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Calculating the ROI of a Learning Management System

December 12, 2018
Image of a calculator with lms savings written on it

In today’s economy, it’s vastly important to implement staff training programs that are aligned with your company’s business goals and that will result in a positive effect on your bottom line.

By implementing a learning management system for your staff training requirements, you will see increased training ROI and immediate cost savings.

Listed below are some areas where you will see increased ROI:

  • Reduced administrative costs for training program management
  • Lower travel and facility costs with training available online
  • Increased revenues due to faster employee productivity
  • Accelerated time-to-market training of sales and customer service employees
  • Increased revenues due to improved customer service and higher levels of customer satisfaction and retention
  • Diminished financial risk associated with meeting regulatory compliance standards
  • Lower employee turnover through the provision of focused training and development
  • Streamlined company performance by ensuring training activities are aligned with employee development needs
  • Reduced IT and hardware support costs by utilizing a Cloud-based LMS rather than an internally installed software system (on-premise).

The following SeamsCloud client case studies provide a high-level overview of calculating training ROI and the tangible benefits.

When you consider some of the intangible suggestions listed above, you can see how incorporating an LMS into your training program brings far greater rewards.

In order to quantify the savings, we have referenced three real-life client cases as follows.

Client Case One – A one-off training event

Our client had 210 people booked on a 1-day classroom-based Customer Service training course – 15 people x 14 one day classes. The online training course was completed in 2 hours:

READ RELATED POSTS  What is an LMS and what are the Benefits?
Description 14 Days Classroom Training Cost Online Training

Cost

Difference
Trainer costs €7,000 minimum €4,000 €3,000
Equipment/Expenses €3,000 €0 €3,000
Hours Needed 1,470 hrs 400 hrs 1,070 hrs
Training Cost €10,000 €4,000 €6,000
Total Cost Saved €6,000
Total Hours Saved 1,070 hrs

Using online training the direct saving, in this case, is €6000 (60%). Of course, there are more indirect savings involved as well as this 60% saving, such as less “time away from the job” and zero travel expenses. The online training reports for this client demonstrate that of the 400 hours of online training, 10% was taken outside of working hours.

The classroom training course above is costed here at €500 per day. This is a conservative estimate and the cost would be more in many cases depending on the training provider.

The 14 days training is based on each training session facilitating 15 people. Again depending on the training provider, it may only be possible to take smaller groups which further increases the cost of the face to face training.

Client Case Two – Ongoing online training using LMS

This client has 500 staff who take a range of training courses each year. They must repeat those courses every 12 months. In comparison, if each course is taken online it can be completed in 1 hour:

Description Classroom Training Online Training using LMS at €10 per user per year.
Trainer costs per course €16,660 €5,000
Course development €3,500 (year 1 only)
Equipment/Expenses costs €6,000
Total €22,600 €8,500
1st Year Saving €14,100
2nd Year Saving* €17,600

*Year one savings after implementing an online LMS assisted training program and purchasing/designing the training courses – €14,100 (62%).

*Year two savings are even greater because the course design was a one-off cost in year one. The savings for year two and all subsequent years is €17,600 (78%).

The above example is based on a half days classroom-based training for 500 staff in groups of 15. This is a conservative cost – the numbers in each group may be less depending on the training provider, therefore requiring more days.

Client Case Three – Ongoing online training using LMS

Our client had 2000 people who take a range of training courses each year, and have to repeat those courses every 12 months. For each course the online training can be completed in 1 hour:

Description Classroom Training Online Training using LMS at €8 per user per year.
Trainee costs per course €68,000 €16,000
Course development €3,500 (year 1 only)
Equipment/Expenses costs €24,000
Total €92,000 €19,500
1st Year Saving €72,500
2nd Year Saving* €76,000

*Year one savings after implementing online LMS assisted training and purchasing/designing the training course- €72,500 (78%).

*Year two savings are even greater because the course design and development was a one-off cost. The savings for year 2 and all subsequent years is €76,000 (83%).

Note – The takeaway point of note here is that year one of LMS training will be the most expensive. It’s because of the initial cost of the online course content development. After year one you will see even higher annual savings as there will be no course development costs.

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