e-Learning ROI

In e-learning, you need good ideas and a fair amount of creativity. Sometimes, however, it just takes bare numbers to measure the success of e-learning. The key performance indicator: e-learning ROI.

I am a creative mind, numbers don’t have to interest me.
With this (illusory) thought, many of us started our professional lives after completing our education. All those who have subsequently become active in a large company or have founded a company themselves, this sentence has most likely fallen on their heads several times by now. The entrepreneurial world does not work without numbers. Key figures are part of the business management basics. And that is hardly surprising: after all, a company’s stakeholders want to be able to see at a glance whether investments are worthwhile. The key performance indicator for this is ROI. These three letters stand for “Return on Investment”. As the name suggests, ROI allows the success of a company to be measured by comparing profit to capital employed. The corresponding formula is:

Business economists will probably throw their hands up in horror, as there are many other ways to calculate ROI in more detail. For our purposes, however, this basic formula should suffice. Namely, we want to show that ROI is also essential for measuring (and justifying) e-learning interventions.

The e-Learning ROI works the same way as its relative from business administration. It compares the profit with the costs and provides a percentage figure that gives information about the success or failure of an e-learning measure. So the formula for calculating e-Learning ROI is:

This formula may still seem a bit abstract. Here is a simple example to illustrate the point: a medium-sized company has decided to run its onboarding processes on an e-learning basis. The cost of the e-learning onboarding was 15,000 euros. The use of digital onboarding freed up time and personnel resources that could be deployed elsewhere. This enabled the company to generate additional sales of 21,000 euros. Meaning:

The e-learning ROI in our example is 40%. Or to put it another way: every euro invested in e-learning is worth 1.40 euros.

A key component for calculating e-learning ROI, the cost of an e-learning intervention, is relatively easy to determine. On the one hand, there are costs for the concrete offer, for example an e-learning onboarding, the costs for additional purchases (hardware, software, etc.) and the costs for the learning management system. It gets more difficult when it comes to putting a price tag on e-learning success. We would have a few tips.

Depending on the area of application, the value of an e-learning measure can be measured by different figures. The value of good e-learning can be seen, for example, in

• increased sales figures: Let’s assume a company makes an average of 180,000 in sales per year with product sales. In the year in which e-learning product training was established, sales increased to 210,000 euros. The relevant figure for calculating the e-learning ROI here is the difference: 30,000 euros.
• If e-learning onboarding has saved 200 hours per year that employees would have had to spend on training new employees, multiply these 200 hours by the hourly rate of the employees and you get a meaningful figure for calculating the e-learning ROI.
• a reduced fluctuation: If employees stay longer in the company due to the use of e-learning, the desired number is calculated from the sum of the savings resulting from reduced HR and onboarding activities.

At the same time, however, care must always be taken to ensure that only those figures that actually result from the use of e-learning are accepted as additional revenue. For example, if a company has introduced e-learning product training and has hired new sales managers in the same year and the sales figures have increased significantly, it must be calculated which amount is really attributable to the e-learning.

In addition to the values presented, which can be calculated relatively clearly, there are also those that cannot be measured precisely to the euro. Let’s assume, for example, that a company has increased its image in the industry or strengthened the cohesion among its employees through the use of well-done e-learning. Such “soft” factors cannot necessarily always be represented in figures, but should nevertheless not be missing from any report. And that brings us to the last important point: when it comes to reporting e-learning success, e-learning ROI is only one side of the coin. The soft factors mentioned must be communicated as well as the fact that e-learning is a long-term investment and will only pay off completely in a few years – but then all the more so. Of course, a comprehensive report can also include other e-learning KPIs. We have discussed what these are and how they can be used sensibly in a separate blog post.