TSS #003: ROI L&D: From Expense to Investment

Read time: 5 minutes

L&D consultants share a common challenge with their 9-5 counterparts:

Proving the ROI of their services.

In other words, if you can't demonstrate your value, your consulting career is on shaky ground.

So today, we want to talk about how to know if what you offer is valuable.

But first, let's break down the typical L&D consultant's approach…

Investment… or an expense?

Usually, L&D folks parrot learning jargon, spew nonsensical technobabble, show fancy graphs, and create elaborate proposals.

But organizations don't buy the razzle-dazzle; they buy value.

When clients fail to perceive the value in what you offer, they see a cost.

And nobody gets excited about the idea of losing money.

Imagine a consulting service with a generic title like “e-learning” or “instructional designer” without showcasing any strategic value.

In such cases, clients consider it an expense rather than an investment, thinking, "Okay, we’ll make less money, and they’ll build some e-learning.”

Sadly, this is how many L&D professionals unknowingly limit their perceived value.

While some clients may still engage with you as an expense, consistent clients are secured only when they perceive a real, tangible ROI.

Are you clear on how clients see you?

When you transition from the 9-5 to independent consultant, one of the first things you must do is present your services in terms of monetary or perceived ROI.

Here's a little analogy to drive home the point:

The cleaner, sweating and toiling for 12 hours straight, will always be paid less than the lawyer who sits behind a desk in a fancy office, working only five hours a day.

Why is that?

Well, it's because the perceived value of what the cleaner does is lower than that of the lawyer.

The cleaner can be replaced by anyone. It's not really difficult to learn how to do his job, and therefore the market will pay him less.

On the other hand, the lawyer, after years of studying, can save clients significant amounts of money.

And here's the kicker: it's not just about years of study; it's about perceived value.

Likewise, certain roles, like online L&D consultants, can have equal or higher perceived value without requiring extensive study.

Because when laser-focused on a specific niche problem, an L&D consultant's impact is a force multiplier.

Picture Archimedes' Lever in action...

The unsexy world of consulting

As a consultant, all you're doing is providing services in the arena of L&D, where your fee is lower than the monetary or perceived ROI.

That's it.

Welcome to the unsexy world of consulting.

The more money you make for clients, the higher your perceived value and paycheck.

Simple as that.

In essence, champion the ROI of the "YOU machine" to your clients.

Help them understand that every dollar they invest in your services should bring them a dollar fifty in return.

When clients see the potential for a positive ROI, they’ll continue to work with you till the cows come home.

"But what if I don't know the ROI yet?"

Don't worry.

ROI is primarily monetary, but it's not just that—it can also include factors like time saved, convenience, or reduced mental burden.

For instance, client stakeholders often procrastinate on L&D projects due to uncertainty.

By relieving their anxiety and completing the project, you provide a high perceived value.

Additionally, recognition is highly valued in large organizations.

Stakeholders may seek your services to impress their superiors (Directors, Executives, etc.), which can be a significant driver for your engagement.

So, recognize that the primary ROI may actually be helping stakeholders shine, making them look real good, and trust us, that carries some serious value.

That said, here’s a value equation to help you level up the ROI of the YOU machine:

⬆️ Maximize dream outcome (solve a problem worth solving)
⬆️ Maximize perceived likelihood of success (templates, processes, proven case studies)
⬇️ Minimize time to success (how can you make this faster? How can you show progress?)
⬇️ Minimize effort & sacrifice (how can you make this easier? Simple? Convenient?)

Follow the money trail using existing metrics

In your industry niche, there might be pre-existing metrics that organizations hold dear, and those can be your target for ROI glory.

So, if the organization sees a metric they value improve after teaming up with you, you've hit the bullseye!

Because when a metric they care about gets better, after paying for your services, the services you're offering are ROI activities. And any reasonable organization would invest in them — if they can grasp the value you bring.

But, keep this in mind: every valuable metric ultimately leads back to a monetary ROI.

If it doesn't, it's best to steer your efforts elsewhere.

"But my results aren't proven yet."

Here's the thing: It doesn’t matter if working with you, the benefits are not 100% certain.

What matters is that clients perceive working with you will improve their financial position, save them time, or reduce anxiety.

It's not about being 100% proven—nothing is. That's the nature of business.

Sometimes, you're simply helping organizations gain understanding, insights, or improve what's broken.

But remember, your goal is to seek out services that offer a higher ROI for your time.

It's a lifelong journey, sure, but you don't have to slave away for ages to make progress.

Always ask yourself this: "How can I increase my perceived value?"

The answer's in you.

Even if it takes time, it's damn worth the effort.

Summary

When it comes to raking in the dough, remember this golden rule: you get paid in proportion to the perceived value you provide.

It's not solely about your effort; it's about focusing on services that offer a high ROI for your clients.

Think about the monetary impact, reduction of emotional anxiety, time saved, and the recognition or status your service brings when working with a client.

Aim to achieve these outcomes with the minimum necessary effort.

Even if what you're offering feels like an expense or commodity, rather than an ROI offer, you can still pitch and frame your service in a way that demonstrates real ROI to clients.

And you can convince clients of it.

Help them see the benefits your service will bring them.

And finally, understand there's a big difference between an expense and an investment.

And you, friend, fall into the investment bracket—so own it!