Yuanfudao product analysis!

With the continuous development of the Internet, the online education industry has also developed rapidly. Now online education has penetrated into our study and life. We can use online education platforms for training, learning courses, tutoring, etc.; the author of this article shares the development and analysis of the online education software Yuanfudao , let us learn about it together.

The impact of the COVID-19 pandemic in 2020 has put online education in the spotlight again.

According to iResearch Consulting, the education industry raised a total of 116.4 billion yuan in 2020, of which online education raised 103.4 billion yuan, accounting for 89%. On October 22, 2020, Yuanfudao announced that it had completed a total of US$2.2 billion in financing in the G1 and G2 rounds. According to reports, this is the largest single financing amount in China's Internet field this year. After the financing was completed, the valuation of Yuanfudao online education company reached US$15.5 billion, making it the highest valued unicorn in the global education technology industry.

How did Yuanfudao, which has only been established for 8 years, quickly rise to become the largest unicorn in the global education industry? What is the current development status of the entire online education industry?

This article will analyze Yuanfudao’s perspective and give you an in-depth understanding of the operating logic of this company and the K12 online education industry.

This article will analyze from the following aspects:

1. Industry Analysis
2. Competitive product analysis
3. User Value Analysis
4. Business value analysis
5. Product Iteration Analysis
6. Product structure analysis
7. Operational Analysis
8. Summarize

1. Industry Analysis

The K12 online education industry is an online model produced by the education industry with the development of the Internet. It is a training industry with students from the first grade of elementary school to the third grade of high school as target users. Compared with the traditional offline education industry, it breaks the limitations of time and space and provides more high-quality educational resources for areas with a shortage of educational resources.

So in just a few years, what has made the K12 online education industry become a dark horse in the Internet industry?

Since the education industry is an industry deeply affected by macro factors, we will use the PEST model to explore the reasons behind it.

1. Politics

• 2016.2 Internet education was included in the new version of the "National Key High-tech Fields" list. Internet education companies have the opportunity to be recognized as high-tech enterprises and enjoy tax incentives.
• 2017.1 The 13th Five-Year Plan for the Development of National Education encourages social forces and private capital to enter the Internet field in various ways, promoting the development of the new "Internet + Education" business model
• In July 2019, the Ministry of Education, together with the Cyberspace Administration of China, the Ministry of Industry and Information Technology, the Ministry of Public Security, the State Administration of Radio, Film and Television, and the National Office against Pornography and Illegal Publications, jointly issued the "Implementation Opinions on Standardizing Off-campus Online Training", which is the first online training standard document issued at the national level.

The release of various policies and regulations are encouraging and promoting the development of Internet online education and the standardized operation of the subsequent industry.

2. Economy

According to the National Bureau of Statistics, my country's GDP in 2019 was 99,086.5 billion yuan, a year-on-year increase of 6.1%. China's per capita gross national income exceeded US$10,000 for the first time, and the national per capita disposable income was 30,733 yuan for the whole year, an increase of 8.9% over the previous year. The per capita consumption expenditure of the national residents was 21,559 yuan in the whole year, an increase of 8.6% over the previous year.

In addition, with the upgrading of my country's consumption structure and the improvement of people's living standards, the proportion of per capita cultural, educational and entertainment expenditure in total consumption has continued to grow. According to data analysis by the National Bureau of Statistics: In 2019, the per capita education, culture and entertainment expenditure of urban residents continued to increase, accounting for 11.7% of consumer expenditure. This shows that parents pay more and more attention to their children's education and are willing to invest money in their children's education and learning.

At the same time, the scale of China's K12 online education market has been showing stable and sustained growth. According to iMedia Research, the scale of China's online education users was 104 million in 2016. By 2019, the number of users had risen to 259 million, an increase of 149%. Judging from the scale and forecast data of online education users in China from 2016 to 2021, it is estimated that the scale of online education users will reach 446 million in 2021.

3. Society and culture

From the perspective of the entire society, the imbalance of educational resources is a problem faced by the entire society, which is in sharp conflict with the rigid demand for Chinese-style exam-oriented education.

For most families, education is still the only shortcut to their children's development. However, good educational resources are, on the one hand, distributed extremely unevenly, especially in terms of teachers. There is a huge gap between first- and second-tier cities and other underdeveloped cities. On the other hand, good schools have high admission thresholds, and many families cannot enter. Therefore, pursuing better education through technological means becomes their only option.

4. Technology

The continuous development and advancement of technology has brought many improvements and changes to the online K12 education industry.

• The gradual popularization of mobile Internet since 2012 opened a new chapter for online education. Education live broadcast platforms began to emerge in 2014, breaking the limitations of time and space and expanding the use scenarios of online learning.
• The improvement in hardware performance of mobile phones, tablets, etc. has greatly improved the user experience of online learning: higher-performance devices provide a better experience.
• With the popularization of 4G, the research and development and application of 5G, and the support of big databases, teaching students in accordance with their aptitude is no longer empty talk. Accurate user portrait analysis allows users to truly choose the courses and education that suit them.

All of the above factors have together driven the rapid development of the online education industry in recent years. So what will be the development trend of this industry in the next few years? Is there enough market space?

According to statistics and calculations by iResearch Consulting, the market size of China's online education industry in 2020 was 257.3 billion yuan, with a CAGR of 34.5% over the past four years. Among them, the accelerated online process of K12 subject training is the main contributing factor to the rapid growth of the online education market.

Therefore, we can see that there is still a lot of room for this market, and it will continue to grow rapidly in the next few years.

2. Competitive Product Analysis

Faced with the promising online education industry, a large number of players have emerged to participate. Traditional offline educational institutions have started online education in order to maintain their competitiveness, upgrade and expand their businesses, and open up the industrial chain.

In May 2018, New Oriental launched Oriental Quark, which was renamed New Oriental Primary and Secondary School Online School in 2019. It focuses on online courses for primary and secondary schools, and will later develop to cover adult education.

Internet giants such as BAT and Toutiao are optimistic about the online education industry and have taken advantage of their traffic to enter the market.

In 2019, ByteDance acquired the Internet mathematics education platform Tsinghua University and Peking University Online School, and launched the incubation project Dali Classroom. 100% of the teachers are from Tsinghua University and Peking University. The teaching method is "dual teacher model", and the courses cover all subjects in primary and secondary schools.

