ROI in coaching

I'm a big believer in being able to calculate a return on investment (ROI) for products or services purchased -- whether that's a return in productivity time saved or hard dollar returns that allow me to recoup my original investment and then some.

The ideal of any ROI is that the value derived from your original investment exceeds the original investment itself.

I get asked a lot, 'What is the ROI of coaching services?'

I cannot speak for other coaches, but being that GrowLoop focuses on marketing coaching for solopreneurs and small businesses I feel fortunate that calculating ROI for my coaching services is likely easier than for coaches focusing on other specialties.  What I really mean by that, is with marketing coaching one can calculate, more likely than with other coaching specialties a monetary ROI.

How, you ask?

Well, GrowLoop's coaching is based on working with clients to assess their marketing needs -- usual a long or short-term strategy toward attracting more clients.  Together, we establish a goal for having that strategy in place by a certain time.  We break down what action items will be needed to reach that strategy goal by the designated date/time, and GrowLoop helps coach the client along the way with marketing expertise and by holding the client accountable toward the goal/timeline.  The ROI usually comes once the coaching goal, the developed strategy, has been employed for a little bit.

Here's how one might calculate their ROI of marketing coaching:  

• Allow yourself to employ the marketing strategy developed with the coach for at least as long as the strategy was intended...In other words, if you created an entire year's marketing strategy with your coach, you really won't have a true understanding of its total effectiveness until the year is over and you can measure it.  However, for shorter term strategies we'll use 90 days as a general rule of thumb.  
• In that 90 days measure how many client opportunities you have gained as a result of the new strategy.  
• Calculate the dollar amount of new sales derived from the new opportunities gained in that 90 days that are a result of the new strategy. 
• Take the total sales revenue from that 90 days minus the total cost of the coaching service.  
  
• The idea is that hopefully the value of what you gain as a result of the strategy outweighs the cost of the service to develop the strategy.  For example, you pay around $500 for a couple of coaching sessions, but come away with a few marketing strategy ideas that you try and they result in, say, 3 new clients for you, with an average sale price of $400 you still come out ahead.

There are other ROI benefits that may not appear as hard dollar returns, for example, the education one gets by learning to do new things, like developing a marketing strategy...not to mention, the confidence gained by increasing one's knowledge and feeling like you have a resource in a particular area when questions arise.

Posted by: Nick Venturella 

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