PODCAST - how to measure roi in elearning
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Have you been investing your time and your money in creating an e-learning program or multiple e-learning programs at your organization? And while you, and maybe some people on your team are passionate about online learning and what you're doing at your organization, but when it comes to it, you aren't really sure what the return on your investment has been in eLearn.
Well, I've had multiple clients and prospective clients bring this up with me over the past couple of years, and that [00:02:00] is exactly why I've created this video today, so that you can prove to yourself and your organization that the time and energy that you are putting in, in developing your online courses, your learning experiences, your e-learning programs, your training programs, whatever you're building, so you can prove that there is a return on investment.
If that sounds like you, then the three step process I'm gonna share with you today is exactly what you and your organization needs. Step one, improving ROI at your organization is very simple. You need to define the primary purpose. What does this mean? Well, when you define the primary purpose, you are starting to create a case for yourself and your organization for why you have an e-learning program in the first place.
And really, you can break e-learning into two categories, and then you can break the categories into multiple subcategories. The first category is internal, so over here on the board we [00:03:00] have internal. On the other end, we have external, your e-learning program will primarily fall into one of these two categories.
And the cool thing is once you master creating ROI for one of these categories, you can actually start creating ROI in the other category. And that's how we multiply the return on your e-learning investment for your organization. When we're looking at internal. There's really two things that your e-learning program can do.
The first thing that we can use our e-learning program to do internally, which internally means we're focused on our team members and externally means we're focused on our customers. Internally, team members, external customers. When we're looking at internal, we're looking at first and foremost, increasing the effectiveness of our team.
What is effectiveness? Well, my favorite definition of effectiveness [00:04:00] is doing the right things.
And this is where a lot of organizations, when they create an e-learning program, don't actually know the reason why they did it in the first place. They create the program to create better culture, to have their team members be better at their job. But if you really dig deep and look at the processes at your organization and you look at, okay, we wanna make sure that everyone on our team is doing the right things well, the right things means the things that are going to move the needle forward.
In sales, we want our team members to do the right things to bring in more sales and marketing. We want our team members to do the right things, to bring in more leads in accounting and finance. We want our team members to do the right thing for budgeting for different opportunities that our business can invest in, like e-learning.[00:05:00]
When we're looking at onboarding, we want make sure that we are doing the right. Things to onboard our new employees and to get them up and running to competency, to providing value to your organization as quickly as possible. But the other thing we wanna make sure that we pair this with is we can do the right things but not do 'em very efficiently.
We wanna make sure that we also increase the efficiency of our employees, and this means doing things. Right. So what's the difference here? Well, let's say you have a goal, like my organization, e-Learning Partners. My goal is to serve a hundred million people worldwide, empowering, mission-driven businesses and organizations using learning to change the world.
Whether that means saving lives, creating opportunities, or spreading hope, that is the goal. That dictates what the right things are to achieve that goal. But [00:06:00] now that we know what the right things are, we need to make sure that we're doing the right things right when we do the right things right. We exponentially increase the output of our team members.
'cause our team members are not only doing the right things, they're doing those things correctly. So when you're building an internal e-learning program for your organization, we need to focus on these two things. Make sure that everyone on our team are doing the right things and make sure that they're doing those things correctly.
Now, when we get to external, there's also two things that we can focus on with our e-learning programs, and the first one is selling our program. Selling as a product. So when we sell our program as a product to customers, we're taking the knowledge, the wisdom in our minds. We're taking the knowledge and wisdom of our team members.
We're packaging it into a product, and we're selling an outcome. We're selling a payoff or selling a result. And the way that our customers get that result is through our product, through what we've packaged, but [00:07:00] we're selling the payoff. We're selling the return on investment. We're selling the return on their investment.
In order to get the highest return on your investment on your e-learning program, you need to give your learners a return on investment. That's why when we're looking internally, if you increase the effectiveness and efficiency of your team members. You are giving them a return on their investment in your program.
If your program doesn't do at least one of these two things, then there's no reason for your employees to actually invest in your program because they're investing their time, their energy into the program. If you can get your sales teams to be more effective and efficient with. Their job, then they're gonna make, then your organization's gonna make more money and they're gonna make more money.
If you make your employees more efficient and effective, even outside the sales department, then they can work towards getting a raise. When you create this in your organization, you're showing your team members that you care and that them getting a return on their investment in your program is important to you.
When they get a return on investment, you get a [00:08:00] return on investment. Same thing over here. When you give your customers a return on investment and investing in your product by giving them the payoff that you tell them that they're gonna get by buying your product, then their return on investment is your return on investment.
