Challenging market conditions for training providers have prompted many to consider offering free places on courses or discounts as an incentive, but this is usually a big mistake. Here's why...

Training providers are having a tough time in today's unpredictable economic climate. Corporations cut training the moment the downturn began in 2008, and the market is still recovering over a decade later.

Training is a lot like car maintenance; in the short term you can skip a few services, but after a while, the wear and tear starts to take its toll.

In a business, productivity and engagement decline as investment in people falls behind, and training is still seen by many business owners and managers as a luxury they can’t afford.

None of this helps the many businesses and self employed consultants who provide training. Those who specialised in niches such as financial services lost their entire client base overnight in 2008, others with a more diverse portfolio were luckier. I’ve been self employed since 2002, and the journey has certainly not always been a smooth one – sometimes it’s been an absolute struggle.

I suspect that all learning and development professionals know the value of investing in people development, just as all garage mechanics know the value of having your car serviced before it breaks down - but has the way that we create value in learning changed as a result of the economic roller-coaster of the past few years?

Cutting costs

In a declining market, consumers put price pressure on suppliers. Of course, we do have less disposable income, or at least we’re afraid that we might not have as much in the future, so we automatically cut back on luxuries, a trend exploited by the rapid growth of the budget supermarkets Aldi and Lidl and the loss of middle market retailers such as BHS.

Suppliers at the top of the market can ride out the storm, those at the bottom can cut costs, and those in the middle suffer the most. The temptation for everyone is to cut prices, because any cashflow is better than none.

From a training provider’s point of view, there is a fundamental difference between an open course and an in-house course. With an in-house course, everything runs on demand, and there are next to no overhead costs.

However, anyone who wants to run open courses faces the catch-22 problem, they don’t want to commit until they have delegates, and their delegates don’t want to commit until the trainer is committed. No-one ever booked themselves onto a course that might be running.

The free option

One solution for the open courses is to offer ‘free’ places as incentives or in competitions. A prize draw in return for contact details allows the course provider to offer discounted or full price places to the entrants who didn’t win, and ideally has at least one delegate to start the ball rolling.

Herein lies a very peculiar problem – people are winning free course places, and not collecting their prizes. Why is this? Why wouldn’t someone want free training?

Simply, because it’s not free. Firstly, the delegate has their own overheads; travel, accommodation, time off work and so on. Secondly, the delegate still has to commit something far more valuable than money – their time.

If someone doesn’t like your service, you can give them their money back, but you can’t give them back their time, so the risk is entirely on them. So what if the course was free? If it’s rubbish, that time is wasted and can never be recovered.

A question of price

You don’t have to look far on social media networks to find sales experts telling you the secrets to sales, but these are product sales concepts, and service sales is fundamentally different.

For a self employed trainer, the cost of delivering a day’s training is very low compared to a training company with offices, administrators, course designers, IT systems and so on.

Therefore a self-employed trainer can always price their service lower than a training company with all of these overheads, however a large part of the customer’s perception of value comes from the price itself.

When we reduce the price, we also reduce the perceived value. Economics theory says that we should increase our prices in a recession, but our human fear of losing our livelihoods makes us cut our prices. That doesn’t just affect the discounting supplier, it affects everyone because it skews the market price of the service.

When we reduce the price, we also reduce the perceived value.

Retailers such as eBay, Amazon and Argos have skewed customer service expectations in the same way. We don’t just expect rock-bottom prices, no-question returns and instant delivery from them, we expect such service levels from everyone, from all suppliers.

Consumer expectations feed through into business-to-business interactions too. Corporate buyers expect sky-high service at rock-bottom prices, and they want it yesterday, because they know that, somewhere out there, there’s a supplier willing to give them that.

We all know that we should stand together and protect each other from this price erosion, but at the end of the day we have mortgages to pay and little ones to feed, and no-one will take that risk.

Tasters and discounts

One of things I’m currently experimenting with is running free taster sessions at home. This removes the risk of paying for a venue, and means that I don’t have to charge participants.

I planned four hour sessions and tested the idea via social media, and the reaction surprised me. The general consensus was that I was being way to generous, and I should give one hour, maximum.

Is there only so much that we can give for ‘free’ before we arouse suspicion? Can we give a tiny morsel, a small discount voucher? Perhaps if we give a free training place it’s too much of an imbalance?

I’ve been running competitions at conferences and events, and so far I’ve given away five ‘free’ places, which aren’t really free of course but greatly discounted so I still cover the actual costs involved.

What’s really interesting is that I have offered far more ‘free’ places to winners, most of whom I haven’t heard back from at all. Why would you go out of your way to enter a competition when you weren’t interested in the prize?

Maybe some people will enter anything. Maybe the barrier to entry was too low, all they had to do was write down an email address. Maybe they all changed their minds. Maybe they simply didn’t value something that was ‘free’.

Time constraints

I think that the training market, in the UK at least, is probably still in over-supply, and new learning technologies have pushed down delivery costs and price expectations.

Why attend a training course when I can watch a free video? I’m sure it will be just as good.

Money can be refunded, though. Time cannot.

Whilst we can be up in arms at this affront to the value of a face to face training session, we’ve also all sat through training sessions that were so bad that a video really would have been better.

When we get bad service from one car mechanic, we expect them all to be untrustworthy. Money can be refunded, though. Time cannot.

Time is the currency that we must trade in. Solutions such as e-learning and ‘bite-sized’ training  are one way of reducing the time cost, what we must also do is increase the time value of what we deliver. How? I’d tell you... if I only had time.

Interested in this topic? Read The five big problems with ‘free’ content.