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What does ROI mean in digital learning?

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27th August 2020

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What does ROI mean in digital learning?

Digital learning plays a significant role in many organisations. So it doesn’t take long for the top dogs to start asking about ROI. Let’s explore what this really means in the world of digital learning:
 

What does ROI mean?

ROI (Return on Investment) is used to evaluate the efficiency of an investment. This means it measure the return of an investment, in relation to the cost of investment.
 
So, in a digital learning context, this means understanding how much is the organisation getting back from your digital learning efforts. Then measuring this against the cost of developing your content.
 
It’s usually fair easy to measure how much it costs an organisation to develop digital learning. You’ll have your cost of your learning platform, plus the cost of content development. If you’ve outsourced development, it’s slightly easier. If not, you’ll have to calculate how long development took, and how much that cost your organisation. Either way, calculating cost of eLearning, is usually a lot easier than calculating the return.
 

Calculating ROI

The calculation for ROI is:
 
ROI = (Current value of investment – Cost of investment)/Cost of investment
 

The Kirkpatrick Model of Evaluation

Many L&D professionals will head to the Kirkpatrick model, when it comes to any type of digital learning evaluation. Kirkpatrick’s Four Levels of Training Evaluation is broken into four parts:
 
  1. Reaction
  2. Learning
  3. Behaviour
  4. Results
 
Though beneficial for L&D professionals, levels 1-3 are used to evaluate the benefit of the training from the learners perspective. It’s level 4 that helps us evaluate the business impact, and the information we’ll include in our ROI calculation.
 
Focusing on results allows us to determine the behavioural change from the learning, and the impact this had on the organisation. LinkedIn Learning give the example of management training, which summarises level four very well:
 
“Have your managers improved? Have employee surverys shown an improvement in manager effectiveness, thereby reducing turnover?”
 
From this – you can attribute a cost to the benefit of the training, i.e. a reduction of staff turnover and more efficient staff. The number you attribute to this will be the “value” part of our ROI calculation.
 

Why is ROI important?

 
Simply put, ROI in digital learning gives your organisation a numerical value of its success. We know learning is critical for organisational growth, employee happiness and development. But when it comes down to it, for organisation’s to invest, they need to see the benefit to the bottom line. Don’t let your hard work go to waste, by your exec team assuming it’s just a ‘nice to have’. Prove the benefit of your work – and you’ll see the perspective of the Board change in no time.
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