eLearning ROI: How to calculate eLearning ROI in 2020
Those who are responsible for training are well aware of the value of evaluating training programs. As long as you don’t implement a formal method of measuring training, you cannot determine ROI on your training spend. Still, only 35% of organizations evaluate the ROI of their learning programs. Let’s find out what eLearning ROI is and why and how you should measure it.
What Is ROI?
ROI or return on investment is one of the chief metrics that are used to measure success. It is a ratio that tells you how much you gained or lost after putting your resources in an asset or service. ROI calculations allow you to convert training benefits and costs in a single value e.g. British Pound or American Dollar. In this way, a clear comparison helps you to evaluate the effectiveness of a training program.
What makes ROI crucial is its mainstream adoption. It is understood by not only financial experts and accounts, but even executives and managers leverage it extensively to make a wide range of decisions.
What is eLearning ROI?
eLearning ROI is similar to traditional ROI, the only difference is that you use it to determine the monetary benefits of providing online training to your workforce. It covers the costs spent in designing and rolling out a training course. These costs are compared with the benefits enjoyed by your employees and organization. An eLearning program is considered successful when you can demonstrate that the value it brings to the table outweighs its cost. Companies use eLearning ROI as a performance metric to assess whether their investment in a training program is profitable or not.
eLearning for corporate training programs can be tricky when it comes to assessment. Merely performing a financial calculation isn’t enough. Conventional LMS (Learning Management Systems) often fail to prove their effectiveness. Hence, it comes as no surprise that many L&D teams struggle with demonstrating their success.
There’s some confusion regarding the calculation of eLearning ROI: do you only need to calculate it at the end of the training?
It is ideal if you can calculate eLearning ROI twice, before and after a training course. Some companies believe that measuring eLearning ROI should occur at the end of a course. It’s a faulty approach because you don’t know what you need to measure precisely and how to measure it. By the end, all the spending is fully exhausted, limiting you to take any rational decision.
Firstly, at the start of the course, know what success looks like for your course. Therefore, it’s ideal that you define the KPIs at the outset and decide on how much change is required when the course ends. This allows you to obtain an important figure: the projected ROI. If it’s already negative (less than 100%), there’s no use to go ahead with your eLearning initiative.
Secondly, reality deviates from the intended plans; therefore, it’s valuable to identify the actual change in the KPIs. Also, you need to have a clear overview of your expenditures on the course and match these calculations to the real eLearning ROI.
What to Take Into Account While Calculating the Costs?
When it comes to eLearning, here’s what you need to calculate:
Calculating these costs involves figuring out the external and internal costs that come with eLearning development. Personnel costs are unpredictable. When the project is set in motion, you may have to hire graphic designers and web developers to work on some pages or scenarios. You may also have to obtain copyright permissions for certain resources.
There’s no dearth of innovative tools for eLearning. Companies have to pick learning solutions that are broadly categorized into the following categories:
Remote learning infrastructure
Other than buying new tools and infrastructure, companies may have to look into the existing systems and decide whether refurbishment is the need of the hour. For instance, they may have to replace or update current networking/collaboration devices, tablets, laptops, and servers. If your company is already running an up-to-date collaboration and communication system and boasts a powerful network, put in effort in custom coding to build seamless integration.
Keep in mind that it’s relatively easier to convert eBooks and PDFs into eLearning content rather than creating multimedia content (diagrams, images, audio, video). You will need additional development time to incorporate additional layers of interactivity and scenario-building. Moreover, it’s necessary that your eLearning programs have integrated support for your LMS. Or else, coding and modifications can consume plenty of resources, such as time and effort.
When making a decision to transition from traditional learning to eLearning, keep an eye on the hidden costs. They can include:
Existing project deferrals
What to Take Into Account While Calculating the Benefits?
Consider the following benefits during ROI calculation.
Consider the most tiring and cumbersome travel experience, such as driving your car in rain or snow to reach your training site. This is not the most pleasant of scenarios. Traveling in these circumstances may also serve as a prelude to procrastination. Your trainees are going to be a lot happier when they come to know that the majority of the course is online. There are also fuel savings and an opportunity to avail of a better home-career ratio.
Live training is expensive but it’s known for the fun part. Contemplate incorporating this fun element for the on-site meeting sessions of your eLearning program. This can be a terrific way to save data and power resources of your organization. Besides, it’s a smart option to engage trainees in a more constructive and meaningful way.
