The Phillips ROI Model: How L&D Teams Prove the Business Value of Training

The Phillips ROI model gives learning and development teams a way to answer the question every budget review eventually asks: what did this training return to the business? Completion rates and satisfaction surveys show that people showed up. The Phillips ROI model goes further and connects a program to business results, then converts those results into a financial return.

This guide walks through the five levels of the Phillips ROI model, the formulas behind it, and the steps L&D teams follow to run an ROI study. It also covers how skills practice data from platforms like Yoodli fills in the levels that are usually hardest to measure.

What Is the Phillips ROI Model?

The Phillips ROI model is a training evaluation framework developed by Jack J. Phillips. Training Industry describes it as “a training evaluation framework that extends the Kirkpatrick Model by adding a fifth level.” That fifth level is return on investment.

The model builds on the four levels of the Kirkpatrick model. According to Kirkpatrick Partners, those levels cover reaction, learning, behavior, and results. Phillips keeps that structure and adds a final step that compares the monetary benefits of a program to its costs.

The approach is now known as the ROI Methodology and is maintained by the ROI Institute. The ROI Institute says the methodology has been “implemented in over half of the Fortune 500 companies.”

The Five Levels of the Phillips ROI Model

Each level of the Phillips ROI model answers a different question about a training program. The ROI Institute names and describes them this way.

Level 1: Reaction and Planned Action

Level 1 “measures participant satisfaction with the program and captures planned action.” This level tells you whether learners found the program relevant and whether they intend to use it.

Level 2: Learning

Level 2 “measures changes in knowledge and skills.” Quizzes and knowledge checks cover the knowledge side. Skills are harder to check, because they show up in performance.

Level 3: Application and Implementation

Level 3 “measures changes in behavior and specific actions on the job to make the program successful.” This is where many programs lose the thread. Learners may pass the course and still fall back to old habits. Our guide on transfer of training covers why that happens and what helps.

Level 4: Business Impact

Level 4 “measures changes in business impact measures.” For a sales program, that might be win rate or ramp time. For a support program, it might be handle time or customer satisfaction. Pick measures the program can plausibly influence.

Level 5: Return on Investment

Level 5 “compares the monetary benefits to the costs.” This is the level that turns training data into a number a CFO can weigh against other investments.

Phillips ROI Model Formulas

The Phillips ROI model uses two calculations. The ROI Institute presents them as follows.

• Benefit-cost ratio (BCR): Program Benefits divided by Program Costs.
• ROI (%): Net Program Benefits divided by Program Costs, expressed as a percentage. Net benefits are total benefits minus total costs.

Here is a simple hypothetical example. Say a sales onboarding program has fully loaded costs of $200,000. After isolating the program’s effect, the team attributes $500,000 in monetary benefits to it. The BCR is 2.5, which means every dollar spent returned $2.50 in benefits. Net benefits are $300,000, so the ROI is 150%.

The math is simple. The hard part is producing defensible numbers for the benefits line, which is why the steps below matter.

How to Run a Phillips ROI Study in Six Steps

The ROI Institute lays out six steps for the ROI calculation. Here is how each one plays out for an L&D or enablement team.

1. Identify the improvements in impact measures

Pick the business metrics the program should move before the program launches. Teams that set these measures upfront get far cleaner data. If you are evaluating onboarding, start with the metrics in our guide to measuring onboarding effectiveness.

2. Isolate the amount of improvement caused by the program

This step is the heart of a credible ROI study. Results usually have many causes, so the team has to estimate how much of the change came from training. The ROI Institute lists techniques such as control groups, trend line analysis, forecasting methods, and estimations.

3. Convert the improvements to monetary value

Each impact measure needs a dollar value. Revenue metrics convert directly. Time savings convert through loaded labor costs. Quality and retention metrics usually need a standard value agreed with finance.

4. Tabulate the fully loaded costs

Include everything: design, delivery, technology, facilitator time, and the time learners spend away from their jobs. Leaving out costs inflates ROI and damages credibility with finance.

5. Identify intangible benefits

Some benefits are real but hard to price, such as learner confidence or manager engagement. The ROI Institute’s process calls these intangible benefits, and teams report them alongside the ROI figure.

6. Compare monetary benefits to costs

Run the BCR and ROI formulas and present them together with the intangible benefits. A clear summary of the method you used to isolate results makes the number far easier to defend.

Where Skills Practice Data Fits in the Phillips ROI Model

Levels 2 and 3 are where most L&D teams have the thinnest data. Knowledge checks don’t show whether someone can handle a hard customer conversation, and on-the-job behavior is expensive to observe. That gap makes Level 4 and Level 5 harder to defend, because the chain of evidence between training and results is incomplete.

Skills practice platforms help close that chain. When learners complete AI roleplays scored against a rubric, every session produces Level 2 evidence of skill. Repeated practice over time shows whether behavior is changing, which supports Level 3. Practice analytics turn those sessions into reporting L&D teams can bring to a budget review. That data plugs into the broader learning analytics L&D teams already track.

Practice programs can also produce cost savings that feed Level 5. RingCentral used Yoodli AI roleplays for call center certification and reduced certification time by 90%. Time savings like that convert directly to monetary value in step 3 of an ROI study, through the loaded cost of learner and reviewer hours.

Practice also strengthens the on-the-job learning that frameworks like the 70-20-10 model emphasize. That gives the ROI study more behavior data to work with.

Applying the Phillips ROI Model to Sales and Enablement Programs

Sales and revenue enablement teams can use the Phillips ROI model with metrics they already report. Common Level 4 measures include ramp time, quota attainment, win rate, and average deal size. Our guide to sales enablement metrics covers how to track and report them.

For practice programs specifically, teams often build the case around manager and reviewer time recovered, faster certification, and faster ramp. Our post on the ROI of roleplays covers where those returns show up.

Teams building a wider learning and development program can apply the same structure across onboarding, leadership, and customer-facing training.

Frequently Asked Questions About the Phillips ROI Model

What is the difference between the Kirkpatrick and Phillips models?

The Phillips ROI model adds a fifth level to the four-level Kirkpatrick model. Kirkpatrick measures reaction, learning, behavior, and results. Phillips keeps those levels and adds return on investment, which converts business results into monetary value and compares them to program costs. Phillips also adds a step to isolate the effect of training from other factors.

How do you calculate training ROI with the Phillips model?

Training ROI in the Phillips model equals net program benefits divided by program costs, expressed as a percentage. Net benefits are monetary benefits minus fully loaded costs. Before calculating, the team isolates how much improvement came from the training and converts those improvements into dollars. The benefit-cost ratio divides total benefits by costs.

When should L&D teams use the Phillips ROI model?

L&D teams should use the Phillips ROI model for high-cost, high-visibility programs where leadership expects a financial justification. Full ROI studies take real effort, so many teams run them on a few strategic programs each year. Lower-stakes programs can stop at Level 3 or Level 4 and still give leaders useful evidence.

What is the hardest part of the Phillips ROI model?

Isolating the effect of training is usually the hardest part of the Phillips ROI model. Business results have many causes, so teams need control groups, trend analysis, or structured estimates to credit training fairly. Strong behavior data at Level 3, such as scored practice over time, makes that isolation easier to defend.

Making the Phillips ROI Model Work for Your Team

The Phillips ROI model gives L&D leaders a shared language with finance. It turns training outcomes into the same terms leaders use for every other investment. Teams that plan impact measures early, collect real skills data at Levels 2 and 3, and document how they isolated results will produce ROI numbers that hold up in a budget review. For more on how L&D teams use practice data, see Yoodli for learning and development teams.