Choosing an LMS (or learning management system) to facilitate employee development and training is a big decision, and it’s understandable if you want to prove the investment was money well spent. Luckily, you can do exactly that by calculating the ROI (or return on investment) on your purchase. You can calculate the ROI of your LMS by comparing the costs to the benefits.
Unfortunately, performing that comparison can be more difficult than you might expect. Many LMS benefits cover areas that can be challenging to quantify, while hidden costs can throw off your initial ROI analysis. Your organization may even overlook some benefits of its LMS investment.
Maximizing your LMS ROI begins by choosing the right online learning platform and Craig Weiss can help. Weiss is an elearning maestro with over two decades of experience in learning and development (L&D). The majority of his career has been dedicated to digital learning platforms, and he launched a website called FindAnLMS.com to help average consumers leverage his training expertise to choose the right system. Read on to learn more about how Weiss and FindAnLMS.com can help your business save time and money when choosing an LMS!
Determining the ROI of your LMS begins with the cost
ROI can be defined as a metric illustrating the effectiveness and profitability of any business initiative. Within the elearning realm, ROI refers to the quantifiable monetary benefits an organization derives from its online employee development program. The standard calculation entails comparing the costs associated with learning and training to the value of the benefits gained.
If the costs are higher, your LMS has a negative ROI and you should look at what you can do to improve the learning experience for your employees. If the benefits are higher, your LMS has a positive ROI and you may find it easier to secure funds for L&D in the future. Of course, you should constantly be examining your company’s elearning program for ways to improve ROI even if it’s positive.
That means keeping costs down while maximizing what you get from your LMS. Choosing the cheapest system available will force your employees to work with a clunky system, so that’s not the answer.
Instead, Weiss offers the following tips to help minimize the costs of your employee development program:
- Never reveal your LMS budget
LMS vendors expect potential clients to negotiate on price, so they start high. If you reveal what you’re willing to pay for an LMS, they’ll happily give you a quote that just fits your budget even if they could go lower.
- Think three years ahead
The average business only considers immediate needs when looking for an LMS, but you’ll be stuck with whatever you choose until your contract expires. The elearning industry doesn’t do refunds, so your purchase decision should emphasize tomorrow’s needs just as much as today’s.
- Consult the Buyer’s Guide
Weiss offers a free buyer’s guide that covers everything your business needs to think about when dealing with LMS vendors. From what questions to ask to how to write a proposal, using this guide is sure to help you optimize the ROI of your online training program.
Three factors contributing to learning management system ROI
While costs are generally easy to quantify, most learning programs don’t generate revenue directly. Instead, you’re looking at factors such as productivity and employee turnover rates to measure system ROI. Here are three specific things you’ll want to include in your analysis:
- Time and money saved by the LMS
The alternative to LMS training is usually instructor-led training or ILT. The ILT model forces your employees out of the office, so you lose productivity. Likewise, you have to pay the instructor every time you wish to conduct training, produce single-use learning materials, and compensate employees for any travel expenses related to reaching the training site. All of that will add up quickly.
Switching to an LMS often saves valuable admin time as well by streamlining learning management. ILT requires physical course materials, making it difficult to see what courses your business offers at a glance. In contrast, an LMS provides cloud storage for your training materials. Admins can search for specific content, enroll employees in courses with just a few clicks, and track learner performance far more efficiently than they could with in-person learning. If you multiply the time saved by each admin’s hourly wage, your ROI will get a huge boost.
- Continuous learning improves employee engagement and retention
Do you remember looking forward to lectures when you were in school? Your employees don’t want to be lectured at either, and their minds will wander as the trainer drones on and on. When learning takes place online, employees can access training content whenever they like. They can explore training opportunities directly tied to their interests whether that means learning new skills or pursuing professional development.
The result is a more engaged workforce that will increase productivity and your ROI. Better yet, engaged employees are less likely to voluntarily leave the business, saving substantial sums of time and money in replacement costs. In fact, many workers say that continuous learning opportunities are among the most important factors in choosing an employer.
- An LMS can generate revenue through e-commerce
If your business invests in customer training or partner training, you might generate cash flow through selling your learning materials. You cannot force people to buy your stuff, so you’ll need a great LMS for a seamless learning experience that will keep partners coming back for more.
The right LMS will also have analytical tools to help you discover what’s selling well and what isn’t as popular as it should be, allowing you to modify your training materials to better meet the needs of your unique audience. Naturally, the increased profits will improve your ROI.
Trust FindAnLMS.com to help you find a great LMS
Now that you know how to determine the ROI of an LMS, you’re probably eager to get started. The first step is choosing an excellent learning management system for your business, so create a free account on FindAnLMS.com right now!
Craig Weiss made FindAnLMS.com an exclusive club, so you’ll only find the best LMS vendors on the platform. You also get unbiased ratings, comprehensive feature lists, and contact information for every vendor. Unleash the potential of your employees with an investment in a quality LMS.