On March 7, 2020, ByteDance’s AI English enlightenment course “GuaGuaLong English” was launched, dedicated to providing multi-disciplinary online systematic AI enlightenment education for children aged 2-8, which mainly includes three major course systems: English, Chinese, and thinking.

At the same time, pure online education companies are constantly emerging and flourishing in various segments.

In July 2016, Zuoyebang, which focuses on taking photos to search for questions, officially launched the live class function, providing online teachers and course services, covering all subjects in primary and secondary schools.

In 2016, the Zhangmen One-to-One APP was officially launched, focusing on providing one-to-one customized online tutoring for primary and secondary school students across the country. Its unique "4in1" teaching guidance system shines.

In 2019, Zhangmen One-to-One received US$350 million in Series E financing, setting a new record for the highest financing in the K12 online education one-to-one full-subject tutoring track.

Gaotu Classroom was officially launched in November 2016. Backed by SXU, it focuses on K12 online education and also adopts the online live broadcast dual-teacher model of "famous teachers teaching + dual-teacher tutoring".

The online education business conducted by Internet companies has a strong traffic entrance, but lacks basic education industry experience; traditional offline education institutions have rich experience in the education industry and long-term face-to-face teaching experience with users, but have insufficient traffic entrances, their scale is restricted by geographical location, and their market costs are relatively high.

According to the "Online Education Market White Paper 2020 and Outlook Report 2021" released by the Virtual Economy and Data Science Research Center of the Chinese Academy of Sciences in 2020, Yuanfudao leads the way with more than 4 million paying users for full-price courses and corporate revenue exceeding 28 billion, ranking in the first echelon of the industry; Zuoyebang has more than 1.3 million paying users for full-price courses and a large number of APP downloads. It has an important position in the industry and belongs to the second echelon; other companies with relatively low market share belong to the third echelon.

Yuanfudao and Zuoyebang are both leading comprehensive K12 education companies with similar user groups and similar scale, and are direct competitors. So, we will take the growth paths and business models of the two companies as the entry point to gain a deeper understanding of the differences between them.

1. Yuanfudao

• Yuanfudao Online Education was founded in 2012 and received RMB 10 million in Series A funding from IDG in August of that year.
• In August 2013, it received $7 million in Series B funding from Matrix Partners China and IDG, and launched the Yuantiku APP in October of that year.
• In July 2014, it received $15 million in Series C funding from Matrix Partners China and IDG, and in October of that year, it launched the Xiaoyuan Question Search APP.
• In March 2015, it received $60 million in Series D funding from China Media Capital, New Horizon Capital, IDG Capital, and Matrix Partners China, and in May of that year, it launched the Yuanfudao online course APP.
• In May 2016, Yuanfudao received USD 40 million in Series D+ funding from Tencent, which was a major strategic investment by Tencent in the field of K-12 online education.
• In May 2017, Yuanfudao received a round E financing of US$120 million from PE Warburg Pincus and Tencent. In December of the same year, the Xiaoyuan Oral Arithmetic APP was launched.
• In December 2018, Yuanfudao received a $300 million Series F financing led by Tencent, with participation from Warburg Pincus, Matrix Partners China and IDG’s original shareholders. After the financing, Yuanfudao’s market value was estimated to exceed $3 billion.
• On March 31, 2020, Yuanfudao completed its latest round of financing of US$1 billion. This round of financing was led by Hillhouse Capital, followed by Tencent, Boyu Capital and IDG Capital. After the financing was completed, Yuanfudao's valuation reached US$7.8 billion.
• On October 22, 2020, Yuanfudao announced that it had completed a total of US$2.2 billion in financing in rounds G1 and G2. After the financing was completed, the valuation of Yuanfudao Online Education Company reached US$15.5 billion, exceeding the Indian education technology company BYJU'S and ranking first among the global education technology unicorn companies.

Core business model: dual-teacher teaching - large class lectures, small class tutoring and question-answering mode.

Teaching Staff: Most of the teaching staff graduated from prestigious universities at home and abroad such as 985 and 211 or have many years of front-line teaching experience. The admission of teaching staff is extremely strict every year, with an admission rate of only about 1%. New teachers must undergo 12 weeks of training and 200 hours of trial teaching before they can officially teach.

Tutor: Each class is equipped with a tutor who provides individual WeChat Q&A, reading companionship, exercise explanation, class summary and other services to consolidate classroom knowledge.

Course selection mode: Yuanfudao will provide one-on-one online consultation for every registered student, clearly understand their learning situation, the points they hope to improve, accurately profile their users, and then recommend suitable courses for them.

Teaching mode: In order to improve the quality of classes, we adopt a dual-teacher mode of large-class teaching and small-class Q&A. The main teacher is responsible for explaining the course content, and the tutoring class teacher fully assists in classroom learning, answering questions after class, and correcting and explaining homework, etc.

Traffic acquisition: In the early stage, Yuanfudao relied on the large number of users accumulated by its two free tool software, Yuantiku APP and Xiaoyuansouti, to attract traffic at a low customer acquisition cost. In the mid-term, with the support of capital, technology, and traffic, it invested heavily in advertising to increase exposure and popularity to obtain traffic. In the later stage, it reached strategic cooperation with the authoritative technology competition program "The Brain" and the national education program "Study Strong Country" to further build brand awareness, consolidate brand positioning, and acquire more users.

Track layout: In 2019, Yuanfudao announced the closure of its one-to-one tutoring business and will focus on class business.

2. Homework Helper

• On January 15, 2014, Zuoyebang Android was officially released and had been downloaded by 300,000 users that month.
• In September 2015, Zuoyebang received a $25 million Series A funding round from Sequoia Capital and Legend Capital. In the same year, it announced that it would separate from Baidu and operate independently.
• In September 2016, Zuoyebang received a $60 million Series B financing led by GGV and Xianghe, followed by Sequoia and Legend Capital.
• In August 2017, Zuoyebang received a $150 million Series C financing led by H Capital, followed by Tiger Fund, Sequoia Capital, Legend Capital, GGV, and Xianghe Capital.
• In July 2018, Zuoyebang received USD 350 million in Series D funding, led by Coatue, with participation from Goldman Sachs, Primavera Capital, Sequoia Capital, GGV, Xianghe, Tiantu, NEA, Taihe and other new and old investors.
• In November 2018, Zuoyebang received $500 million in D+ funding from SoftBank

Unlike Yuanfudao, Zuoyebang, which also started out as a search tool, has not given up on the search tool business. Instead, it has continued to enrich this business while opening up the online live teaching business.

