The return on investment (ROI) for a learning management system comes down to how your business and its bottom line are impacted by your training programs, which is critical given that 90% of organizations consider building capabilities a top-ten priority.
When introducing a new LMS, you’ll see immediate cost savings like reduced travel expenses and lower administrative costs. You’ll also cut employee turnover and onboarding time.
Your LMS ROI proves your investment generates revenue and saves money. But how do you calculate and demonstrate this value?
In this blog, we’ll go over that answer, and the key ways your LMS drives measurable returns.
What is LMS ROI?
LMS ROI measures the financial value your learning management system returns compared to its total cost. It’s calculated as,
ROI (%) = (Net Benefits / Total Costs) × 100%, where Net benefits = Total Benefits – Total Costs
This proves your learning platform drives measurable business results, not just expenses.
Why measuring LMS ROI matters for your organization
When you show training’s financial impact, you build credibility and secure executive support. You also align learning initiatives with business goals.
Effective measurement transforms your L&D team from a cost center into a value driver. This gives you data to make smarter decisions about program investments.
How to calculate LMS ROI: Step-by-step guide
Calculating your LMS ROI doesn’t have to be complicated. It boils down to a straightforward process:
- Identify all costs: Include subscription fees, implementation costs, content development, and staff time spent on administration
- Quantify the benefits: Calculate savings from reduced travel, lower turnover costs, faster time-to-productivity, and new revenue streams
- Apply the ROI formula: ROI (%) = (Total Benefits – Total Costs) / Total Costs × 100%
Key metrics to calculate LMS ROI
The standard formula for calculating ROI is clear and direct. It gives you a percentage that represents the return on your initial investment. To use this formula effectively, track these key metrics:
- Net benefits: Total financial gains minus total costs
- Key benefit metrics: Productivity gains, reduced travel costs, customer/partner training revenue
- Total cost components: Software licenses, implementation fees, content development, administrative time
Understanding LMS costs for accurate ROI calculation
A credible ROI calculation requires a complete cost picture including both obvious and hidden expenses. See below for some direct and indirect costs to track and include in your calculation.
Direct costs to track:
- Subscription or license fees
- Implementation and setup charges
- Pre-built course content purchases
Indirect costs to include:
- Staff time for administration
- Content creation hours
- Employee training on platform usage
10 ways your LMS drives measurable ROI
#1. New revenue generation
This is one of the easiest ways to prove the value of an LMS. Being able to extend the reach of training to partners, customers, or members is one of the ways LMS solutions drive positive effects that turn into a funnel of untapped revenue; one training program, for instance, was projected to generate over $100 million in annual incremental revenue if scaled across the organization.
By offering additional material or services through an LMS, you’re able to unlock untapped revenue and engage multiple audiences to drive more cash flow. The LMS you choose in this case, though, is especially important. You need to make certain that when people are coming in for sales training, new product training, or training on your offerings, that people have the best experience. This unbeatable experience will ensure that they continue to see value in the partnership or business relationship.
Related: Increase revenue with your extended enterprise LMS by enabling partners and customers
#2. More members equals more money
Elevating your brand and what you can provide your members with is essential to growing revenue.
Implementing a new LMS can increase the satisfaction and the perceived value that members get out of their business relationship, and can even attract new audiences. If your members are trying to monetize e-learning but are not getting a grade A selection of content or a wonderful learner experience, this could be where you get to step in. Member training, when done well, can easily make up for the cost of your LMS, and then some.
#3. Data maintenance costs
The reason the cloud has so much clout (buh-dum-ts) is because the cloud makes dealing with data way easier. This is because when an LMS is a cloud-based system as opposed to an on-premise solution, the vendor keeps hold of all the data.
Older and more dusty solutions require extra resources that are devoted to the maintenance of this LMS data, instead of it just living easy and breezy in the cloud. Fewer people and less hardware are needed to upkeep data, which means a reduction in maintenance costs for you!
#4. Training expenses
DIY is all fun and thrifty until we’re talking about training efforts, because in this vain it can actually make training more expensive (yikes).
For organizations still doing some or all training in-house, the cost adds up quickly (and it’s not cheap). Paying for physical training materials, the distribution of those materials, and instructors to facilitate training for folks results in a lot of dollar signs.
To cut these costs, you need an LMS that allows you to create courses, store and replicate materials, quickly send them off to the relevant parties, and host training sessions and recordings that can be stored and re-watched. For example, instead of paying someone to give the same lesson eighty-three times, they can give it just once, while it’s recorded. They can then focus on other areas of the business where they’re needed, and your organization benefits from them using their time more wisely. Win-win!
