Coaching ROI: “Wow” Your Clients with Real
Results
By Susan Battley
Do you want to stand out from the competition? If you offer
business or executive coaching, showing clients a solid
return on investment (ROI) is a surefire way to differentiate
your services in the marketplace. Why? Because few consultants
or coaches currently “wow” their clients with
results they can take to the bank. But you can—without
having to add a Ph.D. in economics or finance to your credentials.
What you do need is a familiarity with coaching outcome
research, knowledge of basic ROI analysis, and proficiency
with a simple yet powerful coaching model
ROI Myth-Busting
If a company, business owner, or executive makes any investment,
it should show a return. No wonder, then, that buyers often
voice a healthy skepticism about the tangible benefits of
coaching. As a relatively new management phenomenon, coaching
is still associated in many decision makers’ minds
with faddism. Consequently, they suspect that money spent
on one-on-one coaching disappears into a black hole with
no way to measure bottom-line value.
You can, in fact, counter this common myth with compelling
evidence-based research. Notable examples include:
- A Manchester Consulting Group study of Fortune
100 executives found that coaching resulted in an ROI
of almost six times the program cost.
- An International Personnel Management Association survey
found that productivity increased by 88 percent when coaching
was combined with training (compared to a 22 percent increase
with training alone).
- A study of a Fortune 500
telecommunications company by MetrixGlobal found that
executive coaching resulted in a 529 percent ROI.
- Metropolitan Life Insurance Company found that productivity
among salespeople who had participated in an intensive
coaching program rose by an average of 35 percent.
- In the case of MetLife, the company invested about
$620,000 in a coaching program, and realized $3.2 million
in measurable gains.
So “wow” current and prospective clients with
research findings that speak to their concerns and interests:
coaching results not only can be quantified, they have been
quantified.
The Current State of Coaching ROI
Research supports the business case for coaching. Research
also tells us that ROI is sorely underutilized as a success
metric to evaluate program effectiveness.
This presents a significant opportunity for savvy consultant-coaches
to differentiate their services in terms of proven, quantifiable
results.
First, let’s review the levels on which professional
development and training can be evaluated. They are:
1. Personal Satisfaction: Did the client like the experience?
2. Learning: What insights or new information did the client
acquire?
3. On-the-Job Application: What new behaviors did the client
use in the workplace?
4. Business Impact: How did these behaviors affect key business
results?
5. Return on Investment: Did the program yield a favorable
benefit-to-cost ratio?
The first two levels rely solely on client self-report
and deal with subjective intangibles. By contrast, levels
three, four and five deal with tangible phenomena such as
observable behavior and quantifiable data.
Your clients and prospective clients are keenly interested
in level four outcomes—those with bottom-line business
impact. For example, coaching that results in increased
profitability or market share, lower operating costs, improved
talent retention, faster speed to market, or greater customer
satisfaction has both high real and perceived value.
The problem—and distinct opportunity—for consultants
is that ROI analysis is seldom applied to management development
and organizational training as a success metric.
Consider, for example, the results of a recent IBM Global
Human Capital study that encompassed 320 organizations in
both the corporate and public sectors. When asked how they
evaluated learning effectiveness, almost 90 percent of respondents
said they measured participant satisfaction. By contrast,
less than one-third measured actual business impact, and
less than 10 percent measured ROI. In fact, 10 percent did
not measure program success at all.
Now for the good news: This dismal state of affairs has
a silver lining for any consultant or coach who can deliver
quantifiable, high-impact coaching results. Don’t
you want to be among them?
A Bottom-Line Coaching Model
To produce results that consistently delight your coaching
clients, you need a methodology for identifying the business
impact of your services. To do this, you need to be able
to compare before-and-after performance. Once you have identified
the improvement (that is, program results), the ROI equation
enables you and, more importantly, your clients to see what
a great deal they got.
The Five-Step Coaching Model includes all the activities
to execute this progression. A scientifically-based yet
simple approach, it can serve as the backbone of any coaching
engagement to:
- Define. Identify coaching goals.
- Assess. Obtain relevant data and baseline
performance data.
- Plan. Develop an action plan to achieve
the stated goals. Include quantifiable success metrics.
- Act. Execute the plan.
- Review. Evaluate the results. Did
the program achieve its goals?
A “quantifiable success metric” is one that
can be measured. For example, if an insurance salesman increases
his business from, on average, ten to fifteen new policies
per week, he has improved his performance by 50 percent.
Further, the improvement can be monetized—that
is, converted into a financial equivalent—as additional
commissions earned.
To illustrate, let’s say he earns an extra $45,000
in sales commissions that he attributes directly to his
coaching program. These are his program results in terms
of business impact. Let’s also assume that the total
coaching fee is $14,000.
In this case, the salesman’s immediate return on
investment is a whopping 221 percent. Of course, if results
were projected and annualized to include future earning
potential, his ROI would be even higher.
Make It Real, Make It Measurable
The purpose of business coaching is to make your clients
better, faster. You can become a better consultant-coach
faster by adding ROI techniques and practices to your professional
toolkit. Include research and client ROI success stories
in your marketing and sales messages, and watch your “Wow
Factor” go way up. And be prepared for more repeat
business. When you make it easy for clients to see your
full value, you become a valued adviser.
````````````````````````
Susan Battley, Psy.D., Ph.D., is a leadership
psychologist and international authority on executive and
organization effectiveness. She has worked with Fortune
500 CEOs, Nobel laureates, and university presidents. The
CEO and founder of Battley Performance Consulting, she can
be reached at www.battleyinc.com.
Her latest book is Coached
to Lead: How to Achieve Extraordinary Results with an Executive
Coach.
|
send
feedback