Understand the Return on Investment for Customer Education
Your customers’ needs are evolving as they work to solve increasingly complex problems in increasingly complex digital ecosystems. Your competition is evolving too, sometimes coming from unexpected sources that are disrupting business landscapes. So it has never been more important to distinguish yourself through exceptional customer experiences.
Customer education is a critical component of a solid customer experience strategy. When done well, customer education and training programs create value for all stakeholders. Research by the Technology Services Industry Association (TSIA) found that when customers are trained on a software product, 68% use the product more often, 56% use more of the available features and 87% use the product more independently. The subscription renewal rate for trained customers was also higher at 92%, compared to 80% for untrained customers. This shows a measurable impact on customer adoption, engagement, success and retention.
Measuring return on investment (ROI) of your customer training and education should be an ongoing part of the strategy. By diligently tracking ROI, you’ll always be aware of the value you’re generating for your customers and your organization, allowing for continuous improvement of both your training programs and your product and service offerings.
If you’re looking to add to your value proposition and stand out in the market by providing or enhancing virtual customer training opportunities, the question is: What types of results and returns can you expect?
This guide is here to help you answer that question with:
- categories to consider when breaking down ROI
- factors to incorporate into your calculations
- sample formulas and metrics
There is no single formula for ROI because the calculation needs to be customized to your strategic objectives. This guide will give you the knowledge you’ll need to shape discussions and evaluations in ways that are relevant to your goals. Here’s how we’ll break things down:
- The strategy. Define what success looks like and determine the metrics and data you’ll need to measure it.
- The returns. Take a deeper dive into the types of returns to look for and what to keep in mind as you evaluate them.
- The investment. Understand what costs you need to factor into the equation.
- The final calculation. Bring everything together to quantify some of the returns.
- The qualitative benefits. Don’t leave out the factors that have a less definable place in a straightforward equation; they have a critical impact.
- The wrap-up. Bring it all together.
Before you can talk about results, you need to define benchmarks around what you are trying to accomplish. Are you trying to scale your current customer training by transitioning to an online program or are you changing from one learning management system (LMS) to another? Is the focus on increasing your value proposition? Or is reducing your team’s administrative burden the higher priority?
Whatever your goals are, establishing the benchmarks for success is the first step in figuring out the ROI of your program.
Questions to answer:
Who are the key stakeholders that should be involved? Think about representatives from teams like IT, customer support, account management, finance, and learning and development.
- Do any external stakeholders need to be involved? Think about partners, vendors, key customer accounts or anyone else with whom you might have unusual circumstances to consider.
- What customer training platforms, tools and methods are currently in place? Where else do your customers gain knowledge and skills to use your offerings effectively? Include external sources like blogs, courses, YouTube tutorials and so on.
- Do you have the knowledge and resources internally to create effective training content or will you need outside help?
- What kind of timeline are you working with?
- How will your processes and operations be impacted, and what will you need to facilitate the change?
- What kind of data and insights do you already have access to? Do you have a formal system for collecting customer feedback? What data can you leverage from your customer relationship management (CRM) software?
Metrics to consider:
- Engagement: Focus on how customers interact with the programs you currently offer. This includes things such as how many users engage with it, whether they follow along in sequence or hop around, how long they spend on training, the best and worst performing content, and so on.
- Time to productivity: Consider the average time it takes customers to get up to speed and begin to realize value from your product or service for those who engage with your customer training programs versus those who don’t.
- Usage: This is about comparing learning with implementation. Is there any correlation between how much training customers do and how well they use your product or service? Consider both the breadth of their usage and the depth of their expertise in various functionalities.
- Support: Are there any differences between the number and types of customer support cases for customers who engage with your training programs compared to those who don’t?
- Retention: This is a comparison of customer churn rates between customers who are fully trained and those who aren’t. Whenever possible, it can also be helpful to look at reasons why customers don’t renew.
- Growth: Is there a relationship between those customers who complete a lot of your training programs and the premium packages and add-ons that they purchase and use?
- Administration: How much time does your staff spend administering the learning environment? Include course and content creation, communicating with learners, providing feedback and grades, and troubleshooting issues.
Returns can generally be divided into three categories:
- Those that reduce costs.
- Those that directly generate revenue growth.
