Sales Training Company Revenue Models

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.