The Total Cost of Training: Why Requirements Definition Is Important

Many organizations take an informal approach to defining their sales training requirements—they either don't develop any, or do so with a minimal effort. The typical "requirements" effort is reviewing "word of mouth" references, searching the web for training companies that serve the enterprise's market, or responding to a training company's marketing campaign. Countless companies have invested millions in these informal approaches, leaving them with a confused or demoralized sales force, lost business opportunity, and a training budget spent with little to no measurable return.

A Look at Costs

A training event for fifty sales people can cost an organization almost $109,000. For companies in many industries, two sales training events per year are required for their people to stay competitive. If you gather your sales people twice per year for sales training, that is a nearly quarter of a million dollar investment. For a company that, for example, generates $30 million in sales and $4.5 million in earnings, two training events per year represent an incredible 4.8 percent of annual earnings!

Where else in the organization can your spend 1 percent of revenue or 4.8 percent of earnings without a business plan outlining the requirements and benefits, an action plan to track results, and some type of RFP with performance criteria issued to competing vendors? A twice annual sales training event approaches the total information technology (IT) cost for a typical midsize manufacturing company. In this example, from the chief financial officer's (CFO) perspective, sales training is a material income statement expense.

Sales training is an investment, with the expected return being an increase in the average sales per sales representative. The goal of developing training requirements is to maximize the probability of achieving the expected return.

What Is a "Requirement"?

When discussing a requirements definition, the first thing we should do is define a requirement. A requirement is a characteristic of the training, such as the language in which the training materials are written and delivered, or the background of the facilitator (including details such as whether that facilitator was a sales person in the past, or has knowledge of your industry). Your organization must define those requirements that are appropriate to your business situation.

Once you have "selected" the requirements for your particular training engagement, you must define the desired characteristics for those requirements. For example, the Training Materials Language requirement, may be characterized by English and Spanish. You can then present this to an ESP in an RFP and evaluate their characteristics against those of the requirements you've defined (see figure 1).

ESP Evaluation and Selection

With that in mind, once you determine that you need sales training for your organization, the next step is to develop a set of requirements. These will serve as a foundation from which you will select a sales ESP, or define a curriculum for delivery by your internal sales training team.

Broadly, ESP evaluation process can be divided into three parts:

1. Requirements Definition: This is the process of defining your organization's sales training needs, culminating in an RFP. Are you currently using a methodology? If so, what are its characteristics? Is the training strategic, or tactical, as described above? Do you need basic, advanced, or sales management training? Do you need to transfer product, industry, and service knowledge, or basic selling skills? Do you know how to assess the training needs of your existing sales personnel, or do you need an impartial, independent assessment? Change management is a key part of the sales training process. Do you have a program of continuous follow-up and reinforcement to ensure that change is effected, or must that be part of the procured program?

2. ESP Vendor Evaluation: This is the process of examining the vendor, its training methodology, geographic reach, facilitator experience, business model, pricing, customization capability, and a myriad of other factors that affect whether or not this particular vendor is a fit for your organization.

3. ESP Program Evaluation: This is the actual evaluation of the training program(s). What is the underlying sales methodology? Is the methodology suitable to your markets, products, and services? Is the complexity of the solution compatible with your sales team? Does the complexity of the methodology match the products or services being sold? Does this program have documented, demonstrable success? How does the vendor suggest you measure program success? Does the vendor provide tools for assessment? Can the program be tailored to your needs? The key question is "Will using this sales methodology, as advertised, provide your company with competitive advantage, above and beyond other assets such as your products or services, quality customer service, or brand recognition.