Michael Allen’s Practical Guide
Every organization depends on good performance. Effective and continuous training and motivation are essential for superior performance. Unfortunately, it’s easy to think that good training is not a difficult endeavor and should be done on a minimal budget. It becomes a checkbox, provides only half-hearted support, and the resulting training is not only ineffective, but also, ironically, incredibly expensive.
what? Is budget training expensive?
yes. Time is non-refundable. Learning that does not improve behavior wastes everyone’s time and costs money. It reduces productivity, frustrates learners, and wastes resources that could otherwise drive organizational growth.
Of course, simply increasing the cost does not guarantee high quality. To help you understand the cost of developing effective custom eLearning, we draw on decades of experience at Allen Interactions. There, we’ve encountered and successfully solved a variety of training and performance challenges in nearly every industry and with nearly every conceivable constraint.
The myth of one-size-fits-all pricing
Pricing eLearning development based on estimated learning time is traditional and convenient, but it also has flaws. Not all students need the same amount of class time to master a skill. That’s why we often use “per hour” cost estimates for clarity, but this assumes that all learners will have the same experience, which is simply not true. Adaptive learning solutions that dynamically adapt to individual needs and tailor content to strengths, weaknesses, and prior knowledge help all students, not just some, learn in the least amount of time.
Seating times can and should vary significantly. So how about using average expected seat time? Average time to complete does not indicate how much training you need to produce. What needs to be taken into consideration is the wide range of learner needs and providing an e-learning experience that is appropriate for the full range of learners, providing them with prior preparation and competency.
Adaptability is a game changer. Done right, eLearning can shorten your learning curve by allowing over 40% of participants to return to work as quickly as possible after training. Achieving this outcome requires advanced design and technology to adapt to different needs, but the associated development costs are easily paid for with greater outcomes. For example, in our work with AutoNation, adaptive eLearning increased productivity by 22% and generated $10 million in additional profits, while streamlining onboarding and reducing time away from the core business. We can develop a lot of great eLearning for a fraction of $10 million, and the profits come back to us every year.
Furthermore, once e-learning is developed, the cost of providing it is almost free. Unlike traditional training, which scales linearly with the number of people (think facilitators, venues, and travel), digital solutions can reach thousands or even millions of people with negligible incremental costs. This scalability makes e-learning ideal for distributed workforces. This can be seen in our Mary Kay Cosmetics project, which onboarded 3.5 million learners in over 35 countries and achieved 90% engagement and 80% completion rates through personalized microlearning.
Key factors influencing eLearning development costs
The main drivers of eLearning development costs are:
Readiness and complexity of content Range of trainee readiness Motivation for learning Appropriate instructional paradigm Required proficiency (considering the cost of performance errors) Frequency of performance (long-term retention requirements)
Why invest in performance-based eLearning?
Inefficient eLearning is a hidden cost killer. It leads to lack of knowledge, lack of skill upgrades, lost productivity, and potentially millions of dollars in opportunity costs. But a well-designed learning experience can help all learners learn faster, achieve scalable delivery, and gain solid proficiency with measurable outcomes.
As the conceptual table below shows, as training effectiveness increases, the cost per learner decreases. While it is true that initial investment costs increase, the lowest investment also ends up costing the organization the most.
However, it is important to note that this table is not primarily based on investment amounts. This is based on the effectiveness of digital training delivery. At levels 1 and 2, training has little effect. In reality, it doesn’t make sense to invest in tell-and-test or tutorial e-learning. The forgetting curve is steep and the learner has no opportunity to practice. Practice is essential to developing and retaining skills.
The best eLearning uses smart, adaptive simulations to provide continuous practice for weeks or months after initial training is complete. This ensures that learner performance is at its best and provides a foundation for continuous upgrading as workplace tools and procedures become more sophisticated.
Expenses and fees
In many organizations, especially large ones, responsibilities are divided among different people and departments. Some people are responsible for keeping expenses low, while others are responsible for service quality and sales revenue. This division of perspective often results in training being viewed as a cost, as opposed to an investment in equipment and facilities. But few investments are as important and valuable as investing in people.
Yes, training is an investment. It’s an investment in human resources. The result is not only more efficient and effective performance, but also increased staff retention, where good performance earns personal rewards and increases loyalty to an appreciative organization.
On the other hand, inadequate training is costly. In fact, poor quality training is the most expensive and least affordable training. The result is errors, customer churn, product returns, on-the-job injuries, high employee turnover, and even lawsuits. The need for additional repetitive training increases to counteract the ineffectiveness of previous training.
Create eLearning that changes behavior and drives success. – Dr. Michael Allen, CEO and Founder, Allen Interactions Inc.
One step further
This buyer checklist summary is excerpted from my book, Rethinking eLearning: What Works and What Doesn’t. What is missing?
They are designed to help buyers of custom-built or off-the-shelf eLearning make smart investments.
Training buyers don’t need to have all the skills an instructional designer or developer needs to create great eLearning, but they do need to know what to look for when specifying criteria.
Allen Interactions Co., Ltd.
Our heart and soul is building custom learning solutions for learners that are meaningful, memorable, and motivating.
