Inside The Sales Training Industry (Part 3): The Hard Numbers
As a result of some recent research ESR has done for client projects (working with sales trainers as well as buyers of sales training), we have some information we’re able to share with you.
Sales training revenue. Sales training revenue is off across the board, ranging from a 10% decline in previously rapidly growing companies, to 60% or more in established companies that had modest growth in previous years. We suspect that companies are just unwilling to admit a greater than 60% incline. However, we believe some companies are off far more than that.
Sales training volume. The volume of sales training, versus the revenue generated, is a different story. A very common complaint is the price pressure realized by sales training companies that are actually selling products/services in the marketplace. Some training companies have reported to us that while the number of total courses they have delivered has not declined sharply, fees have become significantly depressed. These companies report that they are retaining clients and even acquiring new clients, but with a significant sacrifice in margins. The decreases result from price and fee cuts to retain business rather than a lack of customers. We estimate that approximately 30% to 40% of training companies fall into this category. The rest of the companies, we believe, have just seen opportunities as well prices decline—a very risky combination.
The industry. ES Research Group, Inc. estimates that in 2009 the direct B2B sales training spend in the U.S. (including consulting and methodology work) is $US 5.5 billion, with $3.8 billion attributable to internal corporate resources. That leaves the outsourced/third-party spend at $1.7 billion or 30% of the total, down 44%. The overall training spend is shrinking and third-party sales trainers are getting less of the total investment.
Preserving profitability. A small but growing number of companies have figured out a way to preserve profitability in a period of revenue decline. They are leveraging new technologies to deliver their content and in addition provide, through sales-enablement technology, tools that will help salespeople be more effective by more efficiently managing their sales processes. More and more companies (and individual trainers) are delivering some or all of their course material as recorded sessions over the web, interspersed with occasional, live, web-based sessions. This allows them to substantially reduce instructor costs, as well as reduce customer costs for travel. Furthermore, although training virtually—at the students’ convenience—may lengthen the elapsed calendar time required for training, it will have low impact on the salesrep/students’ work schedule and travel budget. ESR believes that this mode of training will reduce delivery costs and thus position it well in this still depressed economy. This mode is built to last. Supporting technology is sound, and has been proven again and again to offer a high ROI for those companies who have been training their salespeople this way. It took the high cost of live, ILT (instructor-led training) prpogram delivery during a declining economy to further stimulate its adoption.
Conclusions: There is simply not enough sales training going on. And, as I pointed out above, it is declining.
Buyers of sales training must begin to explore, at the least, blended learning approaches for training their salespeople as well as reinforcing that training. Understand your requirements, find the right partner, and embark on a long-term approach to sales performance improvement.
Sales trainers have a choice: face the music or face the growing consequences. Whether you’re a one-person shop or a global provider, you must have a strategic, funded plan to leverage technology for learning and selling support for your clients. If you don’t have one, you’re risking being irrelevant to the changing face, age and learning preferences of increasingly diverse sales teams. And sticking your head in the sand doesn’t work. I’ve tried it.
Photo credit: © Geo Martinez – Fotolia.com
ES Research Group, Inc. (www.ESResearch.com) estimates that in 2009 the direct B2B sales training spend in the U.S. (including consulting and methodology work) is $US 5.5 billion, with $3.8 billion attributable to internal corporate resources. That leaves the outsourced/third-party spend at $1.7 billion or 30% of the total.
Filed under: Sales Training Companies, Technology, sales process, sales training
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Sorry, but in addition we need to be find creative ways to drive performance, tie it to client’s bottom line, and here is the big one NOT disrupt our client’s day to day work schedules.
Again, thanks great article!