How to Measure ROI for an LMS: 3 Experts Weigh In

The LMS market is expected to grow from $2.06 billion today to more than $7 billion by 2023 – a more than 28-percent Compound Annual Growth Rate (CAGR), according to industry analysts.  

That $5 billion growth will be driven by eLearning-tools innovation, mobile access to instruction, and an overriding emphasis on continued learning. Unlike a commodity, however, an LMS system tends to be a bit abstract and diffuse in its implementation, and thus vague in its investment return. 

Or is it? 

LMS ROI blog post by Better Buys

We asked several LMS vendors for their expert opinion on how a company that has purchased a learning management system can measure the return on investment. Their responses show that the flexibility and functionality of any particular Learning Management System affects its returned value. 

 

Track saved expense and baseline criteria

An LMS is designed to deliver ongoing ROI in numerous ways, but it is still up to us to tell the story and to build the business case. The first and most obvious return is in replacing traditional, in-person training with online formats, which is a clear cost saver. This doesn’t mean eliminating instructor-led training (ILT) all together, however. You can and should absolutely still offer opportunities to connect in real life.

Rather, it means using the LMS as the centralized hub for housing video content, whether it’s live or recorded, as well as all other content and courses. You’ll see returns in reducing travel, trimming extraneous productivity losses, and other expenditures associated with sending people to attend traditional training.

You can also show ROI by baselining the metrics that matter to your organization and tracking how using the LMS improves those outcomes. Depending on your business, these may be metrics such as employee engagement and/or satisfaction, customer onboarding speed to proficiency, sales performance or NetPromoter Score, just to name a few. Consult with business owners and department heads to determine the right criteria to track and ask for ongoing involvement and feedback to ensure that training keeps up with changing needs and hits the mark.

Mike Martin, CLO of Litmos, in Better Buys blog on LMs ROI

Mike Martin
Chief Learning Officer
Litmos by SAP

 

Track immediate cost savings and ancillary benefits, like decreased insurance premiums.

According to Brandon Hall, a quarter of companies still do their compliance training manually, and I’m sure those companies are using manual training in other areas as well. It’s amazing to me that companies still rely on that. Time and time again clients come to us with manual training systems and discover that the expense of an LMS is a fraction of what they end up saving in time, in money, in human error and in ways that surprised all of us.

We had one client who saved over $18 million in training costs after they began using our LMS to deliver their training. Another client got a half-million dollar insurance premium break after switching because their safety training was more effective in the LMS. Even if the right LMS system will cost you a few hundred-thousand dollars over a three-year period, the ROI makes the purchase a no-brainer.

Mark Anderson, CEO of eLogicLearning, in Better Buys blog on LMs ROI

Mark Anderson
CEO
eLogic Learning

 

Become an LMS expert, identify current training inefficiencies, calculate resource allocation 

There are three things that I would suggest focusing on to help justify an LMS purchase.

The first would be to become an expert on the features of the LMS, as well as exactly how the platform will be implemented. It is much easier to get people behind a tool when they understand it (or know that you understand it) and they see a clear path to integrate it into the organization.

The second piece of advice I have is to highlight the inefficiencies in your current training program and what that means for the bottom line. For example, say your training manager spends 30 percent of their time answering the same questions and conducting repeat trainings for new employees. Highlight that an LMS will make time to focus on more important parts of their job, like reducing employee turnover.

My final suggestion is to make sure you present as many specific facts as you can. Exactly what do you spend on training and development now? How many hours are spent on inefficient training practices? What is the timeline for LMS implementation and how much would it cost? Keep these three points in mind to help get approval for a new LMS.

Charlie Gillette, CEO of Knowledge Anywhere, in Better Buys blog on LMs ROI

Charlie Gillette
CEO
Knowledge Anywhere

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