Finances and expenses have become quite a touchy topic lately. With news about the economic slowdown around the corner, it seems like being a little cautious with your company’s L&D budgets wouldn’t really hurt, right? Well, we certainly think so, and as a part of our efforts to educate L&D teams around the world on the benefits of choosing the right LMS at the right pricing plan, here’s another interesting take on how to determine the ROI of your LMS.

Most companies use the LMS for internal training & certification, compliance training, employee on-boarding, dealer or partner training and to sell courses online. Organizations spend an average of $70,600 on their LMS annually, a whopping $5,885 per month (Research by Capterra).

In all farness, it may be a little tricky to correctly estimate the ROIs of your LMS because LMS ROIs come in all perceivable forms. From directly impacting the bottom-line to reducing attrition and even increasing employee morale and motivation, truly determining the ROI of your LMS is not that straightforward, nor is it easy.

Let’s understand this a little better.

An LMS can actually appear as both an expenditure or a cost saving alternative to traditional formats of training. As we are aware, traditional training comes with its fair share of expenses ranging from trainer fees to accommodation and more. An LMS saves on these costs and that is quite obvious. Now where does this scenario actually make most sense?

If your organization is one of those modern, ahead-of-the-curve places to work, which generally attract the most talented young professionals from the industry based on the promise of giving each employee the chance to learn and build themselves via your training and development initiatives, then an LMS will indeed play a big role in saving your training budgets while actually maximizing your training quality. Especially when you compare it to hosting similar training repeatedly using traditional training approaches.

So when you tie the LMS to your learning and development functions, it becomes slightly easier to determine the actual savings you are about to accrue and therefore give a slight shape to detecting the ROI of your LMS.

Let us look at some of the areas where you can save training costs and improve your revenues by deploying a modern Learning Management Systems:

  • Trainer Fees or Salaries as the course can be delivered online
  • Travel and Accommodation expenses as LMS offers anytime, anywhere mobile access
  • Training Facilities and Administrative costs as LMS courses are web or mobile ready
  • Learning assets printing, shipping and distribution costs
  • Downtime, Security Incidents, Fines and Risks if the employees are effectively trained on compliance and Standard Operating Procedures Training

As evident, when you look at an LMS as a cost saving platform, determining some form of perceivable ROI becomes easier. Your ROI is basically the costs your are saving by implementing a learning management system instead of opting for traditional training formats with many overhead costs that can quickly add up.

Let us now look at some non-perceivable LMS ROIs because they do exists and it’s very important to know what they are in order to truly appreciate and understand the importance of an LMS.

  • More productive work hours per employee as they spend less time on training
  • Faster Training need identification since LMS provides performance reports and feedback
  • Better quality of customer service training and thereby more satisfied customers.
  • Faster and and increased course completion rates
  • Higher employee retention & morale
  • Lower Operating and re-work costs
  • Faster time-to-market due to on-the-go training. This is especially true for Field Sales & Marketing Teams

Likewise, these are the un-perceivable ROIs that your LMS present.

However, you can still track and measure these parameters to understand the true size of the returns on your LMS investments. Some of these savings and gains are tangible or quantifiable, while others offer intangible benefits. This way,  you can calculate the return on your investment by dividing the sum of these gains and savings with the cost of the learning management system.

Building a business case for your Learning Management System is crucial to demonstrate the business benefits and returns for all the stakeholders in the organization. The L&D or HR teams can use this method to understand if their existing LMS is proving valuable or not.

As research suggests, about 26% of people are unhappy with their current LMS (Research by Capterra). It is imperative for such organizations to carry out a detailed Cost-Benefit analysis of their current LMS. The next time you want to start a new training program, try considering the above mentioned indicators for the ROI calculation.

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We believe in the ROI that an LMS must show. Hence, our LMS is affordable and packed with all the features really needed to rain your employees improving your ROI when investing in it. Click here a to schedule a demo with our representative. Or Try our LMS free for thirty days! Click herea to activate your trial! We are also an experienced eLearning development agency in operations since 2007. Contact us to know more about our custom eLearning development services.

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