Sales Training Budget
How to Budget for Sales Training
Sales Training Budget: Getting Started
Employee development is more critical than ever as our incoming sales reps have less experience and fewer skills, yet our customer expectations and the technology we’re required to master are on the rise.
The best practice is to budget for sales training each year alongside your normal recruiting and tech line items. Now more than ever, “Training is something you do, not something you did.”
Don’t be one of the sales leaders who wait for a budget surplus, a BHAG goal, or a massive GTM shift to train. Today’s generations prioritize career development ABOVE their paychecks.
READ: Why You Need a Sales Training and Enablement Budget
So hats off, leader! You’re ahead of the game by searching for annual sales training budget amounts in this blog.
Why Budget for Sales Training?
Because many of us slashed or froze headcount and training budgets in 2023 and 2024, we recommend that planning for 2025 should be based on 2022 budgets. Before the economic uncertainty, we saw organizations spending more on employee development. This was driven by increasing customer expectations, shrinking pools of available talent, and a resounding demand by the employee base.
In 2022, the average company budgeted approximately $1200/per employee for professional development annually – up about 14% over the previous year. Keep in mind, that this average number is for all employees – from forklift driver to CEO. Not a surprise, but services and manufacturing industries reported the largest budget increases, whereas government, education, and nonprofits largely stayed the same or decreased.
Growing customer demands = growing training demands.
We expect to see these numbers come down in the 2024 Training Industry Report with the widespread layoffs, but we anticipate a resounding rebound in 2025 for two reasons:
- Sales leaders saw the evidence of their untrained workforces in 2023 and 2024. Our time to ramp to quota is still longer than pre-pandemic (or non-remote) days, and the majority of sellers missed quota – even after trimming the fat. The statistics vary by resource, but in 2023 approximately 50% of sellers hit quota vs. the normal average of approximately 70%.
- The pendulum is shifting back to quality conversations over a cadenced quantity of messages. Many believe we’ve come as far as we can with the written cadence, and all evidence now points to the need to refresh and improve the human interaction between prospect and seller. This is underlined by the overwhelming feedback that sellers today lack phone confidence and business conversation skills – two attributes we can’t solve with technology alone.
How Much Does Sales Training Cost?
Average spend on annual training per FTE is 1-3% of the total annual budget or 2-5% of the salary budget. That’s about $50.00 per $1000 of salary. If your team is new, only remote, shifting, or hasn’t had hands-on sales development for six months, aim slightly above average:
Six percent of salary = $60.00 per $1000 of salary
$100K employee = $6000/year | $60K employee = $3600/year
Remember, the benchmark is an average across all industries and employee types – landscapers, fast food workers, and CPAs. If customer experience and loyalty are critical to you, go higher. And, if your industry is complex or your product is early in the lifecycle, go higher. If you’re competing like mad for talent, go higher.
One source says sales jobs average 20% higher than the industry average, meaning 6-7% of their salary.
At Factor 8, our per-employee costs (for under 1000 employee companies) to outsource one year of sales development (onboarding to upskilling) comes in at the middle of this budget range – depending on services and other factors – again validating the research.
How Often Should You Train Your Sales Team?
In 2022, the average organization provided about 5 hours of training per month or a total of 64 hours a year. If you haven’t trained since new hire onboarding, you’re lagging well behind average. This number is up since 2021 when we averaged 4 hours a month.
We theorize that this increase is driven by two sources: Remote workers and ineffective remote training.
With most of our teams still working remotely or hybrid, we are hit from two sides when it comes to learning:
- We’re missing the “OTJ” passive shadowing opportunities of overhearing our peers.
- The ineffectiveness of remote training as compared to in-person. “Zoom fatigue” is real and an unengaged learner does not make big behavior changes (kind of like an unengaged buyer).
Factor 8, provides sales training for virtual sellers and sales managers and we do so both in-person and virtually. I can tell you firsthand that it is taking us more remote sessions to get our normal increases in connection and conversion rate results we normally see in just a few hours when onsite.
By the way, like the last ten years, most companies are increasing budgets for manager training the most (although this group still typically falls underneath “onboarding” as the training department’s top priority).
If your enablement department isn’t prioritizing the development of your sales management team, consider allocating your budget to outsourcing this critical training.
How Many Sales Trainers Do You Need?
Most companies under 1000 learners employ 1 trainer for every 80-100 learners. The exception to this rule is for start-ups where we recommend budgeting for the headcount at around 50 learners if you’re on the way up.
When beginning an enablement effort, your team literally has everything to build. Digital selling skills can be outsourced, as can some systems training, but the product, services, process, and customer acumen training has to come from within. Remember, for every hour in the classroom, there’s someone spending between 3-10 hours creating that learning interaction (and please don’t get me started on the difference between training and telling! 😉)
If you’re in build mode, I recommend a management to director-level staffer and 1 year of time before your onboarding program begins to produce reps hitting quota in industry average timelines (around 6 months, depending on role).