Core business model: large-class teaching, exercise practice, search tools

Teaching staff: More than 40% of the teachers are from first- and second-tier cities, and 60% of the teachers have an average teaching experience of more than 3 years. 985/211 universities account for more than 50%

Tutors: They also maintain classroom order, adjust the learning atmosphere, and answer questions after class.

Course selection mode: It also provides accurate positioning services and recommends courses that are more suitable for users based on their score stage.

Teaching method: A dual-teacher service model is adopted with large classes teaching and small classes answering questions.

Business expansion: On July 7, 2016, the live class function of Zuoyebang was launched, providing online teachers and course services, and allowing interaction and tutoring on mobile phones. This means that Zuoyebang, which has always been based on photo search as its core business, has officially entered an era with live teaching as its core business.

Summarize:

Development time:

• Zuoyebang APP: launched in 2014, Zuoyebang online courses launched in 2016
• Yuanfudao APP: launched in 2015

Traffic acquisition: Yuanfudao mainly relied on the large number of users accumulated by Xiaoyuan Search Questions and Xiaoyuan Kousuan in the early stage and the traffic entrances of the two platforms to complete the acquisition of the first batch of users. In the middle and late stages of development, on the one hand, Yuanfudao invested heavily in advertising with the support of traffic, technology, and capital. On the other hand, Yuanfudao further increased its popularity by reaching strategic cooperation with science and technology education programs such as The Brain and Study Strong China. In the early stage, Zuoyebang also relied on the large number of users accumulated in the tool search vertical field to acquire the first batch of users. In the middle and late stages, it also reached strategic cooperation through advertising and with major educational programs and platforms.

Financing situation: It can be seen that Zuoyebang has been smooth sailing on the road to financing, and major well-known investment companies are competing for financing. Yuanfudao is making great strides, not only attracting investments from major well-known investment companies, but also from technology and internet companies such as Tencent. It is favored by various industries and has become the biggest dark horse in online education.

Core business: Yuanfudao APP focuses on online courses, providing a full range of course services for primary, junior high and high schools, achieving precision and specialization. Zuoyebang has three core businesses: live classes, exercise practice, and search tools: including photo search, word lookup, Chinese composition, English composition, and ancient Chinese text assistant.

From the above analysis, it can be seen that Zuoyebang has richer platform business, and is backed by Baidu's strong technology and resource support, and has strong technical competitiveness, but is slightly insufficient in teaching staff; while from the development of Yuanfudao, it is favored by multiple markets, has a lot of financial advantages, and focuses on its own brand promotion. In terms of teachers, Yuanfudao has stricter recruitment conditions and its teaching staff is stronger than Zuoyebang, which is what parents are most concerned about. This is one of the reasons why Yuanfudao is more popular among parents. The core businesses of both companies include K12 online education courses, and both rely on their own large number of accumulated users in the early stage. They have the same teaching model, both adopt large-class teaching and small-class question-and-answer model, and have developed well, but it remains to be seen which one will outperform in the future.

3. User Value Analysis

In the K12 online education market, there are four main participants: parents, students, teachers, and platforms. The business logic diagram of Yuanfudao is as follows:

If a platform wants to achieve rapid growth, it must meet the needs of all three parties.

Next, let’s explore the needs of these three parties and how Yuanfudao can better meet their needs.

1. Parents

As payers of K12 education products, parents of children from elementary to high school are gradually getting younger, mainly those born in the 1980s and 1990s. They are more receptive to new things and their values ​​towards education are becoming increasingly diverse. Parents have different expectations for children at different stages of education.

Primary school stage: The primary school stage is a critical period for cultivating children's good interests and thinking habits. However, children at this stage generally have poor autonomy, love to play, and have weak learning awareness. At the same time, since children at this stage face little pressure to enter higher education, parents are more focused on stimulating children's curiosity on the basis of laying a solid foundation in cultural courses, and expanding their extracurricular interests and hobbies, such as spoken English, programming, mathematical thinking, ancient poetry, humanities, etc.

Junior high school stage: The number of subjects in junior and senior high school increases, the knowledge scope is broad, the knowledge system is complex, and the knowledge structure of liberal arts and science is quite different. Many children show difficulty in this learning stage, find it difficult to keep up with the learning progress, and find it difficult to understand and master the learning content. At the same time, many parents consider the transition from junior high school to high school to be the first watershed for their children, which means whether they can enter a good high school, enjoy a better educational environment, and receive better educational resources. At this time, parents' demand for online education is clearer and more utilitarian.

High school stage: High school is generally considered by parents to be the most critical stage of education. Whether a child can enter a good university will greatly affect the child's future. In the environment of exam-oriented education, parents are more eager for the utilitarian demand for education. Parents take exams and further studies as the goal - to consolidate the foundation, strengthen and make up for the weak, balance the subjects, and improve the academic performance. Due to the high cost of trial and error, parents are particularly cautious in choosing educational tutoring.

To sum up, parents' demands for tutoring education are roughly as follows: for the primary school stage, focus on the cultivation of interests, thinking, and cultural foundation, especially in English. The main focus in middle school is to expand knowledge and improve academic performance. In high school, the need for exams is stronger, and the main goal is to improve academic performance.

After a strong demand is generated, the learning methods adopted by parents are mainly the following:

1) Rely on existing school resources

China's compulsory education is a 9-year system. In an environment where exam-oriented education and indicators are king, education is not only valued by parents, but has also been quantified as a key indicator that can represent the quality of a school. Schools and teachers also pay great attention to the quality of education and invest huge amounts in education. Especially in recent years, children's courses are becoming more and more numerous and richer. Many parents believe that school education can meet their needs, but there are still opportunities for children's interests and hobbies that have not been developed too much. In underdeveloped cities, school education resources are insufficient, teaching is not professional enough, and there is even a phenomenon of one teacher holding multiple positions, which makes parents very worried.

