The Purchase Process: How People Buy and How Much They Spend

When we look at buyers today, we see a lot of optimism about the possibilities and pessimism about the realities. On the positive side, there is near unanimity in buyer attitudes about excitement in learning technology innovations. However, just because they’ve bought into the dream doesn’t mean they aren’t living the nightmare. There’s widespread dissatisfaction with learning technologies, which is reflected in a -57 Net Promoter Score (NPS). There’s also a sense of not being able to get there fast enough. Vendors must own some of this, too. Many have overpromised on the potential and under-delivered on the product.

Exhibit 9: Learning Technology: 2017 Aggregate Net Promoter Score
Aggregate Net Promoter scores for learning technology declined by 23 points, from negative 34 in 2014 to negative 57 in 2017.

It’s not fair to put all the blame on vendors. We believe buyers are experiencing an identity crisis. “There’s a crisis with a lack of strategy in some ways around learning today,” said David Wilson, CEO of Fosway Group. “L&D doesn’t really understand how to deal with this. They are trying to find its role.” If learning buyers aren’t happy with the technology and the results, poor strategy and execution are a factor. Not having a clear idea about the business challenge being solved and the benefits to the organization and its employees contribute as well.

At The Starr Conspiracy, we see low satisfaction as a continuation of the dynamic we identified in 2014. The learning function — as opposed to learning buyers — is still operating on an island. The measures have improved slightly, but our data shows that learning is still siloed from the rest of the organization. As a result, there’s little surprise that learning technology is not integrated within the organization.

Buyer Skills and Competencies: A Lack of Self-awareness

Buyers feel comfortable with their strategic knowledge and capabilities — perhaps to the point of overestimating their capabilities. For example, nearly three-quarters (74 percent) of learning management decision-makers and influencers find it easy to develop and present a learning strategy to management. Also, only 20 percent of buyers find it difficult to build a business case for the CFO to fund learning initiatives, and 21 percent find it difficult to establish a comprehensive learning budget. If there is indeed a crisis of strategy going on, we call shenanigans on all of this — especially when you consider that they find it not as easy as organizing and managing product evaluations, implementing software, or establishing budget. In short, the actual buying of software.

Exhibit 10: Buyer skills and competencies We’d like to find out more about how you work.​ For some people, the following tasks come easily. For others, they’re more difficult. On a scale of 1 to 5, with 1 being “This is very DIFFICULT for me” and 5 being “This is very EASY for me,” describe your level of ease with the following tasks.
  • Difficult, 1-2
  • Neutral, 3
  • Easy, 4-5
Establish a comprehensive learning budget
Implement new learning software, services, or programs at the employee level
Implement new learning software
Build a business case for the CFO to fund a learning initiative
Organize and manage a major learning product evaluation
Develop and present a learning strategy to management

Key Market Themes

Customers need more handholding, and your margins are at risk.

Not surprisingly, the buying approach has evolved. As we noted in previous sections, the rip-and-replace market has given way to iterating toward improvement. Couple that with the need for vendors to overinvest their time and resources on the front end in strategy and implementation and on the back end in customer success, and you have a recipe for vendors inadvertently giving away their margin as a result of all the hustle.

Reporting and analytics makes a big jump in purchase decision criteria.

65.5 percent of buyers state ease of use for employees as the No. 1 factor in evaluating vendors (Exhibit 11) and maintaining a successful long-term relationship — roughly consistent with 2014. However, the second-highest influencer is reporting and analytics: 55.4 percent consider it one of the top three factors in vendor evaluation. Third is integration with other talent and HR initiatives (43.9 percent). In 2014, we discussed the need for vendors to focus more on implementation success and post-sale support and enablement. The need for implementation support has dropped among the list of technology challenges for buyers and dropped slightly on the list of evaluation criteria. Although vendors may seem to be doing better, we see a direct line between implementation and user adoption. That makes the picture less rosy.

Exhibit 11: Let’s assume cost is the most important factor when evaluating learning management systems. Which three factors are the next most important to you?
  • 2014
  • 2017
Ease of use
Y.O.Y. Change
Reporting and analytics
Y.O.Y. Change
Ability to integrate with other talent and HR initiatives (such as recognition, performance, management, culture, etc.)
Y.O.Y. Change
Product features
Y.O.Y. Change
Implementation support
Y.O.Y. Change
Cloud or SaaS technology
Y.O.Y. Change
Customer service
Y.O.Y. Change
Focus and expertise related to my industry
Y.O.Y. Change
Provider's years of experience
Y.O.Y. Change
Consulting services
Y.O.Y. Change


Investment in learning technology may differ by company size, but technology share (of that budget) is consistent. Spending has remained flat since 2014. It’s worth noting that next-generation technologies are gaining more market share at the SMB level. Granted, as we’ve pointed out at great lengths in this report, traditional and next-generation technologies are not mutually exclusive. However, because SMBs are less likely to have an incumbent learning technology to replace, this could be seen as a foot in the door. All that said, as a vendor, if you’re looking for greater share of wallet, focus on helping your customers define the right strategy, attack the right business problem, and yield benefit for the organization and the employee. If you do those things successfully, the coffers will open up.