Why Invest in Sales Training?
Employee development and career advancement are 2 of the top 3 things millennials search for when accepting jobs. And only 50% of reps think their company provides them with the training they actually need to be successful.
More great news, the American Society for Training and Development cites companies who invest in training their people achieve a 24% higher profit margin compared to those who don’t invest.
It’s much more expensive to recruit and replace (on average 200% – 600% of salary vs. 6% – 7%).
Justification and Benefits of Sales Training
Here’s some great research to help you justify the spend:
Both HR Magazine and ATD sites double the profit per employee that prioritizes training (priority = double the spend of not a priority). In fact, companies who invest a minimum of just $1500/employee will see 24% higher profits.
CSO Insights proved a 63% average improvement across teams where the manager was getting development (that’s average you guys…what would happen with an 85% increase on entire TEAMS?)
And great onboarding can cut a new hire’s time to quota in HALF. That could be 1-2 extra months of productivity on an already-shrinking rep lifespan. Worth it!
Again, I can validate these findings. Over twelve years of partnering with BDR, AE, AM, and management teams across thousands of companies, we’ve seen lifts from 30-300%, with a huge percent of teams paying for the training before it’s even over with increased leads, pipeline, close rate, etc.
If you need an ROI model to get the spend, I recommend showing a 15% lift over about 90 days post-training if you’re still doing event-based training.
READ: How to Measure Sales Training ROI
You can expect bigger spikes with face-to-face training, but longer-sustained skills with a long-term blended approach. Overall, if you can’t show at least a 5-10% lift, it probably isn’t worth the investment.
Not sure it will work? Do it anyway and measure the results. Remember this?
A recent Ambition study surveyed sales reps about training and 98% of them said they would stay with a company indefinitely if they got ongoing development.
IBM recently shared that employees who feel they cannot develop in the company and fulfill career goals are 12X more likely to leave.
Truth is, sales reps know less than they did 10 years ago and our customers expect more. If you haven’t added a development line item by now, you’re in trouble. If you haven’t increased it in the past five years, it’s time.
And, if it’s been more than a year since you provided training, increase your number.
Need help building your sales training & development plan?
Click here to watch our session on “How To Build Your Training & Development Plan” to learn what industry spend is for sales training, the critical skills you need for every sales role, how to partner with your sales training organization, and more!
Is sales training included in your budget?
Contact us today to learn about our customizable virtual sales training programs
available for reps (and managers).
10+ Strategies to Show Revenue Enablement & Sales Training ROI [Webinar Recording]
10+ Strategies to Show Revenue Enablement & Sales Training ROI
[Video Recording]
Meet the Speakers
Lauren Bailey
Founder
Factor 8 & #GirlsClub
Lauren Bailey, known to many as “LB”, is a sales leader, enablement leader, and entrepreneur and founder of 3 successful brands: Factor 8, providing front-line job training for inside sellers and managers, The Sales Bar, a subscription-based virtual sales training platform, and #GirlsClub, a community and development program helping more women earn leadership positions in sales.
Her mission is to change lives by supercharging people’s careers and helping them love coming to work. When we feel confident and successful at work, everything is better, right? Known on the speaker circuit for her “No B.S.” style and spunk, look for LB to make you laugh, keep things moving quickly, and help you take immediate action with her tactical tips and insights.
Deniz Olcay
Vice President of Marketing
Allego
Deniz has had a sales-centric background from the start, including working in the sales training industry at RAIN Group where he was directly responsible for creating learning programs to help sellers sell more effectively.
In his previous role at Dun & Bradstreet (D&B) he was the VP of Product Marketing, managing a portfolio of 12+ products representing over $650M in annual revenue. He played a pivotal role in training a 500+ person sales team and is intimately familiar with the challenges of arming sellers with the knowledge and tools to be successful in selling virtually.
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How to Measure Sales Training ROI
Training geeks will tell you there are four traditional ways to measure sales training ROI and the impact it has on an organization. It’s called “The Kirkpatrick Model.” In my experience, this model only includes two measurements that sales leaders actually care about. I’d like to add a few alternate levels to consider.
Level 1 is Learner Feedback. The smile sheet has more to do with liking the trainer or getting fed than the impact, and the quiz results are more about short-term memory than anyone’s understanding of how to actually apply skills.
Level 2 is Observation. What happens on the job? It’s observed behavior change, and it’s subjective. “Manager, did Bob use his new skills?” Manager: “Um, I haven’t been listening to Bob all day long, boss. I have 14 people and 200 emails to read…” You get the struggle.
