Training Increases Business Revenue--It Takes Money to Make Money!

A Case for Training's Return on Investment (ROI)

Surprisingly, many managers in the tourism sector do not think training employees provides a return on investment for their organization.

We know that training is a good tool for improved human resource practices within organizations, but when it comes to recognizing the monetary benefits many of us are on different pages. Some employers view training strictly as a cost with no attached value. If we look to another business function—marketing, we can draw some parallels to the human resource function and understand there may be a return on investment for training your staff.

Organizations often engage in marketing to expand their customer base and increase the amount of money people spend on their goods and services. Marketing professionals outline their strategic plan and budget for items, such as advertising, with the intention that people will see these advertisements and spend money within their organization. If marketing plans are executed properly, the extra revenue the company earns will exceed the cost of marketing and a return on investment can be seen.

Can we use this same analogy when training our employees?

The same concept the marketing department illustrated for their advertisements can be applied to the human resources department (or function). In addition to budgeting for advertising, let’s create a budget for training. Because most organizations aim to increase revenue, let’s aim for the same outcome: customer expenditures. To illustrate further, in the examples below, let’s see how training has the potential to affect ROI.

Example #1 – An organization that does not support training in the workplace.

A customer walks into an organization in the accommodation industry, which she found in an advertisement on the Internet. The customer walks up to the Front Desk Agent, and is not greeted with a smile; in fact the Front Desk Agent is texting on a cell phone behind the counter. Instead of greeting the customer with a smile, the Front Desk Agent looks annoyed as the customer approaches. The customer provides her name and confirmation number. Rather than be discreet, the Front Desk Agent repeats the customer’s name and room number loud enough for everyone in the lobby to hear. As the Front Desk Agent hands the room key to the customer, she resumes texting behind the counter.

Example #2 – An organization that supports training in the workplace.

A customer walks into an organization in the accommodation industry that was referred to her by a friend. The customer walks up to the Front Desk Agent, who greets her with a smile and asks: “How may I help you today?” The customer provides her reservation information and is immediately given a directory of the hotel services, highlighting the spa that is world renowned and a restaurant that is known for its great wine menu. The Front Desk Agent provides the customer with her room key and directs her to the elevator. Before the customer leaves, a Guest Services Representative offers to carry the customer’s luggage and the Front Desk Agent encourages her to call “0” for more information or assistance. The customer is escorted to her room and proceeds to book a reservation for the restaurant that night and a massage in the spa the next morning.

In Example #2, both the Front Desk Agent and Guest Services Representative are trained professionals who know that providing customers with an experience that leaves them wanting more will increase sales, sometimes even more than a great advertisement in a magazine. While an advertisement may entice people, your employees can provide an experience that will not only keep them coming back, but will encourage them to refer your business to family and friends. More revenue means increasing your ROI.

Does your organization train employees to ensure that your customers are getting the experience they're looking for?

We’d love to hear your feedback! Let us know if your organization measures return on investment for training.