• Learning and Development
  • December 4, 2023

Understanding Learning Data: ROI vs COI 

How often do you see the buzzword “ROI”?

There are a million and one articles, webinars, LinkedIn posts talking about it, but ultimately saying the same thing.

Looking at Return (ROI) on Investment is a critical part of L&D, but Cost of Inaction (COI) rarely gets a look in.

Why is COI as important as ROI (or possibly more important)? What are the key differences? Why should it be essential in your conversations with senior leadership?

These are questions that Valamis experts are asked every day and so let’s explore how to present both sets of data to C-suite, helping you to prove why L&D can secure the budget it needs to shine, despite the economic squeeze.

Discover:

  • What are the main differences of ROI vs COI
  • Why are they important to L&D and your organisation
  • Measuring the success of learning initiatives through insightful data
  • How to present your findings to senior leadership/ C-suite

The differences of ROI vs COI

“There are risks and costs to action. But they are far less than the long-range risks of comfortable inaction.” ~ John F. Kennedy

According to Forbes, return on investment (ROI) is a metric used to understand the profitability of an investment. ROI compares how much you paid for an investment to how much you earned to evaluate its efficiency.

The Cost of Inaction can be simply thought of as missed opportunities. It highlights those benefits that could have happened if, at the time, a quick decision had been made. COI goes beyond hindsight or regret; in business it can often be measurable through finances or not achieving a business goal. As a result, COI is becoming an important metric in the world of fast paced technology as businesses have increasingly less time and more opportunities to choose from when it comes to keeping up with the competition.

The clear difference is not solely about proving what your initiative or decision achieved (ROI) but considering the consequences of inaction on business goals and not making important decisions (COI).

Why are they important to L&D and your organisation?

It’s no secret that so far 2023 has been a tough year for everyone budget wise. L&D is no exception with many budgets withheld or cut down. Virti’s 2023 study of 144 UK-based L&D professionals confirmed that 57% cited budget constraints as their top challenge.

In the LPI’s 2023 April Learning Dashboard research of learning leaders provided overwhelming proof that demonstrating ROI is not easy:

  • 10%

    Only 10% of L&D professionals surveyed said they found it easy to demonstrate ROI to C-Suite

  • 57%

    Of L&D specialists don’t have a reliable way to measure people performance in their business

  • 41%

    Of Learning Leaders do not have a process in place for collecting and collating L&D data

With these survey results the COI is clear – if there is nothing in place to collate and measure the impact of learning then the value cannot be seen or proven. The cost of inaction here is that a budget has been granted to L&D but with no further processes or KPIs put in place to follow it through to growth and success. It is unlikely in this scenario that such a budget would be renewed or increased by C-Suite without evidence.

Being equipped with the right terminology, backed up by data insights, is the key to a successful conversation with those budget holders.

In order to convince people, you need data. Without data discussing your plans and requirements with senior leadership or C-suite is going to be hard, but equipped with the right insights, you will have facts (not just a story) and will be more likely to get a positive answer.

The data and insights required for this lie in your LMS or LXP’s learning and data analytics. If you don’t already have a learning solution then CRM (Customer Relationship Management) or BI (Business Intelligence) tools within your company may hold data that can support you.

What do we mean when we talk about learning analytics?

Quite simply it’s the analysis of your learning data to better understand your learners and the context in which they learn.

When you know what needs improving in the first instance, you’ll be able to better execute your learning strategy and do your job better.

If you are in an L&D role and considering your data analytics, then you’ve also begun the journey towards implementing the goal of data-driven learning.

How to present your findings to senior leadership or C-suite

The Fosway Group’s Digital Learning Realities 2022 highlighted that only 16% of learning leaders get a seat at the table with their C-Suite, and that 1 in 4 reported they rarely or never have a seat at the table with their most senior influencers.

Important to remember is that every part of your L&D strategy or learning plan must correlate to an overall business goal. Examples could include:

  • Getting your sales team trained at speed so they can hit their quotas
  • For companies with a high staff turnover the demonstrating the impact of learner engagement and continuous professional development on retention rates will be a result to take notice of.
  • If one of your business objectives is to improve customer interactions and increase satisfaction. Learning analytics will provide data on the results of a customer training programme and identify areas or employees requiring improvement.

Be detailed and visual with the data findings to make your insights as clear as possible. Focus first on what insights would you like to have to back you up, not just what data is available to you and forget the assumption that Data is knowledge as raw data alone does not tell a story. These insights might include questions such as:

  • How often is the LMS/LXP used
  • What are the learners doing in the LMS
  • Where are the skill gaps
  • Who has which skills
  • Which learners need extra attention/training
  • Usage tracking (basically described above, skipping or speeding up videos/audio, downloading files, answering questions, how long do they take for a lesson, how long are they actively in the LMS/LXP solution)
  • Most popular content
  • Difference between features, age categories, location

Get started, make a plan

  1. Start small and solve problems:Begin by identifying specific issues and focus on finding solutions incrementally.
  2. Pursue quick wins:Prioritise tasks that can provide immediate evidence of improvement, such as enhancing compliance rates.
  3. Collaborate with your team:Gather your team and clearly define your vision, emphasising intentional effort and collaboration.
  4. Engage stakeholders:Involve stakeholders both within and outside the L&D department. Different perspectives can offer valuable insights and support.
  5. Set clear goals:Establish high-level goals for the year and detailed quarterly objectives. Assign clear responsibilities and schedule regular check-ins with stakeholders.
  6. Monitor progress regularly:Conduct frequent reviews to identify any obstacles promptly. Address issues promptly to stay on course; delays can complicate rectification efforts.
  7. Partnership with your learning solutions provider:Collaborate with your learning solutions provider from the beginning. Clearly communicate your goals and seek their best practice advice. Inquire about methods to measure your deliverables effectively.

Conclusion of ROI vs COI

While Return on Investment is an influential metric for assessing profitability, the Cost of Inaction can also be a crucial factor often overlooked in decision-making processes. To drive forward your well-planned L&D strategies always ensure that they are aligned with the overall business objectives and that your data – or lack of data insights – is there to back requests and decisions.

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Author

Leon van Overdijk

Leon van Overdijk

Sales Executive, Valamis Benelux

+31 6 18512615

Leon van Overdijk is an eLearning advisor at Valamis. He helps organisations to empower their learning experience to achieve business goals more efficiently.