Money on Customer Service Training
|by Don Farrell, November 2005
It’s that time of year – budget time, when expenditures in organizations are scrutinized and every program’s return on investment is measured and assigned a budgeted dollar amount. While this is an essential part of business planning, too many organizations neglect taking a careful, calculated look at the budget number given to customer service and sales training.
Are "let's just add a certain percentage to last year’s budget,” or "we need to cut here like we did in other areas of the hotel for next year,” or "I don't have the right people working for me yet, so let’s not invest in training until we do" common refrains in your organization?
If so, your organization may not have experienced the value of an effective customer service and sales training program or understand how to measure the impact of training on your bottom line.
Understanding the value and the elements needed for a successful training program and being able to estimate the return on that investment, makes you better able to assign an appropriate training budget to meet your needs in the coming year.
The most obvious way customer service and sales training impacts revenue is by increasing conversion rates. An employee trained in service and sales strategies knows how to build value for the caller, preferably before quoting rates. Asking the right questions and finding out more about the prospective guest’s needs enables the employee to offer the best solution – YOUR hotel.
Monitoring rates is another way to track return on investment. Building value for your hotel in your customers’ minds enables you to charge a higher rate. Most guests, while price conscious, will choose value over saving a few extra bucks.
It’s not hard to see why customer service and sales training is important to your bottom line, but not all training initiatives are created equal. A one-time training event might get your team motivated but then quickly wears off and is simply not cost effective long-term. The same applies to distance learning (CD-ROM, phone or web-based learning). Don’t be fooled by sales pitches that claim distance learning is cheaper and more effective than face-to-face training. Sure, it might be less expensive initially, but if you are going to commit to a training budget, make sure to allow for a blended approach of both training events and an ongoing reinforcement program to help show ROI. Anything short of this results in less than desired results and leaves you unable to justify money spent on customer service and sales training.
So how does an effective training program that shows ROI work?
Know where you are now
Communicate expectations and teach skills
Map performance back to the areas you are measuring
Understanding the impact of customer service and implementing a training program with an objective performance measurement system, will define a relationship between exceptional service and bottom line results. Compare pre and post training conversion rates. How has RevPAR been affected? An increase in one or both of these areas proves the impact customer service and sales training has on your business. This performance measurement enables you to set a realistic training budget to continue the positive trend.
In the meantime, if you need ammunition for how much a training program can affect your revenues for the coming year, here is a formula you can use. If at each hotel you were able to convert just 3 additional inquiries per day into a reservation, 300 days a year, and then multiply that by the average length of stay and the average daily rate, you’re looking at quite a potential increase in annual revenues at just that location. Multiply that by several locations and that number becomes even more impressive. This alone helps make a case for expenditures in sales and service training for 2006.
Over time, tracking and incorporating this ROI in the annual budget review will become a natural part of the business planning initiatives and you’ll never have to skimp on your training budget again.
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