Proving that Your LMS Fuels Business Growth

Over the four years since implementation of the LMS, the total of three measures of value —increased sales, reduced returns, and cost savings—was $46.2 million.

By Matt de Feo, Senior Vice President, Sales Training & Recruiting, Techtronic Industries Inc.

Techtronic Industries Inc. (TTI) is a $3.7 billion global company operating on every continent with nearly 20,000 employees. Since 1985, the company has grown rapidly by focusing on excellence in the design, manufacture, and marketing of portable power products such as Ryobi and Milwaukee Electric Tools. When I joined TTI in 2006, I was determined to ensure the same focus on excellence applied to learning and development, too.

My approach was simple: I wanted to have an impact. I knew I would need learning technology to help in this, but I also knew I didn’t want to waste my time making different pieces of learning technology work together. As senior VP of Sales Training and Recruiting, I had been recruited for my focus on adding to the business. I set a strategy: First, define the business goals, and then find the technology to help achieve them.

The business goals became very clear in 2007 when TTI announced a corporate strategy to increase market share and profits worldwide. Success relied on increased speed in product development and sales. Success also relied on knowledgeable, well-trained staff. It was essential that our learning system supported this strategy.

I’m delighted to report that TTI succeeded in reaching its corporate goal—with our learning management system (LMS) playing a significant role in that success. Since implementation, it has added $46.2 million to the business. The cost of implementation? Less than $1 million.

Getting Learning Online. Fast.

TTI’s need to get new products to market fast meant a corresponding need for highly skilled sales, marketing, and merchandising teams. The existing offerings—classroom training, CDs, and binders—couldn’t keep up. At the time, fewer than 50 percent of the sales force undertook training. We decided to take training online.

We needed a single learning system for 20,000 employees, which could be accessed, instantly, worldwide. It would have to deliver short courses, assessments, videos, and reference materials to enable us to support TTI’s speed of product development.

We didn’t want half a system. We wanted an integrated platform that would allow our L&D department to focus on creating and delivering courses with impact rather than ensuring different systems talked to each other. We decided it had to house the LMS, a Learning Content Management System (LCMS), and an integrated authoring tool. And it had to be capable of scaling globally.

A Big Task

In 2007, following a review of 12 possible vendors, we selected CERTPOINT Systems’ learning platform, CERTPOINTVLS. Not only did the LMS over-deliver against all our needs, it had one unique feature essential to our success—Content Creator , the platform’s integrated content tool.

With CERTPOINTVLS, we could create, deploy, and track courses all in one system with a small staff, essential for supporting TTI’s new, rapid product launches. Thanks to the all-in-one platform (LMS, LCMS, and authoring tool), we were able to capture and deliver proprietary content, fast, with reporting and course management all in the one system. Beyond technical support, we also wanted a business partner focused on helping us deliver results. We got that, too—a chairman who personally helped us through the inevitable ups and downs of launch and beyond.

Within six months of CERTPOINTVLS implementation, more than 2,000 North American employees were regularly trained online. The learners come from across our U.S. companies, from different roles—engineers, management, sales, and marketing. Within the next two years, the system will roll out to 20,000 employees worldwide.

Linking Learning Technology to Sales

TTI’s strategy worked. 2011 sales rose 11 percent. My conservative estimate is that just under a fifth of this—2 percent—is a result of training.

That was impressive, but as part of our new approach to training for organizational effectiveness, I also set to work on the handling of returned goods. Every manufacturer has returns, and it is part of TTI’s commitment to quality to replace truly faulty goods promptly. Yet, I felt our rates of return were too high and were adversely affecting margins.

We discovered that employees were insufficiently aware of how returns should be handled. So, our solution was to focus on the practical.

We executed a detailed online training program via the LMS to hundreds of staff. We established context, explaining how returns affected the business. We listed 10 reasons why returns come back when they shouldn’t. And we checked that learners were clear about what this meant in terms of practical action at work.

As a result, the rate of goods returned fell by almost half from 4 percent to 2.2 percent within two years, saving $33 to $35 million.

Showing the Value

Increased sales, reduced training costs (less classroom training), and operational improvements (reduced return rates) all have measurable effect and monetary value that are crucial when it comes to demonstrating LMS value. We were able to demonstrate all three.

Improved sales: In 2011, against tough global conditions, TTI increased product sales by 11 percent, increased profits on those sales by more than 70 percent, and launched 300-plus new products. I estimated a fifth of the growth—2 percent—was due to online learning.

Improved operations: TTI’s ability to reduce returns saved $33 to $35 million over two years.

Cost savings: While TTI now is training more people than ever, classroom courses have been reduced by about 33 percent, which alone has covered the LMS investment cost.

Has TTI’s investment in the learning platform paid off?

One word: Yes.

Over the four years since implementation of the LMS, the total of three measures of value —increased sales, reduced returns, and cost savings—was $46.2 million. The investment in the learning management system software, implementation, and consultancy over those four years was less than $1 million.

The LMS has more than justified its costs across all three measures of impact. And it enabled training to support the company drive for increased sales to grow the top line, and lower costs for higher profits.

By linking training to strategic objectives, we have ensured that learning was, and continues to be, supported by the organization. By being conservative in estimates of the share of training in impact, credibility also has been ensured.

In conclusion: We were able to reach our goals, thanks to having the right technology on board to support the business, and thanks also to my unique role across HR, training, sales, and marketing. A great example of how all these aspects come together to drive business success.

Matt de Feo is senior vice president of Sales Training & Recruiting at Techtronic Industries Inc. For more information, visit http://www.certpointsystems.com.

Lorri Freifeld is the editor/publisher of Training magazine. She writes on a number of topics, including talent management, training technology, and leadership development. She spearheads two awards programs: the Training Top 100 and Emerging Training Leaders.