2) Self-tutoring

Parents who choose to tutor their children themselves are mostly parents of children in primary school. The reason they choose this method is that, first, parents believe that the subjects their children learn at this stage are relatively simple, and they are capable of tutoring their children while saving money; second, parents believe that this method is more flexible and free, as parents and children can flexibly arrange time and space for tutoring; parents understand their children's learning situation better and can provide flexible tutoring based on the situation, which is more targeted, and the effect is more obvious and faster.

However, there are also prominent problems with this approach. First of all, the vast majority of parents have no teaching experience and are worried that their knowledge reserves are insufficient to provide systematic teaching assistance to their children, which may even affect their children's thinking habits. Most of the parents' time and attention are occupied by work. After all, they are not professional teachers and cannot devote all their time and energy to tutoring their children. Intermittent, spare time, and fragmented tutoring has minimal effect on their children's education. Secondly, parents do not have the methods and abilities to cultivate their children's interests and hobbies. Interest is the best teacher for children. Only interest is the greatest driving force for children to learn and explore in depth.

3) Home tutoring

From the survey on part-time jobs for college students in major universities, we learned that home teaching is also one of the favorite methods for parents. They believe that, firstly, it can save time and space costs. Compared with traditional institutions, children do not have to spend time and energy on traveling and adapting to a new learning environment. Second, one-on-one tutoring at home is highly targeted. Teachers can develop targeted tutoring plans based on the child’s academic performance and focus on tutoring in weak subjects to achieve the goal of strengthening and making up for weaknesses.

However, in the tutoring market, college students and part-time teachers are prevalent. There are problems such as lack of professional teaching skills and characteristics, overly traditional teaching methods, lack of in-depth teaching, and difficulty in cultivating children's ability to solve difficult problems from a systematic thinking perspective.

4) Training institutions

This is also the most popular method among parents. The main reason is that parents believe that training institutions are more professional, authoritative and easier to cultivate children's thinking ability.

At present, when parents choose training institutions for their children, most of them still choose offline tutoring classes, and relatively few choose to teach only online, which shows that there is still huge room for the development of online training.

Although offline tutoring classes have many advantages, their disadvantages are also obvious. The market is not standardized. For example, there are unreasonable fees, uneven teacher levels, too many students attending classes at the same time, low teaching efficiency, time and space constraints, and it is inconvenient for parents to pick up their children, or even have no time to pick up their children. These problems have led to a significant increase in parents' costs in terms of money and time.

It can be seen that these four methods have their own advantages and disadvantages, but none of them can meet the current needs of parents well.

2. Children

The users of K12 education are all those born in the 2000s. Compared with the instrumental attitude of those born in the 1980s and 1990s towards the Internet, those born in the 2000s, as the "natives" of the Internet, often regard it as a "necessity of life."

The high penetration rate of the Internet in their lives has led to mutual influence and interaction between the Internet and their lifestyles: on the one hand, long-term immersion in the online world has made them more accustomed to images and videos than text, and has also developed a fragmented lifestyle, especially for primary school children. Children of this school age group have poor purposefulness, and unintentional attention still plays a big role. When disturbed by new and strange stimuli, their attention is easily distracted; therefore, in order to gain their attention, the content must be lively and vivid in form, otherwise there is no way to "please" them.

For children in junior high school, they are in adolescence and are under pressure to enter junior high school. Overly traditional and rigid tutoring can easily make them dislike studying and become resistant. Students need to have their own study habits and correct study methods. At the same time, communication between teachers and children and psychological counseling are also particularly important.

High school stage: At this stage, students are divided into arts and science. Because the subject knowledge is more complicated, the gap between students is more obvious. Students not only need the correct learning methods and a lot of test training, but also need to enhance their self-confidence. Specialized tutoring, efficient specialized and personalized tutoring is what they really need.

We can see that children of different school ages have different problems, but they are relatively similar in junior high and high school, and it is not easy to solve these problems.

3. Teacher

The core of any education and training institution must be the teachers, and the quality of teachers is also one of the core concerns of users in brand selection, which is also one of the core competitiveness of all education and training institutions.

In 2015, the Ministry of Education issued the regulation “Strictly prohibiting primary and secondary schools and in-service primary and secondary school teachers from giving paid tutoring”, which made it even more difficult for most teachers who already had meager salaries. Especially in an era of rapidly rising housing and commodity prices, many teachers have to look for other part-time jobs to increase their income in order to make a living and have a better life.

It can be seen that faced with meager salaries and increasing life pressures, teachers have an increasingly urgent need to make money. In the context of the government banning paid extracurricular tutoring while encouraging the development of Internet + education, teachers seem to have seen new options.

According to a survey conducted by iResearch, Chinese parents currently pay more attention to the richness of teaching models, quality of teaching materials, fun of courses, and quality of teacher teaching when choosing the brand of a tutoring institution. Relatively speaking, affordable price is what parents care least about.

From the above analysis, we can find that in the matter of educational counseling, the problems with parents' existing solutions are mainly:

• The traditional school teaching method is too rigid and cannot cultivate children's interests and hobbies;
• Concerns that the quality of teachers varies greatly and it is difficult to improve the skills and knowledge of one’s children;
• The question of whether the teaching method is systematic or not, and the worry that it cannot exercise children's thinking ability;
• The question of whether personalized teaching is possible, especially for junior high and high school students, the trial and error cost for parents is extremely high;
• Whether it is necessary to spend extra time to pick up and drop off the children, etc.

Children’s main demand is fun. They need fresh and interesting teaching methods to make learning more interesting and more attention-grabbing. In addition, efficient, personalized and goal-oriented tutoring is also what they need.

Similarly, teachers also have a strong desire to increase their income, status, and realize their self-worth. How does Yuanfudao, as a platform, better meet their needs and attract them to this platform?

4. Platform

1) Control of teacher quality

As we mentioned above, Yuanfudao has a very strong faculty and extremely strict requirements for recruiting main teachers. Most of the team members graduated from prestigious universities at home and abroad such as 985 and 211, or have many years of front-line teaching experience. The annual admission rate is only about 1%, and new teachers must undergo 12 weeks of training and 200 hours of trial teaching before they can officially teach.