You're gonna get more sales. The second thing that you can do externally is educate customers. When you educate your customers on your products or services, you are helping them get the most value out of what you're providing. And e-learning partners, one of the most powerful things that I do is help my students and clients save five to 200 X their investment on the right e-learning technology.
What I find is when people don't work with me, they end up spending way too much on e-learning technology, five to 200 x more than what they should. Now what I've done is I've created my e-learning platform finder. You can check it out in the show notes or LinkedIn description below. If you're watching this on YouTube, what I've done is I've created this platform to pair you with the best e-learning platform for you and your organization.
In a matter of seconds, it's gonna save [00:09:00] you five to 200 x, and I'm gonna give you access to a free course on the platform that you got matched with to help you start getting up and running immediately so that you're getting value before you even start paying for the platform after your free trial. I educate my customers on the products and services that I sell.
This is extremely powerful. You can do the same thing. My s and p 500 company, CoStar Group. They not only sell an e-learning program as a product, but they sell it on. They're software, so they're doing both of these things. So they're not only making money selling their program, they're certifying people on how to use their software.
We've been partnered for about three years as of the recording of this video, and I not only help them save multiple six figures per year, but actually turn their e-learning program into a profitable program. On the selling the product side, they actually initially created their program just to educate customers on their product to drive adoption and retention related to their core product [00:10:00] offering.
They were willing to lose money on the actual sale of their e-learning program for 10 plus years, but after working together, they're not only educating their customers, increasing that adoption and retention of their core products, but they're actually making money on their programs as well. That is ROI.
When we. Capitalize on multiple of these options that we have access to of these tools that we have access to. This is how you prove ROI on your e-learning program, and you exponentially grow it because think about this, what if you have a program that you also use? To increase the effectiveness and the efficiency of your team members.
CoStar also does this. We use the same programs that we're selling, that we're using to educate our customers on our products and services to increase the efficiency and the effectiveness of our team members. This is how you exponentially grow your ROI. But you're gonna start with a primary purpose. I don't want you to think, okay, I gotta do all these things.
Let's start with one of these things, and [00:11:00] then we can grow into these other things. When you start with one, either selling as a product, educating your customers on your products, or increasing the effectiveness or the efficiency of your team members, then we can grow into the other things, and then we get exponential results for your business.
Once you've come up with the primary purpose of your e-learning program, maybe you already have it built and you're like, okay. Really, it's focused on increasing the effectiveness of our teams. Or maybe you're like, okay, well I created a program and we're selling it to make some additional money by packaging our knowledge.
Well, whatever you've decided, now we can select the right metrics. Support your purpose to track ROI, the right metrics. This becomes super easy once you've completed step one. What happens is organizations never even consider step one, and they jump to step two and they don't know what to look for. But once you have.
Figured out the primary purpose, then we can start looking at the metrics. To look at the metrics to track ROI. It's the same thing [00:12:00] as before. We wanna break things into internal and external. If you are selling a program, it's gonna be different metrics to look for than if you're training your team members.
And remember, again, this is team. Remember again, this is customers, so very important. You can have both of these things, but once you start mastering the metrics of your primary, then you can start expanding beyond. So here's what you wanna look for internal. I want you to ask questions like, how do we increase.
The time to competency. What does this mean? This means how long does it take a new hire to produce at a level that is giving you a return on your investment in that new hire? So the return on investment may not be a direct metric related to the e-learning program itself, but it may be cutting the time to competency from 18 months.
To 12 [00:13:00] months. That's six months. That's six months of more output. That is significant. Now, if you can start tracking. Okay. Before we had our e-learning program, our training program in place, it was taking 18 months for someone to start bringing an ROI to the organization, and now they're doing it in 12 months.
You've just proven ROI. Now, this could be anything. It could be, maybe it only takes three months for someone to start producing ROI and you cut that to a month, or you cut that by a couple of weeks. Even if you cut it by a couple of weeks, that is worth something you can come up with. Okay? All you have to do is come up with how much are you paying them over that couple of weeks.
In this example, let's say that you're paying an employee of a hundred thousand dollars a year. Well, you times that by 1.5 'cause that's a year and a half. So you're spending $150,000 to get that employee up and running to start bringing a return on investment in that employee to your organization. If you cut that to 12 months, now you have a hundred [00:14:00] KA year times one that's a hundred K.