Exhibit 12: Investment in Technology
  • SMB
  • Technology
View the technology shareView the next-generation share

Key Takeaways for Vendors

Educate your buyers and get them off of their island.

Buyers’ skills don’t map with what they need to know to set strategy that’s mapped to a business problem and employee benefit, much less how to buy from you. This is especially true with next-generation or nontraditional technologies. In our experience, buyers have always needed help making the business case. Learning buyers still believe the needs of the workforce have changed, but they may not have the skill set to sell your approach.

As a vendor, it’s in your best interest to address this proactively because your customers and prospects are well positioned in the organization. “Learning organizations actually have a tremendous amount of leverage in being able to influence human capital management, and talent management overall. But for some reason it’s really not being addressed,” said Chris Bond, CEO of Bluewater, an international consulting firm focused on learning and talent management. “I think the big overall gap is a real gap in strategy. And the different full talent management suite implementations that we’ve done are very, very interesting because the organizations are so siloed that somebody finally said, ‘We need to go out and buy one system.’ Oh, well, guess who did that? The IT department did because they wanted to reduce their spend and their footprint. But there was no overall organizational strategy for how we are going to use all these talent components together. So, it doesn’t surprise me to see learning continuing to sit on an island out there. Somebody’s got to take that first step and begin to drive that. I think vendors have an opportunity to really help dive deeper and help establish a full talent management strategy for organizations that begins to integrate learning and performance and succession to drive different activities.”

Strategy, customer success, user adoption, integration, and ROI are tied together.

Fortunately for vendors, the way your customers buy is in line with a successful outcome. Building out a proof of concept will support a strong business case before expanding to the entire enterprise. This will usually mean building out a prototype site with custom branding and messaging, developing an implementation framework from a single line of business, building out the communications and education program, testing and implementing it, and getting a clear ROI story before and after the implementation. If you do that, the business case will be strong and the subsequent enterprise-wide rollout will be flawless. “When we take this approach, most of our pilot clients get strong ROI, such as improvement in retention and engagement,” said Fulton. “We also hear things like ‘smoothest integration we ever experienced’ or ‘best thing HR ever did for me.’”

Investing in success during these pilot projects can pay dividends in establishing relationships for the long term. Integration can’t be an afterthought. It has to be front and center. “As long as you see and manage learning as something that is intrinsically separate from work, learning will continue to be inadequate and distant,” said Sumser. “That involves a fundamental mindset of the vendor and buyer community in L&D.”

User experience still hasn’t delivered.

Ease of use remains at the top of decision criteria, but the buyer pain is really user adoption. Vendors may be overlooking an opportunity for improvement. “Functionality improvements and add-ons are released regularly by providers to keep up with buyer demands,” said Rochelle. “The challenge for a provider is to offer functionality upgrades on a consistent basis but take the time to also work through the user experience implications. New functionality is great on the back end but often over-complicates the front end or creates additional steps that may work against utility of the new functionality.” Providers need to balance offering a lot of functionality with a clean and inviting user interface that keeps their technology powerful on the inside and elegant on the outside.

Get reporting right and generate meaningful analytics.

In 2014, we discussed how buyers needed meaningful, strategic analytics beyond just course completions. In 2017, reporting and analytics made a jump in purchase decision criteria — big time. Certainly, buyers are tantalized with the promise of analytics and the business impact of the resulting insights. However, many buyers are expressing more basic needs. “One big change I’ve seen in recent years is that front-line managers and other decision-makers outside of the learning function want information from the LMS. However, the standard reports in the LMS don’t work for these managers. There’s a gap there,” said Chris Bond, president and CEO of Bluewater. Vendors should note that just getting basic reporting right and into the hands of the right people at the right time would be a good start.

Nonetheless, many buyers are also in pursuit of meaningful analytics. Vendors are going to need to up their game to meet the needs of these buyers. “Buyers will need help setting up their data strategy and collection efforts before the analytics process can get off the ground,” said Rochelle. “The single biggest challenge for organizations when it comes to predictive analytics is the ability to collect the right data over the right time period to build the predictive model. Particularly in learning, many organizations have not collected the right data or have no ability to access and coalesce the data into meaningful databases that can be used for predictive analysis. Learning organizations struggle with setting impactful KPIs that align with the business and drive business performance.”

Message is not just what you do, but who you are.

In 2014, we discussed the need to clearly explain and align benefits for the buyer, the organization, and the end user. Although we generally see improvement in some areas, there’s still too much “me too” messaging. Here’s a hint: You’re doing it wrong if your messaging is a junk drawer of disjointed messages taken from your competitors to not allow them any “white space,” or if you’re focusing heavily on your technology as a differentiator. Communicating features and benefits is not enough. As Roger Daltrey once sang: Who are you? People buy from people, especially from people they like and who are like them. If you’re not communicating who you are and what your culture is like and taking a stand on some potentially polarizing areas in your messaging, you’re failing.