Spend Less, Train More

Corporate training is big business. In the United States alone, corporations spend more than $60 billion annually on training and performance initiatives, according to the American Society for Training and Development. “The spending numbers are staggering,” says Linda Richardson, CEO of Richardson, a seminar and eLearning sales-training firm. “With the profitability of the average corporation running at less than 9 percent, anywhere from 5 to 20 percent of corporate profits can be consumed by training alone.”

Obviously, executives wouldn’t be spending big bucks if they didn’t feel they were getting something out of it. According to experts, six guidelines may help executives and sales managers figure out the right amount to spend and, more important, how to invest that money both wisely and well.

1. Calculate your budget based upon your industry average. The quickest way to determine roughly what you should be spending on sales training is simply to find out what your competitors are spending. “Sales managers should research companies that have strong sales forces and find out how much they invest in their training,” says Tom Hopkins, author of numerous bestsellers, including How to Master the Art of Selling (Warner Books Edition, 1982). “Sales managers should exert the same amount of effort selecting a training firm as they would expect of their top salesperson when researching a large client.”

As a general rule, most companies spend from around $700 to $1,500 per sales rep, per year, according to Richardson. Sales-training budgets for companies with complex products and long sales cycles are likely to be significantly higher than for companies that sell relatively simple products. Because of this, you should ask sales-training firms that cater to your industry how much is normal for your industry.

While the training firms probably can’t reveal precise expenditures from their clients, they should be able to provide you with a reasonable approximation. One caveat, though: Be sure to ask at least three training firms for your industry average. That way you’ll not only get a broader perspective, but you will also be able to tell if one of the training firms is giving you an inflated number in hopes of selling you an overly expensive training program.

2. Don’t tie your training budget to revenue and profit. Some companies spend less on training when times are bad and more on training when times are good. The logic of this strategy is simple. When business is bad, the last thing a company should do is cough up discretionary funds to pay for training. Does it really make sense to pull feet off the street when your team is trying desperately to make its numbers?

By contrast, other companies spend less on training when times are good and more on training when times are bad. The logic of this strategy is also simple. When business is good, your sales teams must be performing well, therefore training must be unnecessary. Does it really make sense to pull feet off the street, just when everyone is finally making big sales?

The truth is that neither strategy makes much sense. To understand why simply look at professional sports teams, which employ coaches whether the team is winning or losing. “It’s always possible to come up with an excuse for not training,” says Earl Taylor, a master trainer at Dale Carnegie & Associates. “But sales training be should taking place regularly, regardless of state of the economy, the state of your industry or the state of your individual company’s finances.” In other words, the training budget should be based upon your company’s desire to win and keep winning rather than being a reaction to fluctuations in the economy.

3. Measure training effectiveness by return on investment. Many companies treat sales training as an expense and a cost of doing business. Under this system, the budget for sales training is determined not by need, but by such largely irrelevant factors as sales staffing levels, the previous year’s training budget, and the conflicting training needs of other groups inside the firm. This way of thinking virtually guarantees the sales-training budget will be subject to a highly political and bureaucratic effort that wastes management time and might not result in a training budget that makes sense.

Rather than treating sales training as an expense, sales managers should justify sales training by tying it directly to cost savings and revenue growth. “Training is only effective if it is reinforced by the organization and provides real, meaningful results,” says Jeffrey Seeley, president/CEO of Carew International, a Cincinnati, Ohio-based provider of customized sales training. The most common measurement is skill development, where you assess how well the reps can perform a particular skill before training and after training. A more effective measurement, according to Seeley, is to calculate the baseline sales and profitability performance of specific territories within your organization prior to the training and then measure those same figures after the training has been implemented.

Emphasizing the ROI of sales training makes it easier for sales managers to gain broad support within the executive suite for sales training, according to Pat Galagan, managing director of content at the ASTD. She believes that it’s critically important for the sales managers to recruit an executive sponsor who can help advocate spending money on training. “Try to get a champion who has access to the executive suite or the board room,” she recommends. “It can be the head of human resources or perhaps a financial type, but whoever it is, your champion must have the kind of clout that can help create across-the-board support.”

4. Demand value from your trainers, from the very start. Jeff Gitomer, author of the bestseller The Sales Bible (John Wiley & Sons Inc., 2003), tells the story of an informational training session that his firm conducted as part of a sales presentation to cultivate a Fortune 100 company as a potential customer. “During the informal training, we presented a dozen ideas and techniques that we intended to include in our online, interactive one-year, program,” he explained. “After they left, but before they decided to buy, I received an email three days later from one of the participants that said he used one of my techniques on a customer he had been trying to close for three years.”

It may not be reasonable, of course, to expect a multimillion-dollar deal as the result of every sales presentation from a training firm. However it’s not unreasonable to demand value from the start. “You should always expect sales trainers to practice what they preach,” says Richardson. “How can they train your sales team if they can’t adequately train their own sales team?”

While it may seem unreasonable to expect sales training firms to deliver the goods without being paid, many of today’s leading sales-training courses emphasize consultative selling. If the consultative selling concept is valid (and there’s lots of evidence to suggest that it is), then training firms should be willing to wow you before you shell out a single dime.

5. Get your sales reps enthusiastic about the training. No training is effective unless the students are ready and willing to learn. Unfortunately, what passes for sales training in many organizations does not always focus on the business reality of the sales professional. Internally run sales training often deals directly with product features and functions rather than giving sales reps insight into why a customer might actually want the product in question. “In general, sales professionals must understand the needs of the customer, handle customer objections, present solutions from the customer’s operating reality and communicate the value of the solution in the context of the customer’s needs,” advises Seeley.

Multiple teaching methodologies such as short lectures, structured experiences, simple assessment instruments and relevant role-plays help keep the team involved in the process. Seeley recommends adding an element of competition to the training, such as a contest or a performance award. “Sales professionals love competition, so creating ways for professionals to win special incentives through trivia or other games of competition will gain their attention,” he explains.

Similarly, sales reps are more likely to become excited about sales training if they see it as a reward rather than a duty, according to Seeley. “We’ve found that many companies focus their training programs on the worst sales reps, which turns sales training into a stigma,” he says. A better approach is to initially limit sales training to the top performers and only roll it out to the rest of the sales team after the top performers have experienced and endorsed the training. “If the top guys say the training is worth the effort, the rest of the team will follow suit,” says Seeley.

6. Stretch your training budget with online instruction. Travel is one of the biggest expenses connected with sales training, so you can save money by using online methods. Online methods range from e-learning (automated training programs conducted across the Web) to CD-based (automated training programs viewed on a PC or TV) to Webinars (interactive programs conducted across the Web with teleconferencing support.)

However, online training is only effective if the subject matter lends itself well to nonclassroom instruction, according to ASTD’s Galagan. “Virtual classrooms can save you money, but there are definitely cases where live instruction is a better choice,” she says. Indeed, some skills can only be taught effectively in a face-to-face environment, according to Murphy. “What has worked best for our clients is to limit classroom training to skills requiring actual client interactions, such as social connecting and rapport,” he explains.

There is a potential drawback to online training, though. Poorly designed courses often consist of masses of information presented in the form of papers and presentations. While such courses are relatively easy and inexpensive to design, “the Big Jug (we have expertise and knowledge) and Little Mug (we will fill you up with this knowledge) approach loses an audience almost instantly,” according to Seeley. He points out that effective training “can’t just engage the intellect, it must appeal to the spirit and the heart.” In other words, the purpose of sales training is not only to inform, but also to change the sales culture within the organization.