Managing Training Costs

I've recently agreed to sell a new software programme via the Complete Trainer, called Course Manager. It's a comprehensive system for running your training courses. Which although I have never used such a system, I can certainly see the benefits.

When I worked within a training provider, they ran many open programmes but frequently found that tracking the real ROI (for promotional events) and the profit on pay programmes was a challenge.

Yes, there are great tools out there like Course Manager (which cost money and the ROI on such systems should be calculated too), but I think really understanding the true costs of running a training programme is crucial, even more so during these cash-strapped times.

If you are offering funded training that costs your delegates nothing, you still have to examine the cost of sale for your organisation. This will include the marketing, delivery costs, administrative support and - as in some funded training - ensuring that your client fills in all the forms, talks to relevant brokers, that all your paperwork is submitted and that you get paid.

Understanding the hidden costs is important; whether you are a sole-trader trainer or part of an in-house training team. Venue costs, equipment hire, cancellation fees (for venues and trainers), materials, no-shows - all of these must be considered.

A software programme is a great way of tracking your costs (and a good spreadsheet can be too), but managing your ROI may be more of a challenge simply because of the time scale involved.

On a simple '£ per delegate' programme you can calculate a 'recruitment/delivery' cost and look at your profit at the end of delivery, but if you are running a promotional event to demonstrate a training product or service, then your ROI may not occur for months, or even years, after the event.

I know of an NLP company and a coaching company that run free two-day workshops as introductory programmes in expectation that they will convert delegates to full practitioner/accreditation courses which, of course, are high value to them. But it may take one or two years for their initial delegates to convert to fully-paying clients. In between times they maintain contact, offer other events and support delegates in their learning and development. This is a long-term investment and it builds loyalty and a goodwill network (getting more contacts). And, of course, it must convert a sufficient percentage of delegates to be profitable.

Likewise with business clients, you may well be talking about relationships that last years (according to your product). And decision making may be a far more convoluted process, involving others who are in charge of budget, but who do not necessarily understand the service/benefits offered. Keeping that relationship with the client may be frustrating when business is repeatedly stalled, postponed or redesigned, but (and you must still manage your cost of sale) by maintaining the relationship, you will increase your chances of being the provider of choice when decisions are actually made.

Some tough decision making must come into play when you've worked with a client for a long time but, by the time they've changed the delegate list six times, asked for different modules from what they specified, asked for a different venue and changed the dates three times (yes, it has been known), you have to make sure the price you charge this client still makes a profit.

Selling training is not, on the whole, a 'shifting units' game. There are some business models which operate on that basis (such as Croner and Reed who have national coverage and large marketing budgets), but mostly it's about managing your operation effectively and taking on the long-term commitment to your client. Crucial to this is managing your costs, whether you use bespoke software, off the shelf databases, spreadsheets or good old pen and paper. Make sure you really know what a programme costs you to run.