Pain points of K12 online education industry and 3 solutions

The 2020 epidemic “black swan” event has pushed online education into a new turning point. Data shows that in 2020, the number of online education users in China reached 37.66 million, with a market size of 485.8 billion yuan, and the growth rate rose to 20.2%.

In particular, China's K12 user group is huge, with high demand and satisfaction for online education consumption. Under the policy support of "suspending classes but not learning", a large number of primary and secondary school students have resumed classes online, and the penetration rate of K12 online education has grown rapidly, rising to 23.2% in 2020, with a growth rate far exceeding previous years' data.

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According to iMedia Consulting data, the size of the K12 group is expected to be 162 million people in 2020, and the number of K12 online education users is expected to exceed 37 million. Among them, the renewal rate of the interviewed K12 online education users is about 80%, and the user satisfaction level is relatively high.

K12 online education has effectively solved the shortage of high-quality educational resources, but the behavior of major institutions spending money on marketing to seize customer acquisition channels has increased the pressure on corporate operating costs. Although free live classes and heavy investments in advertising on major satellite TV stations, public transportation and other places have helped companies expand their exposure and acquire more students, they have also increased their customer acquisition costs and weakened their profitability. The difficulty in achieving both efficiency and scale has become a major pain point in the current K12 online education industry.

Faced with this problem, more effective customer acquisition channels such as building their own traffic word-of-mouth marketing, exploring lower-tier markets, and finding new traffic entrances with smart hardware have begun to receive attention from education and training companies.

1. Build your own traffic and use word-of-mouth marketing to form a virtuous cycle

The most direct way to reduce customer acquisition costs is to build your own traffic channels and improve operational efficiency through internal and external dual circulation. The current mainstream method is to create your own private traffic pool, and then use word-of-mouth marketing to continuously attract traffic and conversions to form a virtuous circle.

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According to iMedia Consulting data, K12 users are more inclined to learn relevant information from acquaintances. 68.1% of the respondents said that they learned about K12 education platforms and course information from recommendations from acquaintances, of which 31.3% came from teachers and 36.8% from classmates. Only 25.8% of people learned about the platform through advertising channels. Therefore, the WeChat ecosystem, which can spread quickly and conveniently and has a huge number of users, has become one of the most popular public domain traffic for K12 education and training institutions.

For example, the public account knowledge store and mini-program online classroom built by the third-party technology service provider Maker Craftsman for educational institutions can give full play to the advantages of "social interaction among acquaintances". Offline students are introduced online to become "seed users", and then spread in the WeChat ecosystem through small tools such as group buying, voting, checking in, and helping. The new traffic is accumulated on its own platform, and user reputation is subsequently improved through course services, and then continued to attract traffic through fission through recommendations from acquaintances, forming a virtuous circle.

2. Expand the lower-tier markets and break down regional restrictions

Online education is gradually becoming saturated in first- and second-tier cities, and it is difficult to acquire user traffic. Third- and fourth-tier cities and below will become the new target markets for education companies, especially in areas with scarce educational resources. The online education model can maximize the use of teachers.

Educational and training institutions can use online tools to expand into lower-tier cities earlier than their competitors, build brand awareness and accumulate users more quickly, break through regional restrictions with the best cost-effectiveness, bring high-quality teaching experiences to all parts of the country, and quickly gain market share.

The K12 online education market in first- and second-tier cities is becoming more mature and competition is becoming more intense. Due to the impact of the epidemic, parents in third- and fourth-tier cities have rapidly increased their recognition of online education models. The online brand trust of this part of users is still in the cultivation stage, which is conducive to institutions seizing the blank market. In the future, third- and fourth-tier cities will become the main incremental markets for K12 online education.

3. Find new traffic entrances and use smart hardware to achieve offline traffic diversion

As an emerging track in the K12 online education industry, the smart hardware track is another direction to break the industry’s predicament. Because of its low development cost, it can generate considerable cash flow by selling it as a commodity, which can better keep the company's cash flow in a healthy state. At the same time, it is a good offline traffic entrance, which is helpful for users to generate brand awareness.

A typical example is the smart error-correcting printer "Miao Miao Ji" independently developed by Zuoyebang, which has been ranked first in the domestic e-commerce printing category for four consecutive years. The Miao Miao Ji APP has more than 7.5 million registered users, bringing it considerable traffic.

In general, the epidemic has brought a new round of development opportunities to K12 online education. Under the policy of “suspending classes but not learning”, the K12 online market has attracted a large number of new users in a short period of time. Among them, each sub-segment has huge development potential with policy support and market development. As a traditional K12 education and training institution, it might as well seize the development opportunities, transform and upgrade as soon as possible, expand online business, continue teaching innovation, and embark on a new round of rapid development.