Cost or Investment? Measuring the Impact of Your LMS

By August 19, 2014eLearning Solutions

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In a world of constant budget cuts and an ever-slimming bottom line, training isn’t always seen as a solid investment. Of course, unless you shadow your employees for a few months, it’s hard to tell exactly how the training affects their thoughts and behavior.

To truly assess the ROI of an LMS, organizations need to decide whether training is a cost – or an investment. Adding up the cost savings when compared to other training methods helps, but the true ROI is found in the significant revenue benefits.

Cost Savings of LMS

It’s no secret that an LMS is cheaper to administer than traditional training. Without the necessity of travel, paying instructors and renting facilities, eLearning modules can be experienced again and again for a relatively low cost. After the initial cost for development, your LMS should run like a well-oiled machine, which means less time facilitating the training and more time experiencing the benefits.

But it’s the revenue benefits that are the real star of the ROI show – and the area most leadership will be concerned about. It’s difficult to predict exact numbers for your organization, but analysis by the American Society of Training and Development found that when compared to organizations that spent a mere $125 per employee on training, those that invested $1,500 per employee experienced 218 percent higher income per employee. Those that invested more also enjoyed 24 percent higher gross profit margins.

Why the increase? There are a few different theories. An LMS system promotes just-in-time learning, which creates better-informed, more proficient employees that don’t need to wait for a training session to increase their knowledge base. What’s more, a well-built LMS reduces time to market, which means trained employees are the first to offer products and services that other organizations are still learning about them. Better-trained employees are also happier employees, so organizations willing to invest in development are likely to experience lower employee turnover, which also saves money.

Maxing Out ROI

Convinced that an LMS is the way to go? That’s just half the battle. The next step is to work on increasing the impact of your LMS to make sure every invested dollar is working to its full capacity. Here are some ways to make your LMS go to work for a higher ROI:

  • Create an organic introduction. Don’t force an LMS on employees. Instead, find organic ways to introduce and use an LMS as part of their regular day. Looking up a new product in a knowledge base, for example, shows employees how beneficial the LMS without coercing them during a formal training session.
  • Focus on user experience. Try navigating the LMS with your “employee” hat on. Is it simple and intuitive? Does it offer value? Do you want to use it, or would another method be easier? Make sure that you’re offering employees value and simplicity or the LMS could go unused.
  • Install reporting and analytics. Any good LMS should feature methods for user analysis, whether it’s through discussion questions or user feedback. Gather up the reports and use them to help calculate your unique ROI and continue to improve and adjust your LMS accordingly.

When implemented properly, your LMS will always be a solid investment, even if the initial costs might be more than traditional, face-to-face learning. By seeing the potential an LMS offers your organization, seeing the positive benefits, cost savings and even revenue benefits makes eLearning an easy sell.