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Does Custom Content Development Really Cost More?

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When faced with a learner knowledge gap operations leaders and corporate learning organizations often turn to formal training as a solution.   Content relevance, speed to market and price are the criteria that decision makers consider when selecting training.  In other words they ask “how quickly and at what cost can I effect change with training?”  Two basic choices are to be made; purchase  “off the shelf” content OR create and deploy custom content.  Off the shelf training is quicker and easier in some respects and customization requires retaining content development staff and/or the help of instructional designers and custom content developers.  This investment can dissuade some from choosing customization in lieu of off the shelf content, but over the life of a learning program is custom content development really more expensive?  Let’s explore this more with a simple scenario.

 

Scenario

A hospitality organization with national hotel presence has conducted guest survey and come across a handful of properties that show low guest satisfaction and problem resolution scores.  The learning leaders have determined that guest facing staff should take mandatory training on ‘managing complaints’ to help its learners deal with difficult guest situations and improve the guest outcome.  There are 8 properties in the remediation category, each with about 110 guest facing staff.  The company has a Learning Management System and has decided its best chance for training penetration is to use eLearning.  What are the options?

Option 1 - Use ‘Off the Shelf’ Training

The L&D Team has selected a 20 min eLearning that is commercially available as an off the shelf solution for $18 per learner.  The training is mandatory for all the guest facing employees so using our training population above we can develop the cost to train the learner population with an off the shelf solution.

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At $18 per learner and no upfront investment it’s a low commitment option that can be easily charged back to properties or funded at a corporate level.  It’s feasible, though not always easy, to complete the training of the 880 staff members in these properties over the course of 8-12 months. But what about factoring in new hires?  Attrition is one of the biggest challenges in the hospitality industry and impacts nearly every management decision at the property.  We can assume that these properties see a 10% annual employment turnover and take a look at our total annual cost again over a 3 year period.

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Since the off the shelf content cost model is to charge on a per learner fee, each new hire will need to increment the overall cost for the training.  In effect attrition has increased the learner population from 880 employees to 1,100 employees over the course of 3 years.  It’s pretty clear to see how a modest 10% attrition rate can result in a substantial increase to the cost of the program each year.  (I assumed that in year one only 5% attrition would impact the learner population.)  Annual attrition rates like this are not uncommon at hospitality organizations.  Use your own corporate attrition rates if you are calculating this yourself.

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Option 2 - Custom Content Development

In our Option 1 analysis we arrive at a lifetime program cost of $19,800 for a 15min off the shelf elearning module.  Let’s now consider creating a similar Managing Complaints eLearning in a customized fashion using instructional designers and eLearning developers from a corporate training consulting company.  We will assume that an equivalent module will have  ‘level 2’ complexity, with moderate to high interactivity, include quizzing, scoring, custom scenarios, knowledge checks and the use of animations.  For now let’s exclude highly customized flash or HTML5 interactions from this module.  There are really just two cost categories here; eLearning Design, Development and Testing expenses and SME productivity loss from SME Contributions to content, testing and deployment.  In terms of resource rates we will use corporate training consultants at $135 per hour and the subject matter experts( SME) internal hourly rate of $90 per hour.  With those numbers in mind we can build out the customization costs in the table below.

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The choice of custom development over ‘off the shelf’ will always be a tough one.  Content providers price their content at rates that compete with the all-in cost of custom development and create pricing models and terms that are relatively easy to commit to and manage.  There will always be a place for off the shelf training but the progressive learning leader can and must look beyond and konw that it is possible to obtain custom elearning at competitive prices.  Focus on thorough vendor management practices, and define a pipeline of work for their custom content developers to help deliver meaningful volume of work to them and drive down costs.  Learning leaders must also be prepared to sell the custom content business case and expand the knowledge of their internal customer and L&D leadership.  Finally, and most importantly, learning leaders need to partner with training consulting and elearning developers that engage closely with their organization, ask questions, understand the operation and explore solutions and possibilities beyond training.  Most importantly they need to be careful and thoughtful listeners and observers that partner with your organization.   

I hope you found this post useful.  I am always willing to continue the conversation and if you wish feel free to reach me for more information at peter.matamala@matchstick-inc.com or reach out to us for a quick chat about what the ideal learning partnership may look like.

PETER MATAMALA