How to Turn Your Training Department into a Profit Center

“We just hired a new training development company,” the CEO of a retail company told me recently, “and we’re going to be paying a much higher cost for our training than ever before. It better work.”

I appreciate that executive’s concerns. After all, increasing expenditures always requires careful consideration. Yet I disagree with that executive in two important aspects . . .

• First, training is not a cost, it is an investment, as I will explain in a moment. 

• Second, you can’t just sit back and hope training will work. You have to take steps to make sure it does.

Why Training Is a Profit-Making Investment, Not a Cost

When you pay your electrical bill or insurance, that is a cost, because those expenses will probably not pay you a quantifiable return on your money. Paying for training is different. It is making an investment that can, and actually must, pay you a sizable ROI, for reasons like these . . .

• Every dollar you invest in effective sales training will pay you back many times over – For example, you can train retail salespeople to close more sales, to increase the amount of each sale they make, to upsell, to add new products to orders, and more. It is reasonable to expect that after training, your salespeople will be able to sell at least 10% more. And you can do the math. If your company currently has $20 million in annual sales, for example, you can sell $2 million more by introducing training that costs much less than that. Let me restate, you are making a profitable investment, not spending money on something that doesn’t deliver any return to you.

• Every dollar you invest in customer service training will pay you a similar return – If your company does that same $20 million in annual sales and your customer retention rate drops five percentage points in one year, that could mean you have lost about $1 million in sales. Yet the right kind of customer service training can turn that problem around. When you consider that you can invest a relatively small amount of money in training to achieve $1 million more in annual sales, you quickly realize that your training department is a profit center, not an expense.

Plus, Great Training Rewards You with Improved Employee Retention

Well-trained employees are happier and therefore less likely to leave you. Because they are more confident and do their jobs better, they will generate higher profits too. And you will have to replace fewer of them.

It’s another example of why your training department is a profit center, not a drain on your resources. Provided, of course, that you change your thinking and act accordingly to get the largest ROI from your training.

What Kind of Training Pays You the Biggest Returns?

The quick answer to that question is, “Good training.” But it is not as simple as that. To achieve the biggest ROI, you and your training designers should answer these questions . . .

• What larger business goals would we like our training to achieve?
• Which employees should we train if we want to reach those goals?
• Which of those employees’ skills and tasks will we address through training?
• Can we talk to employees who are currently handling those tasks and understand what they do and what is not working? (Note that this is part of the DACUM, or “Design a Curriculum” approach to training design.)
• What can we measure before and after training to be sure we have “moved the needle” and brought about real change?
• Who are our employees, where are they, and what is the most effective way to deliver training to them?

In Summary . . . 

Do you have to pay for training? Of course you do. Can it be expensive? Of course it can. But thanks to new training technologies that include training on mobile devices, there are more ways than ever before to keep costs low.

When you do that and unlock new profits by training at the same time, you have hit the “sweet spot” that makes training profitable.