A learning management system, or an LMS, is increasingly becoming a favorite learning technology for L&D managers. But what is LMS? It is a software or SaaS-based program that helps you manage, monitor, and deliver eLearning content.
A learning management system comes with a bunch of benefits, such as:
- Saves time, money, and effort
- Enables your employees to complete training from anywhere at any time
- Offers detailed analytical data
- Tracks the progress of your employees
- Monitors employee performance
- Easily collects feedback
- Facilitates collaboration
- Helps in community building
- Supports mLearning and allows you to use micro-content
- Easy to update
- Gathers all training material in one place
- Gives hefty ROI
Out of all the benefits, the biggest concern is the Return on Investment. Any investment you make, to determine whether it was a wise investment or not, you have to measure the return on investment you get.
Although you can figure out the ROI by calculating the cost and results, are all the outcomes of using an LMS measurable by the profit you made?
You may be unable to determine metrics like a better completion rate by calculating the monetary benefits. What about the time you used to invest in training programs? Did you save time or spend more of it?
There are many more ways of determining the ROI of your LMS. Let’s learn how to determine if your LMS is worth the investment.
How Far Were My Goals Achieved?
Before you plan a training program for your employees or customers, you must determine your objectives. Your objective should be particular and achievable at the same time. Once you have your goal in mind, you can develop a better eLearning course.
After a while, you can start analyzing how far and how many objectives were achieved. Say, for example, your goal was to increase the completion rate by 18%. But your LMS achieved a 20% increase in the completion rate. Then you can conclude that the reason you invested the money in the LMS was satisfied.
Track Completion Rate
Usually, companies need help with achieving a reasonable completion rate. The poor rates could be due to a lack of time, interest, low motivation, and acknowledgment. An excellent way to analyze the ROI on your LMS is by comparing the employee response of the previous year to this year.
The truth is that LMS can assist you in addressing every issue that causes a lower completion rate. But was it able to do it? By comparing the completion rates from before and after you started using this LMS, you can determine that.
A lower completion rate implies your LMS could have achieved better outcomes. The inference is that your course lacks fun, engagement, exciting activities, and anything that might motivate your employees to take an interest in learning.
Assess Retention Rates
When you train your employees, you want them to remember what they learned for the rest of their time in the company. For example, you would educate employees on the software you use during onboarding. What is the use of this training if the employees forget how to use the technology and constantly pester their seniors with silly queries?
It leads to low productivity and proves that your training efforts were in vain.
The good thing about LMS is that you can determine the retention rate by looking at the employees’ assessment scores.
You should compare the retention rates to see if your employees remember what they learned in the training after you started using LMS.
Cost Vs. Results
The easiest way to analyze the ROI is to find the difference between the money you invested and the results you saw.
Your investment (money) would include not just include the tool but also hosting, instructor fees, development and management costs, etc.
Your results include the new projects that came your way, your revenue growth, improved employee performance, more sales, etc.
How Much Time Was Saved
LMS can save a lot of your time. Once the initial planning and development are done, you must track progress, monitor performance, and update the course when required. Although this is true, if you choose the wrong LMS, you might have to waste a lot of time with technical difficulties. Thus, choosing a suitable LMS is crucial.
Compare the time you used to invest in conducting the training before using the LMS and after. It should give you a clear idea of whether the LMS was able to save your time or not.
Employee Turnover Rate
Although many reasons influence your employee turnover rate, learning and development opportunities are significant contributors.
LMS can help with increased engagement, skill development, better collaboration, and improving the work culture. All these factors also determine your employee turnover rate.
Take a look at your prior records and make comparisons. Has the rate of employee turnover decreased since you began utilizing an LMS? If yes, you have managed to boost your ROI.
Tips To Improve Your ROI
After using these methods, if your ROI of LMS is low, you should try out these essential tips to give it a boost.
- Make your LMS accessible on mobile devices
- Use third-party integrations to save time
- Collect feedback from your employees
- Ask your instructor to work on this feedback
- Make the course engaging, entertaining, and fun
- Include team activities in the training
- Work on user experience
Bottom Line
If you have just started using an LMS, you might want to see if the LMS is worth it or not. And the way to determine this is by analyzing the ROI. A good LMS should be able to give you enough quantitative data to measure the ROI using different methods.
You can even consider altering your training program to maximize your ROI.
If your ROI is negative, which means the cost is more than the results, you should consider changing your current LMS.