Such a strict recruitment and admission system can guarantee the quality of teachers to the greatest extent, thus avoiding parents' concerns about the uneven level of teachers in offline training institutions; at the same time, each teacher has a corresponding detailed introduction, including a summary of teacher qualifications, teaching experience, and teaching characteristics, which eliminates parents' doubts and concerns about the teacher's level.

2) Optimize the teaching system

Yuanfudao has never stopped exploring the teaching system. After closing the "1 to 1" business model, Yuanfudao focused on exploring large-class dual-teacher courses. The large-class dual-teacher model reduces the demand for the number of main teachers, and the one-to-many teaching is closer to the school classroom scenario. At the same time, each class is equipped with a head teacher who is responsible for answering questions after class, accompanying and assisting students, and providing feedback on learning conditions.

3) Personalized course recommendations

In view of the fact that the subject knowledge scope has expanded and the knowledge system has become more complex and huge in junior and senior high school, students are more likely to have the problem of subject level gap. Yuanfudao has launched courses tailored for students with different goals and ages, which has effectively solved the needs of students for personalized tutoring.

4) Make the course more interesting

Learning itself is a boring thing, especially for primary school children. They cannot establish a learning consciousness, have no interest in learning, and their attention is easily distracted, which are common problems for them. For primary school courses, Yuanfudao has created an immersive classroom to increase the fun of the courses.

The interactive questions and scenarios, with the help of animations that recreate the scenarios, make children’s understanding of knowledge more vivid and easier to concentrate.

The original teaching animation closely follows the course content and runs through the course in the form of animation, making children more interested, more willing to learn, and able to solve difficult problems easily.

Gold coin reward mechanism: students can get gold coins every time they answer a question, and the gold coins can be exchanged for corresponding items. The gold coin reward mechanism is used to enhance classroom interactivity, allowing children to gain a sense of accomplishment from learning, stimulating their learning potential and increasing their enthusiasm for learning.

5) Competitive salary system

When analyzing the needs of teachers, we mentioned that their normal income is relatively low. Faced with the increase in living and survival costs and the pursuit of quality of life, teachers hope to earn more money; Yuanfudao provides a powerful salary system. From Yuanfudao's recruitment, we can see that the salary of the main teachers is around 250,000 to 500,000 yuan per year. For the low-income teacher group, the temptation is huge. Judging from the strict 1% admission rate, Yuanfudao also attracts a large number of teachers to stop every year.

Through the above analysis, we can find that compared with other educational training and tutoring methods, Yuanfudao continuously adjusts and optimizes according to the needs of each user, which explains why Yuanfudao was able to break through the siege in a short period of time and was welcomed by a large number of parents and children.

4. Commercial Value Analysis

We know that the ultimate goal of any product is to create commercial value. A product that cannot create commercial value cannot develop for a long time. Revenue is an important indicator for judging the commercial value of a product. Yuanfudao's revenue mainly comes from K12 live large-class courses. Here, we use the commonly used data indicator GMV (that is, number of users * conversion rate * average order value) of e-commerce to analyze whether Yuanfudao's core business is healthy.

1. Increase the number of platform users

To achieve revenue, the first step is to have platform users, which is the foundation for achieving revenue. So how does Yuanfudao increase the number of users on its platform?

We can roughly divide it into two ways: paid channels and free channels

1) Large-scale advertising investment

• Place television commercials on CCTV.
• Sponsored the popular variety show, "Ace vs. Ace".
• Strategic cooperation, and the sponsorship and cooperation with CCTV for many science and education programs, such as "Let's Talk" sponsored by CCTV in June 2016, and the exclusive online education partner of "The Brain" for the third consecutive year from 2017 to 2020. In August 2019, Yuanfudao cooperated with Xuexi Qiangguo for the first time, and Yuanfudao's exclusive original course "Dore-Mi Classical Music Enlightenment Course" was selected for "Xuexi Qiangguo" and received a key recommendation.
• Free live classes. In January 2020, we invited top scholars to give free master humanities classes, bringing together scholars such as Zhou Guoping, Yu Qiuyu, Meng Man, Yi Zhongtian, Kang Zhen, Ji Lianhai, and Liu Yong to teach Chinese culture live.
• Academic cooperation: In August 2019, Lin Yuanfudao invited Academician Lin Qun to attend a special sharing session, bringing the deep thinking of a mathematician to the Yuanfudao mathematics teaching and research team, as well as his insights and experiences accumulated in many years of mathematical research and education and teaching.
• Live streaming is the most popular way of selling goods at present. Yuanfudao invited Luo Yonghao to sell courses for Yuanfudao online on Douyin, which combines selling courses with brand promotion and achieved very good results.
• To support public welfare, in 2020, the year of the epidemic, Yuanfudao responded to the government's call to suspend classes but not learning, and launched free live classes as soon as possible, and launched online mock exams for the CCP college entrance examination candidates.

In 2021, we participated in the award ceremony for CCTV's large-scale charity event "Looking for You in the Crowd - 2020 "Looking for the Most Beautiful Filial Teenager"" and provided scholarships for the teenagers.

We can see that Yuanfudao has invested a lot of money and energy in advertising. It is not just a simple advertising and marketing investment, but also has its own courses, which have greatly enhanced its brand awareness.

2) Excellent product reputation

According to statistics, more than 60% of parents obtain information about training classes through introductions from relatives, friends and colleagues, accounting for 61.25%; it can be seen that the fission dissemination through interpersonal relationships is a major way for K12 online education platforms to attract new users.

So how can we get friends to recommend each other? Word of mouth plays a very critical role, because educational products are a type of product that requires users to invest a lot of time and money, so the decision-making cost is very high. In order to improve the reputation of its products, Yuanfudao also spares no effort in activities and user service experience.

1. Satisfy parents' desire to share and vanity. By forming classroom reports, test reports, etc., it is convenient for parents to share their children's progress and learning performance on WeChat Moments, thus creating word-of-mouth fission among WeChat Moments.
2. Promote new customers by providing mutual benefits. For example: invite friends to attend classes together and win gifts, and get the same training equipment as the strongest brain for free; invite new users to attend classes and get monkey coins, and get continuous gifts. These activities motivate and stimulate users, increase user participation, and are beneficial to brand image promotion and promotion of related courses.

