In this episode of the CELab Podcast, we’re joined by Maria Manning-Chapman, the VP, Education Services Research at TSIA where we expand upon the TSIA’s “State of Education Services 2020” report – which we covered in Episode 38 of this podcast.
Here, we’re diving deeper into monetization strategies which our listeners and the network that we’re in as Customer Education Professionals are interested in getting more help with. Customer Education tends to “niche down” from where we end up in much larger, mature organizations where we often have true Educational Services teams.
1 – Working with Education Services
Maria works with TSIA members that span across all stages of maturity. Some are newly formed Education Services organizations, some are newish – in that 2-4 year range and then there are mature education organizations, been around for 5 or more years. From a business model perspective:
- About 20% function as a cost center (there is no revenue, or not enough revenue to cover costs)
- Approximately 20% are breakeven (there is enough revenue to cover expenses, but nothing extra)
- Roughly 55% are revenue centers (revenue, margin and profit positive)
- The remaining percentage is mixed models
In many cases, those who are cost centers are often looking to monetize training and at least move to breakeven. Those who are breakeven are looking to move to revenue/margin/profit positive.
2 – Maturity and Monetization
Most “young” XaaS (“X” as a Service) companies start with free educational programs. Educational material emerges necessarily from Customer Success, Support, and other teams prior to having a named leader.
If you’re thinking about education as a business, your job is to always grow the business. You have to have money to invest in your growth. Being revenue-generating allows you to fund your own growth.
Another key concept for all Customer Education professionals need to keep in mind is “the fallacy of free training”. If we give training away for free – the masses are going to flock, right? Many people believe that charging for education is a barrier.
Free training, however, is no guarantee of consumption. We know that driving consumption drives volume. Those who know how to prompt students to consume educational material net a higher average number of training days consumed annually and a higher number of online learning hours consumed annually.
So … it’s critical that any business model includes a consumption strategy. In a well-run organization, it’s a strategy to combine both free AND free to help your customers be successful by using your product more.
Have a free offer, a standard offer, and a premium offer.
3 – Transitioning from CS to PS – the ROI Question!
At some point as teams grow up we start to think about ROI – Return on Investment. How can we demonstrate ROI of our Customer Education Program?
Whether an education organization produces revenue or not, to prove value, you must establish some correlation between training and whatever metrics are important to your company. That could be:
- Growth in ARR
- Customer retention
- Product subscription renewal rate
- Call volume into support
- CSAT or NPS score
The next step is to look at behavior and compare an untrained, or marginally trained, individual/company and impact on any variable just mentioned as compared to an individual/company that has had in depth, ongoing training.
The biggest problem we see across the board is the lack of the collection of data and the necessary analysis to show correlations.
4 – Predictions for 2021
The “State of Education Services 2020” report had a lot of great material – the impact of Coronavirus and much more. What will 2021 bring? More VILT? Less Travel?
Thomas Lah, TSIA’s executive director of research, found that companies are saying that when the COVID-19 pandemic ends, they’re predicting that 60-70% of their workforce will be remote. Based on that, we speculate that means we’ll see more virtual instructor-led training and online learning.
Don’t underestimate the power of a human being in learning. If all this is over in 2021, or at least subsiding, people are going to be craving that human connection. We wouldn’t be surprised if there isn’t a bit of a surge for classroom and onsite training.
Think about packaging! What you can do to add value to your offers? You’re trying to get the attention of your customers – so you have to make it interesting. Part of the future is to make unique, creative packages to compel your customers to learn in many different ways.
There’s much more in this episode, so make sure you listen in!