How to Budget for Sales Training

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Employee development is a critical part of attracting and retaining talent, but only a fraction of leaders include an annual development line-item in budgets. We wait until we have a budget surplus, a BHAG goal or change to surmount, or a massive hiring goal to outsource or hire training talent. 

It’s sort of like call coaching for our managers, right? Employee development isn’t a fire drill (Panic! They don’t know something!) and often gets put off even though we all know the importance.

So hats off, leader! You’re ahead of the game by searching for annual sales training budget amounts.

How much?

Average spend on annual training per FTE is 1-3% of total annual budget or 2-5% of the salary budget. 

That’s $50.00 per $1000 of salary.

$100K employee = $5000/year  | $50K employee = $2500/year

These are averages across all industries and employee types – forklift drivers, CEOs, high tech, landscaping, etc. If customer experience and loyalty are critical to you, go higher. If your industry is complex or your product is early in the life cycle, go higher. If you’re competing like mad for talent, go higher.

How often?

The average organization provides about 4 hours of training per month or a total of 45.5 hours a year. That’s right, if you haven’t trained since new hire onboarding, you’re lagging well behind average. 

My company, Factor 8, provides sales training for virtual sellers and sales managers across all industries. There’s a complexity to the sale, a talent pool in high demand, and a real opportunity to differentiate with a better customer experience. Our per employee prices for a full year of ongoing sales development fall in the mid to upper end of this range, so I can validate the research. 

Why?

Employee development and career advancement are 2 of the top 3 things millennials search for when accepting jobs. And 50% of reps think their company provides them with the training they actually need to be successful.

We spend 5-10x a salary to recruit and hire someone and then a minuscule fraction of that to help them be successful and stay. It reminds me of this: 

Hiring and keeping employees are two ends of the same boat everyone. I picture recruiting and training as our passengers here!

Justification:

Here’s some great research to help you justify the spend:

Both HR Magazine and ATD site 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. 

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.

Want more insight on how to budget for sales training?

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!




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