3) Inflow from other platforms

As Yuanfudao continues to grow and develop, its products have formed a closed loop of preparation, teaching, practice, testing and evaluation. The products within the matrix are divided into two categories: tools and training. A good relationship between customer acquisition and traffic is formed between the two categories of products.

As of now, Yuantiku has provided 800 million practice services, Xiaoyuan Search Questions has been used by 200 million students and provided 36 billion homework tutoring sessions, and the number of Xiaoyuan Oral Arithmetic questions corrected every day exceeds 250 million; all of these provide a steady stream of traffic for Yuanfudao, its core product.

2. Improve conversion rate

After acquiring new users, how can Yuanfudao motivate users to consume and convert registered users into paying users, thereby generating commercial value? Below, we analyze in detail.

1) New member gift package event

For newly registered users, as soon as they log in and enter the APP homepage, they will be given a special gift for new users (10 yuan for a limited time course purchase), and there will also be special courses for new users, free course qualifications and other activities to encourage consumers to make their first purchase.

2) Provide high-quality and low-cost courses

Yuanfudao offers 3 yuan for 5 subjects and 10 hours of difficult and key special courses. The course quality has not been lowered due to the low price. Instead, it has given users a sense of trust through high-quality and low-priced courses on difficult and key topics. In addition, after the first payment, it will be easier to pay for the full-priced courses for the second time.

Next, let’s take a look at the page layout design of Yuanfudao.

List page:

From the list page, we can first see the goals of this course (target A, S, S+ classes) and the detailed notation of the grade: difficulty and what score rate are appropriate for people), class time, and determine whether it is suitable. Secondly, we can see the clear selling price and whether it meets the psychological price of consumers.

Subject List Course Page:

Create a sense of urgency: Impress consumers through the registration countdown and the remaining quota. If you don’t buy it now, you are likely to be unable to buy it, creating a sense of urgency for consumers’ psychology and promoting consumers to develop purchasing behavior.

Course details page:

Create a popularity atmosphere: There are course evaluations under the course details page. Through the display of the number of evaluations and the praise rate, on the one hand, it builds a sense of trust in users, and on the other hand, it creates a strong atmosphere of consumer popularity.

Establish consumption protection: There is a [Service] description under the course details page, which describes the service contents included in the course before, during and after class, so that users can understand clearly and build a sense of trust, security and security.

Free trial class for high-quality paid courses: When a user has the intention to purchase courses on the platform, but may have doubts about the choice of the teacher, Yuanfudao provides the teacher's free regular course audition class on the course details page, allowing users to directly experience the course effect and dispel user's doubts.

Product Guarantee:

At the bottom of the APP homepage, there is a public announcement of course content content, establishing a sense of trust, security and security for users, allowing users to purchase with confidence, and solving the after-sales service without worries!

3) Increase customer order price

The average order value is affected by two factors: the single purchase amount and the purchase frequency. Online education platforms are similar to e-commerce platforms. They both belong to e-commerce trading platforms, but the transaction content is different. So how did Yuanfudao increase the average customer price?

For online education platforms, its core indicator is the renewal rate. In order to increase the renewal rate and increase the average customer price, Yuanfudao has adopted a variety of methods:

① Improve the quality of the course

Strict recruitment requirements, from the annual admission rate of 1% and the large number of lecturers in Yuanfudao, we can know that Yuanfudao has very high requirements for teachers. Most of the lecturers graduated from prestigious schools or have rich teaching experience and rich teaching background.

Targeted curriculum system. Help students match courses according to different grades, different subjects, and students' different grade levels. Tailored courses for students of different goals and ages, which can solve the needs of students for personalized tutoring well.

Systematic large-class courses covering all disciplines. Yuanfudao has achieved comprehensive coverage of all subjects in terms of curriculum system, allowing every student to find a system class that suits them, minimizing the loss of users because they cannot choose courses.

② Improve class experience

The lecturer is taught by the dual teacher, the main teacher is responsible for the course explanation, and the class teacher is responsible for the answers to questions after class, the exercises explanation, etc. With precise task division, the main teacher can devote all his energy to teaching and course research and development.

Immersive classrooms are aimed at primary school courses, and through animation and situations, they make the courses more rich and interesting. At the same time, they strengthen the interaction between teachers and students, so as to achieve the goal of children falling in love with classroom learning.

Visualize learning effects. As decision makers of whether to purchase online education products, parents play a crucial role in the platform. So how can parents and the platform interact and connect?

• Yuanfudao launches classroom report: After parents finish their children’s live class, they receive classroom reports to check classroom performance;
• Exercise report: After the post-class exercise correction is completed, you can receive the exercise report to check the performance of the after-class exercises;
• Examination report: After the exam is over, receive the exam report to check the exam performance.

In this way, parents can understand their children's learning situation in real time, feel their children's progress as soon as possible, and at the same time feel the professionalism of the platform, thereby enhancing parents' trust and increasing the renewal rate.

For users who purchase special price courses:

Yuanfudao can attract a large number of people to buy by relying on newcomers' special courses. So how do you convert this group of users into regular course consumers?

Service experience of special offer courses: Although it is a special offer course, Yuanfudao still takes the course quality and after-school service seriously. The class teacher brought all users into the WeChat group and provided class reminders and Q&A services. At the same time, the teacher will also share class notes in the group.

Check-in reward: In order to reduce the user churn rate during special classes, Yuanfudao has set up a check-in reward mechanism to provide a free learning material for users who check in for classes for several consecutive days.

Distribution of coupons and precious learning materials: Users who purchase special courses can get a fixed coupon to purchase regular courses again, and at the same time, they will be given a special course score increase information worth several hundred yuan.

Summary: From the above analysis, it can be seen that in order to optimize its revenue model, Yuanfudao has done a lot of work to achieve the purpose of attracting new customers, increasing conversion rates, and increasing customer unit price.

In 2020, Yuanfudao's national users reached 400 million, and its core business indicator "renewal rate" rose from the initial 30%-40% to 70%-80% in 2019. The customer acquisition cost was reduced to hundreds of yuan, and the promotion conversion rate was about 42%. It is at the top of the industry. This is also the reason why Yuanfudao can gain favor from the investment community.

