Where is the crux of online education?
Editor’s note: This article is from Mustard heap, the author knows the wind.
In addition to the war-torn K12 online school, this year’s online education market is not prosperous. Taking online children’s English as an example, the problems of uneconomic scale and difficult profitability have not been improved overall.
Chenmei Education, which was recently contacted by the mustard heap, the company’s products expanded its B-end business at the end of last year, in addition to the one-to-four online professional oral English brand “Children’s Star” for children, mainly providing American-style double for kindergarten primary schools. The teacher class provides a pure American curriculum solution. The company has completed the last round of financing last year and is currently in a new round of financing.
Chenmei Education CEO Gao Bo recently talked about some opinions on online children’s language training and online education. The following is an excerpt from sharing content, which is organized by mustard:
Small class VS one-on-one
One to one, many people have said it, but I don’t understand it. I understand the following picture:
One-to-one customer cost map
Small classes and one-on-one do not have a big essential difference in terms of business logic. Whether it is a person or a group of four people, in principle, it is a personalized teaching. From the perspective of supply chain cost, the profitability of small classes is definitely higher than one-to-one, but why not profit, there are several problems:
First, the full-time rate is difficult to guarantee. The online traffic acquisition method is doomed to the complexity of the user composition. Most of the placements in the fixed mode only consider the age and class time (the two highest priority dimensions). If you count the area (this is very important), grades, personality, etc. from the perspective of experience, you can imagine the full class rate. The full-time rate in non-fixed mode has not been verified. For example, a four-person class starts in January. In March, two people retired. Two new recruits were recruited from the outside. The time was seamlessly connected. Some people followed 100%. The full class rate is counted, but this is just an algorithmic game. The renewal fee is also a truth.
One-on-one students and teachers are very quick. As long as they meet the students’ time, they can start classes. Of course, the quality of teachers is different. Small classes are much more complicated in group classes, and it is extremely painful to make trade-offs between full class and user experience.
Second, the decision-making cycle and cost of small class users are high. phaseCompared to one-on-one, small class users will not be less expensive because the course price is cheaper than one-on-one. In fact, the pre-sales cost is still high, but the cash flow has come down.
Third, back-end operating costs are even heavier. The figure below shows the composition of subsequent operating costs:
It can be seen that the cost of small classes is higher than one-on-one. This is also why there is no one-on-one small class in the cash flow, and it has not achieved profitability. A seemingly profitable road is gradually blurred.
The disadvantages of online educational institutions
In recent years, the scale and output value of the education industry have become larger and larger, and more and more problems have arisen. The phenomena such as the quality of teachers, the difficulty of refunding fees, and the running of institutions are endless.
There are more and more institutions that lose money. Nine of the ten online education companies are losing money. After the company dies, the new incoming players continue to burn money. Everyone will have a question, can online education not make money? Some people think from the beginning that online education will lose money.
In fact, the education industry can achieve sufficient cash flow and maintain healthy operation through the two natural advantages of prepaid form and just-needed demand. The reason for not making money is that the depth of cognition of the education industry is not enough and the business model has problems. It can be simplified into two points:
One is that the cost of obtaining customers in the early stage is too high. Taking online children’s English as an example, the customer acquisition route is basically through the market. The main links include “Getting Leads – Inviting – Experiencing Lessons – Forming a Single – Regular Price Lesson”. The main channels include information flow advertising, friends circle, Short videos, etc. The cost of obtaining a valid clue is between 200 and 400. The whole process is down. The cost of getting a new customer can be four or five thousand.
The second is that the late user retention is very low. Some companies use Laxin as the main source of cash flow every month, which is problematic. Pulling new is important, and more than half of each monthly revenue comes from new students. It is not difficult to imagine how high this cost is. The essence of low retention is that the product does not meet the user’s expectations. In order to operate the cash flow, there is no time to consider stopping to slowly polish the product, but to continue to invest money in the market.
At the same time, some retention referrals are achieved through profit. Old users recommend a new user, have to send classes, cut prices, these can not be regarded as natural retention and transfer.
Too much emphasis on marketing will fall into an infinite loop
Online educational institutions want to run out, need to be in the supply chain, teaching and researchAnd the service is done in three aspects. However, at present, the investment of most organizations in the supply chain, teaching and research is far from the investment in marketing.
Everyone is over-concentrating on the market and sales, ignoring products and services. Marketing is a visual act that is delivered on the headlines, circle of friends, etc., and the results will be visible soon. But if you spend money on products and teaching, you can’t see the effect in the short term.
Many companies often can’t wait to get rid of the amount, leaving nothing left. When I understand it later, I found that I have entered an infinite loop. The capital market is watching you, and the growth rate cannot fall.
Many educational companies run because the money is burned out. Parents feel that the organization has ran away the money, and the tuition fees have been spent. It is unfair to say that at least the vast majority of the money is spent in places that should not be spent.
The best marketing should come from the product itself. A company that conforms to normal business logic must first be profitable. Many bosses feel that it is wrong to make money first and make the scale. It is not right to make money after pricing. Now every field has been pioneered, and you have to be a substitute. You don’t make money on a small scale, and you don’t necessarily make money on a large scale. Secondly, it is enough for an education company to only make one main product form. When its growth reaches the bottleneck, consider the development of diversification. Finally, the main product form cannot be affected too much in the face of policy changes.
This year is called the capital winter. Some companies use the layoffs to quench their thirst, which is equivalent to spending money slowly. But if the business model is not adjusted, the problem will continue until next year.
How to play in the sinking market
There are many companies in the education industry who are doing and want to sink, which requires a thorough study of the three to five-line market. People are easily caught in such misunderstandings:
The first point is that residents in third- and fifth-tier cities are not strong in spending power. Researchers need to distinguish between good income and disposable income. Many people living in third- and fifth-tier cities, combined with local consumption levels, may have higher disposable income than some people in first- and second-tier cities.
The second point is that people think that the sinking market has low requirements for the quality of goods. When some education companies are doing sinking in the market, they feel that the products are almost finished, and the final result is that they will return. It’s free to use at first, and it won’t be used after someone else runs out. You can feel that the local is very low, but you must not ignore their pursuit of good products.
The third point is not to understand the ecology of the residents of the three to five lines. In first-tier cities, the relationship between people is more bound by interests. Most people who come into contact with each other are not jobs or partners. There is very little time with family members. This phenomenon is the opposite in third- and fifth-tier cities. This is also the reason why more and more can be done locally. Can’t take it for granted that as long as the price is low enough, the market can be grabbed.
New Oriental is doing a good job in the future for so many years, and the brand influence is so huge.Big, the entire market still has a 90% share, which is also the charm of education: no matter how big a company is, others still have a chance.
The people who teach are all feelings. Beyond your feelings, you need to be clear about your strengths, whether it’s a product polishing or a back-end service. At least one thing can be done. The company can run, not because marketing is doing well. Some problems are not solved by spending money. Many people say that I have to be fast, otherwise I will lose the advantage of starting. In fact, the first move can bring advantages, but it can’t bring victory.