Like 40 grammar topics and 2,000 words made the industry a few hundred billion dollars (part 2). Business models
Business models in foreign languages
Given that in foreign languages there are 2 psycho-types of clients , as I wrote in the previous article, the business approach to each of them is fundamentally different.
Business Model No. 1 - Monetization through gamification of the learning process of the masses.
Business Model No. 2 - Monetization through personal work with an individual client.
Business Model No. 3 - Monetization through guaranteed customer achievement.
All models are viable and financially profitable.
Business Model No. 1
Monetization due to gamification of the learning process of the masses.
Ideal for making money if you have seed capital. Very attractive to potential investors. The client belongs to the first psychotype.
Investments in this business model are distributed unevenly:
- the minimum amount goes to the methodological part (it makes no sense);
- fixed assets go to automation, IT infrastructure, marketing and advertising.
With this model, large investments should be made only at the initial stage. After automation, fixed costs are minimal, variables are reduced to zero. That is, a high entry threshold and subsequent work "on autopilot."
In an IT project, the task is to reduce fixed staff costs, automating everything as much as possible, and leave the user without the opportunity to ask a question about the methodology and language problems that arise during his training.
Due to the huge number of potential customers, there is no personal contact with the user and targeting occurs at the group level (Look-alike, behavioral marketing, socio-demographic targeting, etc.).
Sites that operate on attracted borrowed capital with large investments, prioritize the task of working out and increasing the funds invested in them as soon as possible. And according to all the laws of business, working with an existing client is cheaper and more effective than attracting a new one.
Thus, borrowed capital foreign language learning sites are interested in artificially delaying the process of learning a foreign language in all kinds of ways: beautiful pictures, motivational videos, new levels, new courses, unobtrusive exercises, tests, social communication, and so on. The task is to “tie” a mass client in order to earn money on it as long as possible.
It is important to understand and remember that the hallmark of the masses is the blind following of everything they are told and put into their head. That's why it is also a mass market: it is convenient to manage the masses and, as a result, earn money.
Many resources believe that gamification, socialization and humor must be brought in to make learning more enjoyable. But, as a result, in fact - less effective. It sprays attention.
A new type of training (gamification + socialization) is artificially introduced, which is obviously not effective in real life, but it is convenient to earn on it. It is much easier to get 1000 rubles for the entertainment process from a representative of a generation of gamers than to motivate him to get a measurable result in offline life.
The end user does not really understand the concepts, and service providers use this very well - they make the learning process fun so that the client does not get bored, monetizing the process itself.
The problem of the end user is not in learning, but in the application of a foreign language in life.
There is no discussion of the final result in this model. This must be very well understood and distinguished so as not to make a mistake in choosing a resource for learning a language.
If you just need to have fun spending your time in front of the monitor screen, without having to bring your knowledge to real life, this is one thing.
If there is a need for the practical application of a foreign language in life, and it is it that stands, then such sites have absolutely nothing to do with solving this problem in foreign languages.
Because it is much easier to go to a new level in English on any website than to go to a new position in an English-speaking IT company. It's one thing, you sit in your underpants in front of the monitor and silently watch another video from TEDa, and it’s quite another when you have a live interview and a real HR from Ireland is interviewing you.
You can talk about the effectiveness of training only with results offline - in real life. It is difficult to measure the effectiveness of training with glasses and points on the monitor.
If we replace such a favorite word "effectiveness" with a more measurable concept of "effectiveness", it is interesting that then modern training sites will give out as a result?
However, the main cash flow is circulating precisely in this business model. So if the goal is to make money, then this is the most profitable model.
- large incomes;
- low risks;
- fast start.
- high entry threshold;
- price level competition;
- technological complexity;
- inability to solve the real problem of the client (this can be crossed out if morality does not play any role).
Business Model No. 2
Monetization through personal work with an individual client.
Ideal if there is no seed capital, but there is an effective teaching methodology. It can be implemented both by a private lone teacher and a large company. The client belongs to the first and second psycho-types.
Initial capital is not required. Operating expenses tend to zero.
Due to the low entry threshold, it is used by individual teachers and aggregator services that provide orders to individual teachers.