5. Product Iteration Analysis

In order to deeply analyze the version iteration rhythm of Yuanfudao and explore the product iteration logic, the author iterated the iteration of all core versions of Yuanfudao from V1.0.1 to V7.17.0 as follows:

According to the curve distribution of the accumulated downloads of Kuchuan Yuanfudao, it can be seen that from the V2.10.0 stage, that is, before January 15, 2016, the user growth curve of Yuanfudao was extremely low and almost unchanged. Between V2.10.0 version and V5.16.0 version, Yuanfudao's user growth curvature continued to increase at a low speed. When it reached V7.17.0 version, Yuanfudao's user growth curve increased with a very large curvature, which belongs to the "J-shaped" curve. Therefore, the author tried to divide Yuanfudao into two stages and analyze it in three subsections:

Before March 2017, the V1.0-V2.10.0 version was the cold start stage of Yuanfudao's mobile product. At this stage, Yuanfudao did not start marketing methods. The source of users mainly comes from a large number of users accumulated by Yuantuku and Xiaoyuan oral computing in the early stage. At this stage, Yuanfudao's goal is relatively clear: to explore and verify user needs.

1. Phase 1: Explore and verify user needs

The main operations are reflected in the following aspects:

1) Improve basic functions: such as adding pre-class photo answering exercises, adding checking my semester class function, checking delivery address and logistics information function, adding my order function, adding new course playback function, etc., all are improving basic functions.

2) Enhance the connection and interaction between students and teachers: filtering teacher evaluations, contacting the teacher by phone after purchasing class, writing evaluations to the teacher for the first time to send vouchers, improving evaluation information, updating the teacher’s personal homepage, and viewing teacher evaluations by courses, etc., are all to strengthen the interaction between students and teachers. Students can understand the teacher’s background more clearly and easily select ideal teachers. At the same time, teachers and platforms can also receive more feedback from users.

At the same time, Yuanfudao has added course business: it has launched one-to-one tutoring for mathematics, physics and chemistry in high schools, special courses and semester classes, enriching the types of courses. This is actually moving the offline training tutoring classes directly online. In the early stage, Yuanfudao was not sure which course model was suitable, so this is also the most effective and direct way to verify.

The launch of the special courses, starting from the knowledge point level, meets the personalized needs of students, because many students have different levels of mastery of the knowledge points, and the special courses can enable them to achieve learning results more efficiently; at the same time, the launch of the semester class function, on the one hand, can alleviate the tight teacher resources caused by one-on-one tutoring, and at the same time, reduce prices, acquire more users, and reduce their own customer acquisition costs.

At the same time, a series of newly added sharing functions also represent that Yuanfudao has also begun to build operation tools to prepare for attracting users. For example, the sharing function added to the course introduction page and the personal teacher page, sharing means more people know about Yuanfudao, and then there will be more possibilities for new users, indicating that Yuanfudao is already preparing for the next stage of user fission.

2. Phase 2: Build on-site operation tools to optimize user experience

From January 2016 to the present, the curvature of the user growth curve of Yuanfudao has begun to increase from V2.10.0 to V5.5.0. At this stage, Yuanfudao mainly takes:

1) Further improve user experience

The course adjustment function, even if the user has purchased a certain teacher's course, it exists:

• For some reasons, after buying a class, there is a conflict between class time and user;
• Users have discovered the courses of teachers they prefer or want to find that friends have also signed up for this course, and want to take classes with friends in the same class and be with each other.

The course adjustment function launched by Yuanfudao perfectly solves the needs of users in these scenarios and improves the user experience.

Do users want to review and review after taking the course? But watching the entire course will feel boring and waste time. The downloadable streamlined version of the course launched by Yuanfudao will be played back, deleting non-important clips, leaving only key knowledge points explanations, allowing users to directly and efficiently review the knowledge points.

2) User recruit new users

We see that in the cold start stage, Yuanfudao has launched the sharing function, which has set up tools for attracting new users in this stage. You can receive red envelopes when purchasing courses. We hope to reduce operating costs by actively attracting new users and achieve user growth. This is also a commonly used method in the e-commerce field. At the same time, with the increase of users, in order to efficiently solve various problems and feedbacks that users have encountered, Yuanfudao has launched the online customer service function.

3) Enhance user stickiness

The fastest answering questions in classroom tests, through this form, users' sense of accomplishment and participation will be enhanced, users' interest in learning, and thus enhance user stickiness.

In the process of gradual exploration, Yuanfudao gradually weakened the one-to-one tutoring business.

3. Stage 3: Explore and increase learning scenarios and seize market share

From the V5.50 to V7017.0 stage, from the user growth curve, we can see that the growth rate of Yuanfudao's user curve continues to rise. Expanding the number of users and retaining old users has become the key phased goals of product iteration.

In terms of retaining old users, Yuanfudao continues to optimize basic functions at the product level, including optimizing course reports, evaluating teachers with labels, optimizing exercises, optimizing class homepage, etc., to further improve the user experience and conversion rate of the app.

At the same time, junior high school and primary school course replays can also participate in the test, allowing users to be interactive even if they watch the replay courses. The new primary school classroom Chinese support for reading, English role-playing and foreign teacher animations will enhance the fun of the classroom and create an immersive classroom, which is constantly improving and enriching learning scenarios.

In August 2018, Yuanfudao closed its one-to-one tutoring business and stated that it will focus on class and class business in the future. At this time, facing a large number of online education players pouring into the market, in order to seize market share, at this stage, Yuanfudao significantly accelerated its operational rhythm and reached strategic cooperation with major CCTV programs to enhance its brand awareness, including: In 2019, Yuanfudao's online course APP became the exclusive registration and selection channel for "The Strongest Brain". In August 2019, Yuanfudao cooperated with the Learning Power for the first time. Yuanfudao's exclusive original course "Dolaimi" Classical Music Enlightenment Class" was selected as "Study Powerful Country" and received key recommendations. In January 2020, Yuanfudao announced that it had reached a cooperative relationship with CCTV's "Chinese Poetry Conference" (Season 5). In July 2020, Yuanfudao announced that it would become the exclusive naming partner of CCTV's "Speaking Starts".