- Those that indirectly drive growth.
Educating customers through online training programs has a measurable impact on operating costs. Consider the following:
- Delivering training without having to send instructors to customer sites or bring learners together at an offsite location translates into direct savings in travel, food, facility rentals and so on.
- Online programs scale easily to improve reach with much less administrative overhead than in-person learning, meaning you can reach more learners and offer a greater variety of learning opportunities with your existing employees.
Great LMS software provides a learner-centered experience through self-registration, instant feedback and assessment results, automated message touchpoints, collaborative learning tools, and content release conditions to personalize learning pathways, all with minimal staff time.
Built-in learner analytics simplify data collection and reporting tasks for your employees and provide accurate information for all stakeholders, even in the face of last-minute data requests.
- Making programs available anytime, anywhere gives customers the ability to learn exactly what they need when they need it, reducing the volume of routine support tickets.
Factors to consider:
- average cost per onsite training session
- number of training sessions required per customer
- staff hours spent on learning administration, data gathering and reporting
- reduced days of administrative work
- increase in productivity
- number of customer support tickets
- time per support ticket
There are several ways that a customer education strategy can contribute directly to revenue growth. The primary goal of a customer education strategy is to help customers maximize the value they get from being a customer. We accomplish this by empowering them with the knowledge and skills they need to achieve the results they’re looking for as quickly and painlessly as possible. When thinking about the types of results that come from helping customers in this way, consider:
The third part of any ROI calculation is the investment. There are two parts to investment in customer education: the one-time setup costs and variable or ongoing costs.
One-time setup costs:
- LMS implementation
- Change management
- Content development
Variable or ongoing costs:
The Final Calculation
Determining the final ROI requires bringing all your previous calculations together in this equation:
(Annual Program Benefit–Annual Ongoing Program Costs) / One-Time Setup Costs) x 100 = ROI%
An outcome higher than 0% means your online learning programs produced a net benefit after accounting for the costs associated with implementing and running them. The higher the percentage, the better the results.
When it comes to communicating the benefit, people often choose to share dollar figures instead of percentages. An ROI of 50%, for example, means that every dollar spent generates $1.50. If you invested $10,000, your return would be $15,000.
ROI calculations are based on cost savings and revenue growth that can be directly linked to the investment in a single step, but this alone doesn’t tell the full story. There are further benefits that either lead to revenue growth indirectly or have additional qualitative advantages that are harder to put a number on—but are still a vital part of your success.
Let’s look at three: differentiation, reputation and continuous improvement.
In an increasingly competitive market, offering customer education and training could be the differentiator you’ve been searching for. Why?
- It shows both customers and prospects that you care about their success.
- It adds to your value proposition. Customers and prospects know that when they buy from you, they will have access to robust resources to implement and use your product and won’t have to figure it out on their own.
- It’s great marketing. If you make some of your customer training available publicly, it shows transparency and builds trust. Prospects can see the available features and gain some familiarity even before they’ve made a purchase or even seen a demo, which could put you in the lead when comparing options.
When people have the knowledge and confidence to fully use a product or service to attain their goals, they can become champions for your brand. This can result in a range of beneficial results, like:
- glowing online reviews
- customer referrals
- enthusiastic power users who sing your praises to their friends and colleagues and on social media
We’ve all seen the effect a following of brand superfans can have. These customers can have an immeasurable influence on your reputation that can lead to overall growth and financial impact (hint: Make a habit of asking people where they heard about you the first time you speak to them!).
Learning analytics are a robust source of data that, when combined with product usage data and customer feedback, can provide powerful insights into your customers’ needs and behaviors. Not only can these insights be used to improve your training programs on an ongoing basis, but they can also inform product and feature development and improvements. This creates a feedback loop of improvement and innovation that will give you an edge against both your competition and overall market disruptions.
Measuring the Overall Impact of Customer Education
Undertaking an ROI analysis can seem like a daunting task, but by going through the process—taking stock of your goals and objectives, understanding what you’ll be measuring, and using the correct calculations—you’ll be able to articulate the value of online learning in ways your stakeholders can appreciate. It’s proof that you’ll be able to deliver the value your customers are looking for while generating real results for your organization.
The ROI assumptions and calculations presented here are for illustration purposes only. Individual results may vary.