You've literally saved 50 grand. This is the return on your investment, $50,000, and that's per employee. So what does this look like for your organization? Time to competency. Next, reduction in errors. So reduction in errors. What does this even mean? This means that even once your employee has become competent, their job and they're creating ROI for your organization, if we can reduce the amount of errors that each team member makes, this is gonna save time for everyone.
It's gonna save customer service time. It's gonna save time for your managers correcting the errors. So what you need to do is figure out how much time your organization is currently spending on fixing things that have been done incorrectly. So this be another math equation, how much time is it taking right now out of your [00:15:00] team to address errors?
Then you just subtract that. From how much time it's taking for your team of correct errors after having your e-learning program. Very simple. And it's not just one person. It's cumulative time. Cumulative time, minus cumulative time, and then you can multiply this times the average rate or the average salary, the average hourly rate.
That you pay these people, and that'll give you an idea of what the reduction in errors is costing your organization, depending on where you're reducing errors, and that's why step three of this whole process is extremely important, which we'll get to next. Depending on where you're reducing the errors.
Maybe we're talking about errors, delivering a servicer product to a customer, an error that could result in a refund. What if you were able to reduce the amount of refunds that you offer to a client by reducing the errors, by having an e-learning program? That is how you prove ROI Next, [00:16:00] employee retention.
Now, this one is very interesting and overlooked because. I think that we all just assume that we aren't the organization overpaying on hiring and retaining employees. We just assume that, you know, we're a great organization to work for and we don't mind having people walk out the door and we can continue to just hire new people.
We don't mind. What you need to do is look at how much that's actually costing you and it's costing you in time and money. The time is your time. And this is where employee retention and this time to competency are a. Back and forth cost on your business. 'cause if you're not retaining employees, then you are always gonna have to go through this time to competency.
I don't care if you hire the best employee ever, there's always gonna be a time to competency expense. Now, the simplest way to calculate this is gonna be looking at what is the [00:17:00] average amount of time that you have employees stay at your organization. Maybe it's. Two years, and you look at this as, okay, well two years.
Well, if we could increase this to three years, what would that do for us? Well, it's gonna save you a bunch of time and a bunch of money. It's gonna save you a bunch of time training them. Everyone on my team has been with me for at least two years, all the way up to five, six, almost seven years. My organization's only been around for 10 years, and I was really bad at retaining the best employees and getting them up to competency.
I was really bad at all this when I first started my business. So the fact that the youngest employee of my organization has been with me for two years, and I think it's almost three years at this point, is amazing because I don't have to spend time to competency. I don't have to spend time looking for people to hire.
So what you need to do is look at [00:18:00] what is the average amount of time that you have employees. If you're looking at this and you're like, well, people a lot of times leave after three to six months. That is crazy because what that means is that you're probably not even getting those employees up to competency.
So you keep spending your time, your team's time, your team's money, your team's resources, trying to get new employees up to competency. They're never getting up to competency. So you're losing a bunch of money here, and then you're having to find more people. You have to spend your time, you have to spend your team's time finding more people.
So when you calculate this, you wanna be looking at hours. And costs and money. What are you truly spending? And if you can cut this down and you can show that e-learning has empowered you to cut this down, then you have proven ROI for your e-learning program. The last one I wanna share with you is one that is really a hidden gem in your business.
Less staff, more output, especially in [00:19:00] today's day and age, less staff more. Output with ai, with technology, with all these things, the more productivity that you can get out of your current staff. And by the way, I don't mean that you need to work your staff to the bone, a hundred hour work weeks, all this stuff.
No, your staff can still work a normal 40 hour work week, but by increasing their. Effectiveness and increasing their efficiency, effectiveness, meaning doing the right things, and then efficiency, meaning doing the right things right. You can have less staff and more output. This means that you're investing in less employees.
This means that each employee is creating more ROI for your business. So what you can do is look at your company and say, you know, the average amount of money that each employee is bringing in, or each team member's bringing in. So you look at that. That is before the e-learning programs, and then a year later you can look and run the metrics again and you're like, whoa.
This is increased by 10%. This is increased by 5%. If you can increase [00:20:00] this by 5%, that is worth a lot of money, and that's just 5%. What if you get to 10, 20, 30, 40, 50%, and with AI and all these things, you should be able to have more output with less staff as long as you're focusing on increasing the effectiveness first and then increasing the efficiency.
Increase the effectiveness and increase the efficiency. If your staff is already extremely effective, then let's focus on increasing that efficiency and you're gonna have more output. That's just on the internal side of things, friend. Now, when we move to the external side, remember you could pair these things together.