Exhaustible stationery used in the demonstration of learning materials in a live environment is replaceable. Substitute them with multimedia and interactivity. Use audio, graphics, and videos in a live environment for an eLearning course. One of the biggest advantages of this strategy is that you can repeat the session as much as you want and hear the voice of the instructor to gain an understanding of a difficult topic.
How to Measure the eLearning ROI?
Here’s the million-dollar question: how can I track e-Learning ROI effectively?
There’s no official model to measure eLearning. However, a particular method has become highly popular for analyzing eLearning ROI. This model is known as the Kirkpatrick’s model. It was invented back in the 1950s, but its convenience has led to it remain in use even after 60 years. The model is mainly composed of four levels.
This phase focuses on how your employees respond to eLearning. It extracts the following characteristics from learners:
How well are they participating?
Is the training material relevant?
What are the feelings of your employees regarding the eLearning course?
How satisfied are your trainees?
There are multiple strategies to analyze employee response.
Firstly, consider the number of learners who went through the online learning course and the number of learners who actually ended up finishing the entire course. You can use parameters, such as:
The number of days required for your learners to complete the course.
The projected data (expressed in terms of percentage) of dropouts from the training program.
The probable number of learners who are likely to complete a course.
The anticipated percentage of learners who are going to make an attempt to study the course.
Secondly, you should monitor the number of attempts taken by your target audience to wrap up the entire course. It’s necessary to find out whether it is taking them one or more attempts to complete it. After the learner finishes the training, an organization may assess the reaction by performing a comparison between the set parameters and the actual value. Feedback is another useful method to evaluate the learner’s reaction to eLearning. Rather than using simple feedback forms with “tick boxes”, use open-ended questions to your questionnaires. Incorporate them in the relevant sections of your training program.
The last phase doesn’t generate 100% results. It’s possible that a learner's reaction doesn’t reveal how much they have learned to be exact. You can assess learning by:
Introducing assessments to evaluate the knowledge gained by your students on a periodic basis. For instance, after the completion of a learning topic, you can use the following tools: MCQS tests, assignments, or knowledge demonstrations. Consider using game-based assessments—they have been known for improving the engagement levels of the learning audience.
Collect feedback—both qualitative and quantitative—from the immediate superior of the learning.
This level is integral because it allows L&D specialists to figure if the eLearning program is meeting the specified training objectives. Next, they can use the outcomes of these assignments and tests to identify gaps in the course so it can be used to polish and enhance the course content.
Utilizing the third level can allow you to measure the extent to which the behavior of people changes after they get enrolled in the training program.
This is a tricky level because in many cases, it is established that the learners have acquired knowledge, but they don’t apply it in real-life situations. It’s important to know if they are struggling to demonstrate their knowledge so that you can go ahead and create a suitable environment for trainees. Keep the following things in mind:
There’s a need for refresher programs to be organized for a certain period until it starts generating positive outcomes.
Sometimes, it’s possible that the learners never had the opportunity to demonstrate their newly-acquired knowledge. It may indicate the need for reinforcement.
The next level focuses on assessing behavioral changes—how they affect the company. Measure and evaluate the effectiveness and impact of the eLearning program. It includes assessing reduced cost, increased productivity, quality, improved efficiency, increased sales, employees, retention, and higher morale.
5. ROI Determination
The issue with Kirkpatrick’s model was that he attempted to evaluate the results of training in terms of money—an approach that didn’t work all the time. Therefore, Jack Phillips reworked on the model and improved it by adding another level: ROI determination.
In this level, you may convert the results of the last step into financial terms and then compare it with the overall program costs for the calculation of eLearning ROI.
As long as the result of the ROI formula (mentioned above) generates an outcome of 100% or more, eLearning is said to generate a net profit. On the other hand, an outcome of less than 100% indicates that the eLearning has generated a net cost.
Calculating the ROI of your eLearning program is one of the most effective methods to showcase its value. The higher management is more interested in numbers, and ROI speaks their language. Hence, it’s a good idea to pay a reliable company to calculate eLearning ROI for your online learning programs, or at least have it done for the most important courses. It’s also recommended to make a proper plan for evaluation right from the beginning. Or else, it’s going to be hard for you to measure eLearning ROI effectively.