How To Calculate the ROI of Your LMS

Last Updated: July 24, 2022
Learning management system is a vital part in a company. Here are several factors to help you determine what right LMS fits your company and to calculate your ROI.
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Those companies that understand the reasons behind finding ROI will always be one step ahead of their competitors. When considering ROI, it is important to take LMS into account as well. Because learning and training play a vital role in the development of the company. 

Consider LMS that have features to improve ROI and are user-based when it comes to pricing. For instance, Docebo pricing is based on the number of users, that is, you will have to pay per user. This saves costs and also we can customize it according to users. LMS with certain features and this type of pricing module can provide ROI for your company. 

Over the past year, a number of LMS providers have popped up in an effort to keep up with the growing demand from educators and other institutions. Several education and business institutions are present in the country that are providing quality education to the people and in some cases meeting their basic educational needs as well. 

As a result of the pandemic halting learning, a majority of institutions have adopted various technical solutions that assist in learning and attracting new students, such as automated marketing, predictive analytics, and real-time analytics. Learn management systems (LMS) are an essential part of an institution’s online presence.

With choices in abundance, educators need to evaluate the many LMS offerings available and ensure that digital investments are providing value to learners and returns on investment (ROI)? Let’s see how you can find the ROI of your LMS.

Training Expenses

The traditional method of training still involves the costs caused by offline, in-person training. These expenses include the cost of material required for the training, learning material, space required, fees of the trainer, and such expenses required during the training period. 

training

To limit or reduce these costs, we use LMS that will help in cutting all these required expenses. Observing the change in these expenses can help you understand if your LMS is effective for your business or not.

Time Savings

LMS has various features that make the learning process easy. It also helps save the time of learners as well as instructors. This is achieved with the use of features including images, videos, graphics, and other multimedia content. 

You can also use feedback from learners and instructors about the time spent on this thing. If your LMS is not saving your instructor’s time or is not helping learners comprehend, it needs to be evaluated. 

You can manage vast amounts of data efficiently when you use an LMS. Your employees’ skills can be assessed with this information. If you want to quantify the difference between time savings and increased ROI on your LMS, then you can compare training hours for online and traditional training. 

This calculation lets you determine how much you’ll save after cutting down on long, wasted conference room time. You can also compare the time employees spend watching online training versus offline learning sessions.

Reduce Your Turnover

Yes, you have invested in LMS and have paid an expensive price for its features. But is it worth it? Could you save money elsewhere by using your LMS? Or it may happen that using LMS or not, your expenses are the same. 

All these questions will make you understand the overall turnover of your business which will help you understand the returns your LMS is providing. Hiring experienced people is good for the company but you also have to pay them high salaries. Instead, use LMS for your current employees and train them for bigger roles. It will be more convenient financially.

Generate Revenue

LMS can be used for employees as well as customers. Therefore, the company can benefit from both of them, as they can bring more customers. With proper training using LMS you can train your business development associates to bring more customers. 

Similarly, with LMS you can reach customers remotely. These factors will contribute to generating revenue. Check out the change in your revenue after you started using LMS. If the change is positive your LMS is doing its magic. 

Higher Productivity

The basic function of an LMS is to provide effective results for learners and companies. LMS has better features that keep learners engaged, provide easy and fun learning, and has customization options for learners. 

The combination of these features should result in higher productivity for employees. It will be easy for you to see how much has changed from the progress reports of the employees. If the primary goal of having an LMS is not being fulfilled, you need to see what’s wrong with your LMS and why is it not working for you?

Compare Online vs. Traditional Training

When it comes to convenience and time, what role does the LMS play in employee training or student learning? Using a comparative analysis of online and traditional training, you can determine whether the benefits generated exceed the costs, or is it a worthwhile investment to buy an LMS. 

studying

To keep up with the times, educators must constantly upskill, and learners must develop practical skills. If these targets can be met with ease with the LMS system, then the institution will be in a better position. Data management and exchange must be efficient, and LMS systems should permit efficient distribution and monitoring, increasing ROI.

Retention Rates

The more training and development opportunities available to educators and employees, the more likely they are to want to stay at the institution. Having an effective learning management system allows educational institutions to retain teachers and allow students to continue developing their skills, thereby improving the quality of learning for students and increasing the institution’s competitiveness. 

The more satisfied students and parents are, the higher the chance of retention over time. Integrating a good LMS into a seamless learning experience is an essential component to the future of education. 

Marketing Time

Time spent on marketing is a crucial component of LMS ROI assessment. Adding or updating course content might be needed in the future, and the LMS should be able to handle that task without the need for third-party integrations and applications. 

If supplementary materials are regularly included and linked to the company’s learning management system, learners will not have to change from application to application and are likely to become familiar with the company’s LMS platform. As a result, less time and effort is required in marketing, since learners will be impacted automatically.

Cost Associated with LMS

As we’ve seen above, classroom training is more expensive than online training. However, it would not be fair to claim that an LMS is entirely free! You will incur expenses to run a Learning Management System once you integrate it into your system. 

An ideal platform is one utilizing cloud storage, in order to reduce reliance on in-house storage systems and technology. Additionally, maintenance and installation costs are eliminated. You do not need additional training because the platform is easy to operate. 

Although they are initially more expensive, their long-term value is unbeatable. It doesn’t matter how you calculate LMS ROI, you must account for money spent on administration, online training, content creation, and upkeep of your LMS.

Conclusion

It depends on several factors how you calculate ROI for your LMS. However, it is evident that you are able to achieve a higher return on investment once you eliminate costly training excursions off-premise. 

Furthermore, time, employee retention, and infrastructure are saved. We have already touched on how tangible savings can be displayed. By calculating an accurate ROI with the help of several metrics, you will be able to justify your platform choice to management.

The above factors can help you determine whether you’re using the right LMS to suit your company. There should be a major change in ROI that should be visible with LMS in your company. 

Using a Learning Management System can enhance the learning process, provide productive results, increase sales, and reduce overall costs for the organization. If these points are not changed in your organization, think again. 

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Written by Geoffrey Poole

Hey Geoffrey here, I’ve been into technology and the internet ever since I can remember. I enjoy writing articles about emerging technology, social media and business. But sometimes feel inspired to cover other topics too. My aim is to make complex topics digestible and easy for anyone to understand.