When we look at external, we're looking at increasing revenue. This one's really easy. When you look at revenue. It's okay. We weren't making any revenue on our e-learning programs, and now we are making revenue and this is how much we have increased. We've created this new income stream, this new profit line.
Now the other part to look at though is profit margin, and this is what I do with all of my coaching clients. And all of my [00:21:00] Enterprise Learning Accelerator partnership clients, you can apply to each of those programs linked in description below. If you're watching this on YouTube, or it's linked in the show notes.
If you're listening to this as a podcast, when we're looking at profit margin, you may not actually care about having a positive profit margin. You may be okay with having a negative profit margin as long as some of these other things are actually happening, which I'm gonna share with you next. Let's say that you have a lot of revenue.
Maybe you're even making a million dollars a year, but you're spending $2 million a year to make that million. Is that valuable for you and your organization? It could be if you are increasing adoption. Of your products. So remember when we were talking about the primary purposes? If the primary purpose of your program is to drive adoption, to actually increase, to educate your customer so that they use your product more, they buy more of your product, they buy more of your services, then we don't really care what the profit margin is of our e-learning, at least at first.
Eventually, I do think that you need to have a positive profit margin. That's [00:22:00] exactly what CoStar Group has. Now, after partnering with e-Learning partners, after more than a decade losing money on their e-learning program, because they were focused on adoption and retention, they were getting better adoption of their software product.
They had increased the adoption for their software already and retention of their clients. Clients coming back to use the software over and over. But now they're also getting revenue. They were getting retention, adoption, and revenue, but now they're also getting a profit margin, a positive profit margin.
But if you have a primary purpose of a program that you're selling for customers just to make revenue and a profit, then this is where you need to be focused on. Are we getting revenue? More importantly, what is our profit margin? But if you are focused on selling a program or giving a programmer a way to increase adoption and retention, then uh, we're focused here.
And if we get a profit margin, then [00:23:00] that's a bonus. That's why step one is so important. Before you move to step two, now, let's go to step three. Continuously focus on the 80 20 rule. To get the most ROI fast. Now, it's extremely important that you do these three steps in order. So you need to make sure that you've paused this video and you go back and do step one.
You pause this video, go back and go do step two, or make sure when you're done finishing this video, don't start with step three. Start with step one and step two. 'cause until you have assessed what the primary purpose of even having an e-learning program in the first place is, you won't even know what 80 20 analysis you need to install into your business.
'cause we gotta start with ROI. What is the ROI you're trying to get? Once we figure that out, then we wanna focus on the 80 20 Pareto's principle, or the 80 20 rule says that 80% of results are created by 20% of actions. 80% of results are created by 20% of actions [00:24:00] and vice versa. 20% of results. Are created by 80% of actions.
So once you've figured out what category, what the primary purpose of your e-learning program is, then we wanna focus on. The 20%. What is the 20% of activities that can increase the effectiveness of your employees at your organization? What is the 20% of activities of trainings that you need to train your employees on, your team members on that is going to make them more efficient at their job?
What is the 20% of knowledge that you have that is going to create the most sales for an e-learning program that you're selling? What is the 20% that you need to educate your customers on to increase retention and adoption of your product, of your services at your company? When you focus on the 20%, you're gonna create the [00:25:00] 80%.
When you focus on the 80%, you're only gonna get the 20%. You may as well focus on the 20, and we can take this one step further. What is 80% of 80%? 64%. What is 20% of 20%? 4% and same thing here. 4% and 64%. So the 80 20 rule is true, so is the 64 4%. So what you wanna do, if you really want to exponentially create ROI in your business immediately with your e-learning program, you need to look at what is the 4% driving the 64% of results.
With the primary purpose that you selected in step one, you want to focus on the 4% all the way up to the 20%. Avoid the 64%. The 64% is the wrong things. You are not doing the effective right thing for your organization. If you focus on the 64%, let's focus on the [00:26:00] 4% and score your e-learning program and your business exponentially.
Now, if you really wanna make sure that you're not wasting your time and money on the wrong e-learning programs, I highly recommend that you sign up for my free masterclass LinkedIn description below. On YouTube or in the show notes if you're listening to this as a podcast. In this masterclass, I'm gonna share with you the three biggest reasons why most e-learning programs fail, and then I'm gonna give you the three pillars that prevent six figure mistakes, and that will help your organization get a return on your investment, get paid back for your investment in your e-learning program in 12 months or less.
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.
[00:27:00] 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 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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