#5. Travel expenses
As much fun as traveling on someone else’s dime can be, organizations do better financially when they are able to cut out unnecessary travel at large (as long as it doesn’t harm the business).
When you have workforces that are mostly or entirely remote, or offices that are globally spread, training options that are available on-demand are easier and cheaper to maintain. With a solution that doesn’t require airfare, per diem, hotels, meals, and other expenditure, the savings pile up fast! For example, by shifting a majority of its in-person training to a virtual environment, PwC saved nearly $70 million on travel and hotel costs.
#6. More bandwidth for your buck
This is where we talk about getting you more for your money.
We’re all familiar with days on the job that are so fast-paced that it just feels like there aren’t enough hours in the day to get it all done. With online training that fits the convenience of the learner, people can fulfill their training needs from home, on the way to a huge on-site sales pitch, or even in the break room at the office.
Making e-learning courses available for whenever people can squeeze in relevant training content means that you’re stretching and optimizing employees’ time, bandwidth, and productivity.
Whether it’s on their work laptop, their home office desktop, or in bed on a mobile device before bedtime, training courses that are easy to access give you more from your talent that you’d otherwise miss out on.
Related: What is mobile learning? (M-learning)
#7. Time savings
An LMS that is highly collaborative makes the most out of subject matter experts.
Learning socially is a huge part of how we cement new information. Sites like YouTube have been super influential on the way we learn anything from quick fixes, to languages, to in-depth projects – we’re used to looking to other people when we need some guidance.
On the job, people constantly tap more tenured employees on the shoulder for advice or feedback. An LMS that allows subject matter experts to contribute their knowledge to multiple audiences at once keeps people learning from each other without in-person meetings; at GE, for example, 30 percent of GE employees developed and shared content with their peers in the first year of a new initiative.
Related: Knowledge sharing: Why it makes organizations more successful
#8. Reduce your turnover
When people aren’t growing or advancing towards something, they start to feel stagnant. This is usually when they start to explore new job opportunities.
Keeping people invested in their personal and professional development, and showing that your organization is invested in it too, is what keeps people around for the long haul, as research shows 42% of millennials are likely to leave a job because they are not learning fast enough. eLearning Industry affirms that “employee development boosts employee satisfaction and workforce productivity, and reduces turnover”. They’ve also emphasized that not only does employee training help reduce turnover, but that employee development is the most pivotal secret ingredient when you’re trying to reduce turnover.
Related: The problem with ignoring millennial learning & development needs
#9. More time on high-level strategy
Learning technology makes online learning way easier to stay on top of because it automates a lot of the job.
The right LMS can automate the creation of personalized learning paths, pull real-time reports, send notification reminders, and enroll users, among many more. With less time and human power devoted to keeping training afloat, support costs (that would normally need to be funneled towards LMS admins) go down, leaving admins to focus on high-level strategy.
Related: How to personalize learning with artificial intelligence
#10. Higher productivity from talent
World-class training and course offerings help people reach peak productivity and high-performance faster, with one survey finding that 78% of trainees reported that learning a valuable skill improved their job performance. Partner training, sales training, customer training, onboarding, and regulatory compliance all have that in common. They all need people to get a job done, get it done quickly, and of course to get it done well. Organizations that invest in quality learning reap more from their talent with programs that make it easier for learners to succeed.
Related: Benefits of an LMS: Using collaboration to improve productivity
Turn your LMS investment into measurable business growth
All of the things on this list have revenue attached to them. Either revenue that’s being lost that could be saved, or revenue that’s not being tapped into yet that could help grow your organization.
The goal is never to just break even. You want to grow profits and stop spending unnecessary time and money on things that bring no value. Not only does revenue generation from an LMS more than offset the original cost, but it’s where growth happens.
Explore why more than 3,800 companies across the world trust Docebo. Book a demo today.
Frequently asked questions about LMS ROI
What’s considered a good ROI percentage for an LMS?
A positive ROI means benefits outweigh costs, with well-implemented programs often achieving 100% or higher returns.
How long does it typically take to see ROI from an LMS?
Immediate returns like travel savings appear right away, while substantial benefits like improved productivity typically emerge within 6-12 months.
What if I can’t quantify certain LMS benefits?
Use qualitative data from surveys and interviews for intangible benefits like improved morale or confidence. Include these in your business case alongside quantitative ROI calculations.
Should I include employee time in my LMS cost calculations?
Yes, include L&D team administration time, content creation hours, and learner training time for accurate total investment calculations.
How often should I recalculate my LMS ROI?
Calculate LMS ROI annually to track performance, demonstrate value to stakeholders, and identify optimization opportunities.