Level 3 is Information Retention. New skills should be fresh in their minds and easy to execute the day after training, but what about 2 months later? 6 months? 1 year? Over time, people are known to fall back into bad habits. Truly valuable training provides easy-to-use (and memorable) skills that stick with the learner over time.
Level 4 is ROI. Calculate sales training ROI by taking the results that went up and dividing by the cost of the sales training. Naturally, there are flaws here, like, “When do we stop measuring?” “What about soft costs of missed revenue?” “What if results fall off?” and “Training wasn’t all we changed that quarter!”
When I advise sales training leaders, I help them solve it all with two little words:
“Contributed to”
Last quarter, new vendor training contributed to a 25% increase in meeting close rates and a 34% increase in show rates. Extrapolated over the period of a year and using our standard meeting to deal close rates, that means an additional 245 meetings and 66 closed deals or $3.1 million in revenue. That’s a 31x return on investment of the $100K training investment. (That’s also expressed 3,100% folks and it’s BIG. It’s also a real case study, BTW).
So, sales training ROI is a big deal. When calculating, the bottom line is nearly always revenue or profit, but there are little wins along the way. Look for bumps in any of the following (and celebrate!):
- Talk time
- Conversations over 2:00 minutes
- Close percentage
- Show rate
- Pipeline velocity
- Average deal size
Combine these as I did over a time period of a year and the numbers get big fast. Even a modest increase in a close percentage or deal size will bring double-digit ROI.
Now for the new stuff. In today’s climate, there are 5 more sales training ROI measurements I advise you to start tracking:
- Applicant increase
- Tenure
- Promotion rate
- Employee satisfaction (a KPI to tenure)
- Ramp time
Yes, nearly all of these are about helping show the link between the career development you offer the new generation of sellers and how many of them come to work for you and stay.
If you’re offering ongoing development, a training budget, a certification, or a partnership with a premier vendor, ADVERTISE THAT (you’ll attract the new generation of sellers!). Then start tracking the average number of applicants over the previous months, but don’t compare pre-COVID (that’s apples vs. bacteria).
Great development keeps people in companies longer. So count what percentage of promotions are now happening internally and whether your investments are moving the needle of employee satisfaction.
There’s a direct correlation between employee engagement (and happiness) and their performance. If they’ve been with your company for 6 years and are consistently meeting or exceeding quota, chances are they’re happy in their role and less likely to leave. Have they missed quota a few times now, or are they not as engaged with their customers as they once were? Then it might be time for a 1:1 to see what is going on behind the scenes.
Finally, my holy grail: ramp time. How long does it take a new hire to get to quota? This critical number not only impacts revenue right where it counts but also determines whether a rep stays or not. Here’s an insider tip:
People who feel successful at work will keep coming back to work.
No, not Earth-shattering, but it might be if you reverse-engineer it. 20 years ago I revamped a new hire sales training program for a computer manufacturer. It was taking reps 9 months to hit their goal. Ouch. (Best practice is 3-6 months and it’s getting longer – we’re now approaching 9 months again) Yes, we took out a bunch of filler courses and implemented my “Just in Time” training approach, but we also did something a little sneaky. We lowered the bar. The VP of Sales and I saw the mass exit happening at six months and we worked together to get reps PAID if they were on track by this point in time. The result? We cut the turnover in half.
Help people win, and they’ll stay and keep winning.
Long story long, employee development has an impact on more than just revenue. There’s a reason training investments are up over 30% as an industry over last year. And if you don’t already have your enablement team running regular reports on these new stats, I suggest you get started or you’ll be late to the party. It may feel like we’re in a war for talent, but I assure you this is only the battle. Use your training investments strategically to attract, keep, and promote your people because this precious resource will become only more scarce.
Want more information on how to measure sales training ROI?
Contact us today to request information on our customizable virtual sales training programs
available for reps (and managers).
10 Signs Your Sales Team Needs Sales Training
Your budget is limited. Your needs are not. So when do you know it’s time to invest in sales training for your team?
READ: New Funded Sales Training Program
Here are some easy benchmarks and warning signs to help determine if your sales team needs sales training:
1. Your New Hire Training Doesn’t Include Sales Training. I know, you hired for sales talent. You shouldn’t need to train them. If I had a nickel every time I heard that… Trust me, they need training. Why? Their old company did it differently, the sales motion was slightly different, they love a different methodology, and maybe they were loyal sellers but not great ones. I’ve had 15-year sales veterans in my virtual sales skills classes and often their learning curve is the steepest. (Head here for more info on what good virtual sales training looks like)
2. The Last 4 Classes Were Product Related. If you’re thinking: “I do training all the time!”, I invite you to check the content. Reps are used to getting product/service updates and company updates, but not skill refreshes. Sales skills should be taught in onboarding AND at least once a quarter ongoing.
