Training ROI Revisited

I have written in the past about the Return on Investment (ROI) for technical training, or as my mentor and friend Dr. J. Kenneth Cerny use to call it: “Return on Instruction.” Yet I still find signs in my everyday business dealings that some managers and owners haven’t been made aware of the connection.

For many, technical training simply goes “sight unseen” when revenue or cost control measures are considered. I would therefore like to present some examples of the bottom-line impact that training can have on your fleet operations, with some new supporting examples I have been collecting over the past several years.

Because bottom-line goals are accomplished two ways—increasing revenue and controlling costs, I’ll focus on various aspects of these two.

Revenue Impact

To stay in business, you must attract and retain customers. To attract customers, you must offer something of value. Among other things, value is associated with quality workmanship and convenience (e.g., on-time delivery). A robust training program can impact both. Customer retention is even more affected by training. Mistakes, lateness, failures and/or indifference (real or perceived) can all cause you to lose customers. Consider this example of a rental fleet that also services customer-owned products:

Among customers surveyed before training, 70 percent were satisfied and would return, 15 percent had some concerns but would return, and 15 percent were very dissatisfied and would never return. Six months after a training event, the same survey administered had these results: 80 percent were satisfied and would return, 15 percent had some concerns but would return, and 5 percent were very dissatisfied and would never return.

Simply reducing the “dissatisfied and will never return” customers from 15 percent to 5 percent can have a huge impact on the bottom line. To see the impact on your bottom line, consider the average revenue per month generated by one customer and multiply that by the number that makes up 10 percent of your customer base.

Direct Cost Impact

There are numerous direct costs that training can impact to your benefit. Consider:

  • Employee costs—More efficient, effective employees mean you need fewer of them to successfully run your business. Also, overtime can be reduced through greater diagnostic efficiency.
  • Asset availability—Your vehicles and equipment are not making you a dime if they are down for long periods of time awaiting an accurate diagnosis or complex repair.
  • Reduced comebacks—Think about the extra cost (parts and labor) of making the same repair twice, because the root cause of the concern was not diagnosed accurately the first time. Then consider the cost savings if you could reduce comebacks by 10 percent.
    Indirect Cost Impact

There are a number of cost factors affecting the bottom line that are not as obvious at first glance. Training can have a positive affect on all of these:

  • Safety and reliability of vehicles/equipment—Unsafe, unreliable equipment can have huge cost implications as well as legal ramifications.
  • Employee speed-to-competency —The cost of carrying an employee while he or she is “learning the ropes” can greatly vary, based on whether formal or informal training processes are in place.
  • Employee retention—Last year, I wrote about the cost of replacing a good employee, which many studies place at 1 to 1.5 times the departing employee’s salary. Many other studies have shown a strong correlation between a robust company training program (with career paths linked to training completions) and employee retention.
  • Reputation among customers—The old adage that “a satisfied customer might tell one person about your company, and a dissatisfied customer will tell ten” is alive and well in the fleet business!

And of course, it is extremely important to assure that the training you provide your employees is of value and can be applied on the job. Poor quality or useless training can have more negative results than no training at all. But remember, high quality training that transfers easily to on the job tasks positively impacts employee morale and retention.