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How to calculate the ROI of your LMS

How do you calculate the ROI of a learning management system so you can be confident it’s worth investing time, energy, and money? Dive in to take an in-depth look at LMS ROI.
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Mike Jeavons, Content Writer
2022-09-12

A learning management system (LMS) is a great tool that allows you to create, manage, distribute and monitor all of your business’s training materials and eLearning courses. It allows both your business and your employees to organize and access training quickly and easily, making it an invaluable tool for employee development.

But how do you calculate the ROI of a learning management system so you can be confident it’s worth investing time, energy, and money into one? In this post, we’re going to take an in-depth look at LMS ROI, including what you should consider when making calculations and how you can maximize the ROI of your LMS.

The 3 areas of ROI to consider

When it comes to assessing the ROI of an LMS, there are three main areas to consider:

  • Does it contribute to improving business performance?
  • Does it contribute towards making money?
  • Does it contribute towards saving money?

Your LMS should enable you to answer “yes” to each of these questions, with the first area also contributing toward the other two.

Making money

Most business decisions are swayed by whether or not something will make your business money - and utilizing a learning management system is no different.

An LMS provides your business with a fast, simple, and convenient way to offer your employees the chance to develop their skills and grow within your organization. When employees grow, they are more likely to find new ways to help your business make more money.

Saving money

Every business needs to watch how it spends its money, so long as it doesn’t come at the expense of growth and development - nobody appreciates it when corners are cut and standards slip.

However, that’s not to say that money can’t be saved on top of training and learning. Not only can the process of learning via an LMS save your business money over in-person training, but the skills and knowledge learned can contribute toward your business saving money in other ways. Even when you take into consideration the cost of learning management systems, this money can be recouped by saving money elsewhere.

eLearning is also a valuable time-saving resource and can help train multiple employees and new starters all at the same time, from anywhere, at different stages of their careers.

Improved business procedures

When your business utilizes an LMS and enables your employees to learn via affordable and convenient eLearning courses, it benefits your employees in many ways - which in turn also benefits your business.

Key business benefits of an LMS include greater productivity thanks to employees’ improved problem-solving skills, proactivity, communication, and strategic thinking. These all combine so you can improve procedures and processes, and ultimately deliver a faster, more high-quality service to your customers.

Calculate time savings over traditional training

In any business, time is a valuable resource - one that many employees don’t have in abundance. For that reason, anything that can save time should be seriously considered.

Training can often interfere with employees’ productivity, because it takes them away from their day-to-day responsibilities. However, it can be a two-edged sword, because training is also critical to employees’ development.

In-person training can take up a lot of time. When you consider travel costs and time away from their daily work, the hours (or even days) soon add up.

However, with an LMS, self-directed learning allows employees to fit learning around other responsibilities. That means learning can be done during periods of downtime, during short self-appointed sessions, or even during the morning commute. That way, productivity isn’t affected and there is no impact on the day-to-day running of your business.

Consider savings vs traditional tutors/lecturers

As well as saving your employees time, eLearning also saves your business money. With online courses, the course materials have already been produced by industry experts, so there’s no need for a traditional tutor or lecturer in a traditional classroom environment.

eLearning is also easily scaled, so whether you need to provide training to five employees or five hundred, this is much easier to orchestrate - and can also come with additional cost-saving.

Consider the employee retention rate

Not only is an LMS a useful tool for employee development, but it also helps improve retention rates. When an employee feels like their career is beginning to stagnate and there is little chance for growth and progression, they’re far more likely to seek alternate employment and leave the business.

Investing in your employees enables them to feel valued and increases productivity. This provides them with a greater level of job satisfaction, which means they’re unlikely to want to move on. Recruitment is a long and expensive process, but losing top talent can cost a business in so many other ways. Developing your staff with the help of an LMS contributes toward holding on to top-performing employees.

Compatibility and data integration costs

It’s important to consider that certain learning management systems may come with limitations that means they’re not compatible with other tools or software. Because of this, the LMS you select may cost you additional time and money to ensure compatibility.

Before you decide on your LMS ensure it integrates well with your other processes. Or, if it doesn’t, does the value the LMS provides outweigh the additional costs that may come with it?

Look at KPIs and productivity following training

One of the biggest points to consider when calculating your LMS’s ROI is how it contributes to employee productivity and KPIs. It’s vital that, in order for your business to see value in an LMS, that training is effective enough to contribute toward improving delivery.

Consider the following questions and whether the answers can be attributed to the LMS:

  • Has there been an increase in productivity?
  • Have KPIs been met and exceeded?
  • Have there been fewer issues and mistakes?
  • Has there been an improvement in morale?
  • Have there been fewer missed deadlines, or shortened timelines?
  • Are employees more engaged?
  • Are customers and clients more satisfied?

If yes, then which training modules have resulted in these successes? If there have been improvements in some areas but not others, what additional training can employees take to continue their development?

For more information check out our blogs on measuring the impact of employee training and improving ROI metrics to showcase L&D’s value.

Calculate additional work time saved by reducing learning time

In-person training is time-consuming, even if it doesn’t involve any travel. When employees take prolonged periods away from their responsibilities it’s known as lost production time - and this time can add up fast.

eLearning encourages employees to learn as and when they have the time and capacity to do so, and therefore greatly reduces lost production time. Whether this is during quiet periods, personal development sessions, or even on the commute, it has less impact on productivity than other forms of training.

Work in the cost of implementing an LMS

Not all learning management systems cost, but those that do often have a greater range of tools and features that support learning and administration. Because of this, many businesses choose to use an LMS that costs, rather than a free version.

When looking at costs, make sure you consider all the variables and the overall cost of implementation. These include support, data migration, and training.

Calculate the costs of running the platform

The cost of a learning management system doesn’t necessarily stop with implementation. Depending on the size of your organization, particularly if your business has thousands of employees, you may need additional support to help deal with LMS administration tasks.

If your business produces its own training materials, will you need to purchase additional authoring software and someone to write the copy, and produce the graphics and videos?

You should also ensure that costs won’t rise dramatically as your business grows and more users are added to the LMS. Are there hidden costs or add-ons that may mean your chosen LMS may soon not be a viable option? Some LMSs also charge a monthly fee for certain features, so make sure you’re aware of this.

Tips to maximize the ROI of an LMS

Looking to maximize the ROI on your LMS? Here are a few tips to get the most of your organization’s eLearning:

  • Make sure it’s easy to navigate and accessible across multiple devices
  • Make sure employees know who to contact if they have questions about your LMS
  • Show your employees the advantages of your LMS, and don’t just rely on it for mandatory training such as first aid or fire safety
  • Show employees the impact their learning has
  • Make sure your LMS aligns with your company values and includes your branding and tone of voice
  • Provide a library of content and courses that will increase productivity and upskill employees of all levels
  • Encourage social learning and collaboration
  • Incentivize learning and introduce gamification to make learning more rewarding

Go1’s courses are compatible with a wide range of learning management systems

Looking to get the most out of your LMS? Go1 has a wide range of courses available to access right now. For more information, schedule a demo with a member of our team today.

Go1 helps millions of people in thousands of organizations engage in learning that is relevant, effective and inspiring.
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