I highly recommend you check out both books. 10 x is easier than two x and the science of scaling. Now I built these three levers so you can do this all on your own. Upgrade your technology to save five to 200 x. Do your 80 20 analysis, or better yet, do a 64 4 analysis so that you can cut down on unnecessary costs.
Eliminate those costs to increase your profit margin. And Lever three, change your team's mindset from two x thinking to 10 x thinking so that you as a team can achieve exponentially more for your organization. Do all these three levers on your own and you will increase your profit margin by 20% or more.
Now some organizations decide that they want a partner. To go on this journey [00:22:00] with them, they're making $50 million a year. They have 200 to 500 employees and they have some sort of e-learning or training department, and they really wanna partner to go on this journey with them. And maybe they have a legacy system.
Maybe you have a legacy technology that you wanna make sure that you have. A fluid transition to one of these higher value, lower cost technologies that's gonna save you up to a million dollars a year just on switching out technologies. Or maybe you have a program that's stalled and just hasn't even gotten off the ground yet because of all these other higher ROI priorities in your business.
Well, that's where you and your company may be the right fit for my Enterprise Learning Accelerator Partnership program, where we become your e-learning partner. At E-Learning Partners, we become our client's e-learning partner to not only increase. Your profit margin, but save you and your [00:23:00] organization six figures or more per year, even after paying our fee.
If this sounds interesting to you, I invite you to learn more in the description below on YouTube or in the show notes if you're listening to this as a podcast, and I'll see you in the next episode.
Thanks for tuning in to Learning Transformed Now, if you're designing a transformational learning experience and wanna skip the overwhelm of trial and error. Check out our e-learning platform finder. Just answer a few simple questions and we'll match you with the right platform plus an extended free trial.
And as a bonus, you'll get free access to a course that walks you through building your learning experience on your matched platform. Click on the link in the show notes or go to [00:24:00] www.elearningpartners.com/elearning-platform-finder. I'd also love to hear from you. Leave a review on Apple Podcasts or Spotify or drop a comment on our YouTube channel.
Thanks for listening and I'll catch you in the next episode.
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