Poor LMS System lead to Profit Margin Erosion and Poor Customer Experience

The Issue: 

One company I worked for paid a lot of money for a Learning Management System (LMS) that they did not like. In order to escape this cost, they decided to use a freeware program and have some in-house programmers modify the code. This program wasn’t really designed as an LMS, they just used it that way. Those coders quit, and then contract coders joined the project. Those coders also eventually left and because no one else at the company had database management experience we had to contract an outside IT firm.

Due to all of this, making technology repairs to the system was challenging and slow. This negatively impacted customer satisfaction. The fact that the system was not a true LMS platform also meant that key features of the system did not work as expected. We were losing customers on this platform at an exponential rate, year after year. We had started this platform with just over 30,000 users, but by the end of the 1st year our numbers were down to 16,000. When I joined the company the numbers were down to 8,000 on the third year. This was untenable and my first recommendation, even without knowing the backstory, was to replace this LMS. Just the day-to-day system administration of the LMS was slow and cumbersome. It took 1 hour to accomplish a task that should have only taken 5 minutes on any other LMS system.

The Solution:

The solution was to completely replace the LMS system with a new version. My first couple of managers at this company asked management for approval, but they were not familiar enough with LMS and didn’t want me working on the proposal. When my third manager came on board he told me to run with it. I put together an in-depth ROI and SWAT analysis that highlighted all of the different problems with our current LMS and how switching to a new platform would fix that. I also sat through 30 LMS demos and narrowed it down to the top 3 and presented these to the executive team, who ultimately backed my first choice.

I spear-headed the launch project, doing integration testing, stress testing, user testing, and wrote internal training documents & procedures before training our in-person customer service staff. I also hosted live webinars to train our clients, and I made pre-recorded videos that they could watch later. Our internal e-learning library needed to be completely overhauled and with our current staffing and number of courses, that project would take 2 years, so I forged a partnership with an external training vendor to supply a catalog of compliant courses at a good price. Then I built out the training catalog, made a pricing tool, and taught the sales agents how to pitch the system. The entire project, from initial testing & launch, to customer and data migration of all of our customers, took less than 6 months to complete.

The Results: 

Between technology infrastructure costs, content development costs, tech support costs, and application development costs, the old LMS was costing us $530,765 per year. The new LMS only cost us $185,652.96 for a savings of $345,112.04 per year.

Additionally, our profit margin increased. Our costs for supporting this “free” LMS system were $53.08 per user, but our costs for the new LMS were $18.57 per user, a decrease of $34.51 per user. That translated to an additional $217,413 in revenue just for our existing customers.

The new features also stopped the hemorrhaging of our client base and allowed us to expand our sales, increasing customer count again. Our first years sales of new clients on this system translated to $451,031.27.

All combined, between the reduction of costs, the increase in profit margin, and the new sales, the total money earned for this project was $1,013,556.31