Sales Training Company Revenue Models

By Dave Stein (on April 21st at http://davesteinsblog.wordpress.com/)

I was on the phone today with an associate from a private equity firm. He found ESR on the web and was interested in our opinion on a number of topics as a foundation for his firm acquiring one or more sales training companies. He asked how sales training companies were generally doing during this recession. He pondered how a services-based company could weather these types of economic downturns, correctly observing that it’s hard to find good talent when the economy is strong and when there is a downturn, you run the risk of having expensive, non-billable talent on the bench.  “Tough to grow a business that way,” he said.

Next the comparison of training classes versus daily consulting came up.  I explained how sales training companies make significantly more margin from training classes than consulting.  In fact, many training companies only  do classroom training and are not at all interested in the assessment, methodology, process, customization, design, technology enablement, coaching and post-program support work that we believe is vital to a successful sales performance improvement intervention.  Why is that their approach? Margins!  A classroom day generates a lot more margin than a consulting day.  As a rule of thumb, a training day generates between 600 to 800% more margin than a consulting day.

Companies that only offer out-of-the-box training rarely deliver the kind of long-term sustainable results that those that take the holist approach do.  The guys at Think, Inc! are proving that what was formerly considered a stand-along skill like negotiation really should be integrated with the client’s selling methodology.  As a result they have a consulting component, which they believe is required for success.

On the other end of the spectrum are companies that will not do any classroom training unless it is part of a complete solution which would include the components mentioned above.  Performance Methods is one.

There is another piece to this—non-classroom vendor-provided content, such as e-learning modules, podcasts, remote coaching, opportunity management support (White Springs, for example) and other web/software-based IP.  Vendor that license this type of content to clients should be seeing highly profitable business.

What’s the point here?  You, the client, need to have the proper mix of consulting and classroom time as well as post-program support that will result in the greatest level of sustainable performance improvement for your team.  Don’t jump for what the training company proposes.  Don’t be willing to slash what’s required for success (like post-program coaching) because a vendor recommends it.  They may be willing to drop a less profitable but more important line item in your proposal because it suits them.

Read Dave Stein's blog at http://davesteinsblog.wordpress.com/ for more on sales trends and strategies.

Comments

[Belstaff Jackets]

For any folks invested in more and better resident contribution, that is a knock back, i believe. But strangely enough, the newest one-pager Can involve many responsibilities around consultation.

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[Niall Devitt]

Dave, an absolutely brilliant post. You have really managed hit the nail on the head here. Another possible contributing factor is that a lot of training companies are only ever comfortable delivering off the shelf work and don't have the personell, expertise or relevant skills to offer a bespoke solution.

[Sales Management Dude]

I think the process of a sales training firm developing thier employees has to evolve before they might be considered a good buy from an equity perspective. The sales process has evolved in the current age - how many salespeople from 1995 who can sell a presell page on a website? They didn't evolve. So looking at a company's practice and plan for the future in this sector is more rapidly evolving than most segments

[Peter ODonoghue]

A superbly presented argument. I totally agree.

Pre and post support and consultancy is vital to ensure you get any return on your investment and change in performance.

Companies are waking up to this fact and soon a boiler plate course just will not be acceptable.

[Peter ODonoghue]

A superbly presented argument. I totally agree.

Pre and post support and consultancy is vital to ensure you get any return on your investment and change in performance.

Companies are waking up to this fact and soon a boiler plate course just will not be acceptable.