Think of sales calls as “game day.” How often did you practice before then?
3. There’s Been a Strategy Change. About half of our clients come to us because it’s been a struggle to change behaviors now that ______ has changed. Sometimes it’s a go-to-market strategy, client coverage, or an addition of a product or service line. You get it. What seemed simple in the boardroom can prove crazy-making when trying to align 50 junior reps and their managers. Just remember, telling them in the meeting only opens the door. Most employees don’t have the capacity nor the inclination to then translate how this will change their approach, their conversations, their goals, etc. Tell, TRAIN, then coach.
4. You Just Listened to Sales Calls and Your Ears Are Bleeding. If you’ve recently implemented a conversational intelligence tool like Gong, Chorus, or ExecVision, you probably thought it would be fun to listen to the customer’s voice. By the ninth call recording, I’m willing to bet you summoned your team leads and training liaison and had a serious talk about rep skills. Enter professional sales skills training.
5. You’re Losing Gen Z or Millennials. If the last 3 exits or thanks-no-thanks job rejections were Gen Z or Millennials, check your training package. A recent article cited “opportunities for development and advancement” as the number one requirement for these job seekers. New hire product and systems training won’t cut it if you want to attract and keep today’s talent.
Are you considering alternate hiring pools and need to teach former teachers, retail workers, vets or tradespeople how to sell?
Assign this task to the professionals, your HR trainer is probably not equipped for that heavy overhaul. Alternatively, congratulations on your brilliant strategy. Great training programs will open multiple hiring pools to you that won’t be open to your competition, and I love finding behavioral traits in an existing hire rather than teaching the skills to someone new!
6. It’s Playbook Time! If you’ve grown to the point where it’s time to capture best practices and “how a bill becomes a law” at your shop, I’m guessing you have more than 10 reps but under 50 and you’ve been selling between 1 and 3 years. It’s time to document! Before you do, grab some new best practices from a professional sales trainer. The perfect time is after draft one and before it’s finalized. Invariably, clients who just finished their playbook have gone back to update it with our skills and strategies. If you’re not sure which to do first, I do recommend starting the playbook so that what’s already created can be standardized and uniformly improved with training.
7. Flat Growth. If you’ve used the same conversion ratios the last 2-3 times you’ve done headcount projections, it’s time for some training. In other words, rep staffing isn’t always a quantity equation, you should bank on quality improvements as well. Not sure? Ask yourself how many heads you could save in your budget with a 15% improvement in your top-line conversion metric (whatever that may be). We regularly clock 30-70% improvements allowing sales leaders to lower sales headcount! Shift that spending to your “want” list instead!
Now let’s check in on manager training. Most companies invest in new hire training, then ongoing rep training, and maybe finally manager development. Makes sense, there’s only one for every ten or twenty reps, right? Unfortunately, most reps we promote to manager fail in the first 24 months (50-70% according to the Corporate Executive Board), and they can take down great customers AND reps with them. Here are three signs to check:
8. Your Turnover Is Over 65% or Increasing. If you don’t have annualized employee turnover/exit rates on your dashboard, get them – and by manager. Your star sales managers are keeping their teams and promoting reps rather than suffering high attrition. This is a red flag that you have a struggling manager – perhaps one who hasn’t been taught how to lead people yet.
9. Low Employee Engagement Scores. Consider this a leading indicator KPI of attrition. It is NOT a buyer’s market anymore and if you have a great rep they are actively being recruited out. New generations demand ongoing development opportunities, so be sure you have a line item in your budget every single year. If not, you simply won’t be able to compete for talent.
10. You’ll Be Scaling in the Next 18 Months. If you’ve proven your concept (product fit and funding or even the voracity of digital sales vs. field selling), you’ll be planning to add headcount. When doubling (or more) in size, the critical path is your management team. Sales management training helps provide a consistent rep experience (teams will juggle), a consistent sales process, a consistent definition of what is a good call, consistent performance evaluation, and consistent hiring. I think you’re getting the keyword here. Consistency will allow for a smooth scale. Without it, you’re trying to replicate the Wild Wild West and you’ll experience a spike in rep (and manager) attrition 3-9 months after your hiring waves.
Bonus: Before you scale is also the right time to upgrade your onboarding experience. You’ll need a standard curriculum, testing, wave-based hiring, sandbox systems, and a professional sales curriculum. Do this before tripling the team’s volume in class!
If you’ve found a few signs that your team needs sales training, I hope you’ll reach out and have a conversation. We’re happy to help you decide what skills would help most even if you don’t ultimately outsource to us.
Ready to invest in sales training?
Contact us today to request information on our customizable virtual sales training programs
available for reps (and managers).