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.

The Role of Sales Training Requirements Definition and Requests for Proposals in the Success of Technology Companies

Sales training is a critical component contributing to the success of most technology companies. For sales and training executives and managers, assessing and selecting from among the many sales training and methodology providers can be a daunting task. However, sales training is a significant (and, from a financial reporting standpoint, often a "financially material") investment. To get the best results, and to select the best providers, developing a requirements definition and a request for proposal (RFP) is the best route.

Sales Training as a Component of Success

In today's hypercompetitive business environments, companies look for the competitive edge. For many technology companies, it's product-based. These companies strive for the best quality, the most innovation, the lowest price, the hottest technology, the greatest return on investment (ROI), or, perhaps, outstanding brand recognition. Other companies depend on stellar service or customer care to differentiate them from the competition. Regardless of which of those advantages your company depends upon to win, we believe that those organizations with a well-founded, pragmatic sales methodology—a set of processes, procedures, and tools that provide the sales organization with what it needs to convert qualified prospects to customers—win business more often, at higher margins. Sales training is a critical component contributing to the success of these organizations.

The total cost of training (TCT) is a significant and, for many companies, a financially material expense. Well spent, sales training can boost the top line of an enterprise by providing a competitive edge that mitigates minor deficiencies in product, delivery, quality, price, or brand value. Poorly spent, it is a waste of human resources and money, and can easily cost an organization millions in lost business opportunity.

Sales executives don't invest in sales training, per se, they invest in quota attainment. Sales training is how they achieve that goal. Savvy companies, that employ a sales methodology, invest in sales training strategically (as an ongoing process to support the broad adoption of the methodology) or tactically (to educate and train their teams on specific skills required to adapt to changing market conditions, such as how to win against a specific, tough competitor that introduces a new product). However, a sales training company, (or effectiveness solutions provider (ESP), may not be the same company that consulted with them on the installation of their methodology or even provided the strategic training.

Training Partner LMS by GeoMetrix Data Systems

GeoMetrix is a privately-held company that provides enterprise learning management solutions for utilities, media, governments, universities, law enforcement agencies, commercial trainers, hospitals, and Fortune 1000 companies around the world. GeoMetrix Data Systems Inc. was founded in 1992 and is based in British Columbia, Canada. The company claims over 450 successful installations. The company's products handle scheduling, resource management, registration, reporting, launching, tracking, assessment and skills gap analysis.

GeoMetrix's Training Partner is a sophisticated LMS product suite. Training Partner targets the operational and management needs of commercial, corporate and government clients with a variety of learning management tools.

With extensibility and adaptability that integrates into the information technology structure of a variety of organizations, the Training Partner Administrator Module can be integrated with financial, contact management, human resource, and enterprise resource planning systems.

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edept Training Solutions by Advance Mentoring Healthcare

Advance Mentoring Healthcare specializes in improving the quality of patient care and safety at health care organizations. Based on an organization's distinct needs, aims, objectives, and culture, Advance Mentoring Healthcare customizes business solutions which aim at increasing profits, decreasing expenses, and eliminating regulatory infringements. The company delivers the adept Training Solutions eLearning Management System to manage risks; the Web-assisted, Health Insurance Portability and Accountability Act (HIPAA)-compliant eMentoring in Healthcare Management System to share knowledge and skills; and HIPAA-compliant Collaboration Tools, which focus on development, training costs, and productivity.

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