5 Steps to Find Your Actual Cost of Sales Training - Part 2

By Michael Perla on Apr 13, 2017

Part 1 of this blog began with a statistic showing that U.S. firms spend just south of one trillion dollars on their sales forces. A portion of this spend is on sales training, which can be off-the-shelf content/training, custom training, or some combo thereof. We developed this two-part blog with the premise that your sales training is unlikely to hit its target if you don’t first define your desired outcomes (Step 1), your adoption strategy (Step 2), and your optimal modality mix (Step 3), all of which were addressed in 5 Steps to Find Your Actual Cost of Sales Training - Part 1. In Part 2, we explore the specific sales training investments (Steps 4 & 5), as well as a hypothetical example between off-the-shelf vs. custom approaches.

Picking up with Step 4, we analyze training investment requirements that are specific to your people.

Step 4. Pinpoint People-Specific Investments

Training

The cost of a training ‘event’ - either public or private – is typically top of mind for most considering sales training. Public training events draw sellers or sales managers from a variety of companies to an ‘open’ training workshop (or virtual online meeting) and typically present a training company’s standard, out-of-the-box materials. Given the mixed audience, the training materials take a "one size fits all" approach. While a private training event can be more than 2 to 5 times the cost of public training events, it provides the opportunity to make the material more relevant to your audience, which is key element of our adoption triumvirate.

Travel

For in-person training, up to 40% or more of the investment can revolve around travel expenditures, including airline flights, hotels, meals, and ground transportation. Many companies are pursuing a more blended learning approach in which the instructor-led, face-to-face training time is optimized and aligned to specific training content and objectives (e.g., skills training, planning sessions, etc.), while the remaining training is offered virtually. 

Time Out of the Field (TOOTF)

For sales, the opportunity cost associated with time out of the field is significant. Selling time is sacred in most sales organizations -- don’t mess with it. In a typical face-to-face training workshop, most sellers need to know the timing of breaks and lunch to return calls and get some business done. It’s also why the relevance of training content is crucial.  Your curriculum needs to be designed such that participants are ‘working’ on their business and applying concepts and approaches to real-life selling situations. Similar to travel expenses, the costs associated with TOOTF push some companies to more online and virtual training, even when face-to-face training would be more beneficial.

 

Step 5.  Consider Intellectual Property (IP) Costs

Training firms often have a significant amount of their value tied up in their IP. As such, there are a number of areas that are important to consider when evaluating the full lifecycle cost of sales training.

License Costs

Some training firms require an annual or ongoing license cost to continue to use their IP (this is most prevalent with off-the-shelf programs). The license cost may include some upgrades or improvement in their IP, but it’s usually minimal. Other firms don’t charge a license fee, and instead allow you to jointly own the IP you create in collaboration with them. These training programs tend to be customized and highly relevant to your sales team priorities.

Derivative Works

Given the importance that some training firms place on their IP, the process of creating a ‘derivative’ of their work is significant. If you try to incorporate some of their IP as part of another training program or integrate it with new materials, you will often need their written permission, and they may not allow it. If the IP is co-owned, there is no effort or time involved in changing or integrating the content.

Blank Slate

With custom sales training, you shouldn’t expect that a training partner will start from a ‘blank slate.’ They typically have learning ‘objects’ or modules that they customize and tailor for a given audience and firm. It’s somewhat like object-oriented development in that they configure and customize the learning objects to optimize relevancy for the participants and the investment for the client.

Adding It All Up

The hypothetical example below illustrates the factors to consider when determining the cost of sales training to help you select the best approach for your company and sales team.

Hypothetical Cost/Investment Example

Cost Category

Off-the-Shelf Training

Customized Training

License Fees: Initial training

500 @ $700  = $350,000

$0

License Fees: New Hires (Attrition replacement + Growth)

331 @ $700 = $231,700

$0

Customization/Tailoring Fees

$5,000

$250,000

Reinforcement Materials

Generic, $20,000

Customized, $75,000

Facilitation Fees

34 classes @ 2 days @$4,000/day = $272,000

$272,000 (same equation as Off-the-Shelf)

Derivative Works Fees (Incl. Legal Costs)

$20,000

$0

eLearning Reinforcement

Generic, 831 @ $200 = $166,200

Customized, $75,000 one-time development

TOTALS

$1,064,900

~$1,281 per trainee

$672,000

$809 per trainee

Impact: Level of Adoption

Trends lower

Trends higher due
to relevancy

Other Costs: Common between the two options

Hotel, Transportation, Meals, Room Rental, etc.

 

So, which approach is best for you? Here are a few statistics that can help put training investments into context:

  • Our experience has shown that training for more complex B2B sales teams averages between $1.5K - $3K per seller annually (range is based on the number and type of topics covered, along with the delivery approach).
  • In the Association for Talent Development’s (ATD) 2016 survey around the State of Sales Training, the average organization (of 227 surveyed) spent ~$1.5K per seller annually (note: this average figure is likely to be a mix of off-the-shelf and custom).
  • If you add some sales enablement investments to the training spend, including technologies, tools, sales aids, etc., the average investment per seller could increase the sales training spend by double or more.

Similar to the sales transformation or tweak discussion, there is rarely a one-size-fits-all approach when it comes to sales training. Your costs or investment is one element. You still want to ensure that the learning partner you select has a track-record of delivering on their outcomes and is committed to the on-the-ground installation of the new behaviors, tools, practices, etc. Training without an intentional follow-up or sustain plan is a waste of time, money, and effort and will only add to the hardening of attitudes around ‘training du jour’.

Still not sure what options are best for you? Contact us to continue the conversation.

New Call-to-action

Michael Perla

Written by Michael Perla

Michael Perla is a strategic leader and co-author of Symmetrics Group’s book "7 Steps to Sales Force Transformation." Michael specializes in providing actionable insights to marketing and sales organizations to help them increase pipelines, win ratios and productivity. Having sold and led projects with the Global 50 to Fortune 1000 companies, Michael provides the analytical rigor of a financial analyst with the holistic skills of a strategist to help Symmetrics Group clients improve marketing or sales performance. He has worked as a sales overlay, head of sales operations, and head of strategic marketing planning, in addition to a sales effectiveness consultant. In his spare time, he enjoys working out, reading, and watching his kids play sports.

Sales
Multigenerational Selling Events