Teachers usually work one-on-one or with a mini group.
The user is invited to engage with a teacher, the cost of classes is higher than when using business model No. 1 .
But if in the first case the performance is somehow predictable, then in this model everything looks like roulette. It is not a fact that the client will come across a competent teacher who is able to quickly and efficiently teach. The human factor plays the strongest role of all three models.
In addition, single teachers use generally accepted textbooks and manuals that are designed for multi-stage phased learning, which a priori cannot be fast. Very few teachers are able to separate the important and the necessary from the unimportant and even outdated. Almost every teacher uses examples such as “Students study in the library” in examples of explanations, while all students study through the Internet and mobile devices.
- low entry threshold;
- fast start;
- low risks;
- almost complete absence of operating expenses;
- easily predictable income.
- upper bar in income;
- very high competition;
- strong dependence on the quality of teaching;
- difficulty in accepting payment.
Business Model No. 3
Monetization due to fast and guaranteed achievement of results by the client.
This model is ideal for result-oriented VIP services. The client belongs to the second psychotype.
Investments in the first stage: the development of an effective methodology, manuals and training system.
The main operating expenses in this model are salaries for living people: methodologists and teachers. But this is inevitable, because with an individual approach to solving individual customer requests, these costs will always be. However, they can be reduced by automating processes and developing a more effective teaching system.
In our company, we use this model because we have found solutions to eliminate or significantly minimize its shortcomings.
I’ll describe how this model has taken root with us (we have clean bootstrapping - no initial investment).
Since 2010, we have been working to ensure a measurable customer result in a short time. And we are working on scaling to help as many customers as possible.
Marketing at our place, even at this stage, is still only due to word of mouth - in the old fashioned way, slowly, solely due to reputation. We invest all the money included in the site in the development of new languages and courses, but not in the contextual advertising. Specifically for us, contextual advertising does not work, since the cost of our courses is quite high and you need to prepare for classes every day for several hours. This is not what the “cold client” is willing to pay for. So now we are looking for more effective methods of advertising and popularizing the resource.
Until today, all customers come to us on the recommendation and pay only 1 time. Well or more, if you go to another language or increase your level. But we do not “squeeze it out” - he comes when he needs it. And brings friends with him. As your reputation grows, your cash flow situation improves.
If one of the readers works in the field of marketing and has ideas tailored to our specifics, I will be very happy if we can work together.
- low competition;
- relatively low entry threshold;
- work with professionals;
- communication with very interesting and famous people;
- the ability to set a high price.
- limited market;
- the difficulty of guaranteeing results;
- high operating expenses;
- higher level marketing;
- individual approach;
- slow start
- the complexity of creating an effective methodology.
Precisely because the disadvantages are significant and there are more than advantages, very few work precisely on this business model.
In fact, market players who individually solve the client’s problem are one. And most often these are single teachers, because on a large scale it seems economically costly. But the potential of this model is very high.
The first 2 models do not guarantee the result to the student, but give profit to the business. In the second case, the results, as a rule, are better, but there is a high probability of running into the wrong teacher, who can not only delay the process, but even discourage the desire to learn any language in principle.
All models are viable and a startup that can minimize the disadvantages and strengthen the advantages of the model is guaranteed to “shoot”.
What model to choose for building a business?
- Business model No. 1, if there is investment, initial capital, IT specialists and you need a lot of profit;
- Business model No. 2, if there is no capital and you are a private teacher or a mini-startup;
- Business model No. 3, if you are building a business not only for making money, but also for moral satisfaction and you have a really effective training methodology.
Which company model to choose for training?
- Business model No. 1, if there is time, there is no goal in training and a minimum of money;
- Business model No. 2, if there is time, is not a very critical goal and some money;
- Business model number 3, if there is no time, a very important goal is money.
As you can see, approaching foreign languages on the other hand — not methodological, but already commercial, it becomes clear that very often when discussing methods and methods these 3 business approaches are mixed, as a result of which such discussions lead to nothing: the client He doesn’t understand, he is taught to study or apply knowledge in practice.
Having understood and determined where exactly you want to invest your time - in the study process or in the practical result, it becomes clear what resources, methods and the business models behind them are suitable for this.