Return on Investment
Before giving you the algorithm of calculation the investment return from coaching, let me mention that the average benefit from it is usually 600%-1000% in accordance with the Lore International Institute (US). It means that 1 dollar invested in coaching will generate you 6-10 dollars of income.
Worthy, isn’t it?
If you like the numbers the way I do and would like to have some more detailed data, let me share the formula developed by the abovementioned Institute on how this return of investment (ROI) is calculated:
ROI = ((Benefits – Cost of coaching) / Cost of coaching) x 100
The benefits will be the sum of all chosen indicators of impact (monetary values, of course) multiplied by estimated percentage of improvement due to coaching and multiplied by the percentage of confidence in each estimation. Example by the coaching company from the UK, which has developed a special non-standard coaching program for a sales company and charged for it 35 000 GBP (all amounts are in pounds):
Indicator of impact
Estimated annual monetary value of performance improvement
Estimated percentage of improvement due to coaching
Percentage of confidence in this estimation
Introductions of web-based system to report orders
Increased ability to set motivating sales targets for team
Reduced meeting time
Introduction of a new incentive system
ROI = (265 275 – 35 000) / 35 000 x 100 = 658% - IMPRESSIVE!
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