Judging from the user growth curve of Yuanfudao, at this stage, Yuanfudao's number of users showed explosive growth, and there was no sign of slowing down, indicating that Yuanfudao's series of actions at the product level and operation level have achieved very beautiful results.

Overall, Yuanfudao has a particularly good sense of rhythm; he focused on polishing products and improving business functions in the early stage, and was not in a hurry to promote it, because even if many new users were attracted through large-scale promotion, these users would gradually lose because the user experience was still unstable and the balance between platform resources and user needs was not achieved.

When the user experience becomes stable, and the resources, costs and user needs are balanced, Yuanfudao enters the mature stage, conducts large-scale operation and promotion, and continuously acquires new users; at the same time, it continuously optimizes basic functions to meet users' personalized needs, and improves user experience to retain old uses. This is the overall iteration step of Yuanfudao.

6. Product structure analysis

In iterative analysis, we analyzed the iterative steps of Yuanfudao's product functions. Next, let's take a look at what users' needs meet and how they are distributed throughout the app.

This is mainly analyzed through product structure. The following figure is the product structure brain diagram of Yuanfudao V7.17.0:

For the sake of analysis, the author will get the following table by re-examining the product structure of Yuanfudao according to users, scenarios, needs and functions:

Although the consumer decision makers and users of Yuanfudao APP are not very similar, they meet more parents' needs in primary school, while those in junior high school meet more children's needs, but the needs of parents and children are highly overlapping, so the two are analyzed as the same user.

When users use APP, there are three usage scenarios:

• Before purchasing a class, I want to have an understanding of the product brand, popularity, overall faculty, etc.
• The course purchase process, and understand the detailed content of the course, the details of the course teacher, the paid price, etc.
• After purchasing classes, the operation of courses on the platform.

1. Scenario 1: What needs did the user have before purchasing and what functions did Yuanfudao meet this needs?

Before buying a class, parents may not have a special understanding of the brand's products, so they first want to have a systematic understanding of the product. Users can access the "Homepage" after registering and logging in, and learn about the brand and faculty of Yuanfudao through video, and learn how to select suitable courses, class formats and after-school services through pictures and texts.

After a preliminary understanding, I began to select courses according to the teaching, but I still had questions about the class type, curriculum system, and course teacher qualifications. At this time, users can see the class type: system classes, key and difficult topics on the "Course" page after selecting subjects and grades. You can learn about the information you want through the third level page of the "Course" page and the course outline, evaluation, and teacher details introduction page of the "Course Introduction Page".

After understanding the teacher and course, users may feel that it is too one-sided and cannot truly feel the actual effect. They want to have a more intuitive understanding of the teacher's teaching style and teaching level, and understand what services are available after purchasing the course. Through the service introduction of the "Course Introduction" page and the free trial function, Yuanfudao allows users to clearly know what course services they purchase include and can immediately experience the quality of course services and the teacher's lecture style before paying, so as to decide whether to purchase the course.

2. Scenario 2: What needs do users have during purchase and what functions does Yuanfudao meet this needs?

When you decide to purchase the course and need to pay, the user may still feel insecurity and distrust. Yuanfudao set up the "Announcement of Registration Commitment" under the payment page. You need to read and check it and check it before you can pay, which gives users a greater sense of security and credibility.

At the same time, when purchasing products, what consumers want to know more is whether there are any information such as discount activities, discount coupons, etc. Yuanfudao set up a "coupon" module on the payment page, and users can directly collect and use available coupons through this module, effectively shortening the user's payment process and improving the payment rate to a certain extent.

In terms of payment methods, Yuanfudao fully considers the age and identity of the payer. Mainstream payments such as WeChat and Alipay are convenient for parents, but if they are used by students, "parent payment" and "QQ wallet payment" can also better meet the children's payment needs; at the same time, on the payment page, the product price and product name are also clearly displayed, making users more confident and transparent in consumption.

3. Scenario 3: What needs does the user have after purchase and what functions does Yuanfudao meet this needs?

After the course is successfully purchased, users need to understand the course schedule to facilitate preparation. On the first-level page "My Courses", you can view all the courses purchased by users, and you can filter by subject, type, and course status. Users can view class schedules on this page, and at the same time set up a course calendar function at the top, which can display the class time of each class more clearly and in detail. At the same time, in order to avoid the problem of users forgetting to attend class, Yuanfudao has a "class notification" function in the settings to remind users to attend class.

For children with low awareness of learning, especially those in primary school, parents hope to understand their children's class conditions, class performance, learning results, etc.; this demand is met by binding to the WeChat public account and pushing learning reports. First, the user stickiness can be enhanced to a certain extent by binding to the official account. After all, WeChat is used very frequently in parents' daily life and work. Second, pushing learning reports through the WeChat public account can make parents more desire to share "Friends" and more convenient for parents to share. This also achieves the purpose of Yuanfudao's hope to use parents to perform user fission.

After purchasing the course, users may have a need to adjust classes due to time arrangements, find a teacher they like more, or want to attend the same teacher's class with classmates or friends, so as to facilitate class, communication, and mutual supervision and learning. Users can adjust classes on the first-level page "I" function and customer service center.

Summary: From the above analysis, we can find that Yuanfudao’s functional design can well meet the needs of users in the three scenarios before, during and after purchasing classes. At the same time, the high-frequency functions required by different users have a prominent focus and reasonable distribution in the product structure, which can be considered a product with relatively excellent design.

7. Product operation analysis

In addition to meeting user needs, a successful product cannot be separated from product operation.

The saying "Products are responsible for giving birth, and operations are responsible for raising them" also indirectly reflects the close relationship between products and operations. So how did Yuanfudao achieve rapid growth in a short period of time through operational means?

The author has sorted out the main operational activities since the establishment of Yuanfudao, according to the AARRR model:

1. Attract new customers

Method 1: Name a popular variety show

• In July 2020, Yuanfudao announced that it would become the exclusive naming partner of CCTV's "Speaking Starts".
• "Speaking Started" named by CCTV.

Method 2: Strategy, academic cooperation

• 2017-2020 Tutoring Online Education has been the exclusive online education partner of "The Brainiest" for the third consecutive year.
• In August 2019, Yuanfudao cooperated with the Learning Strong Country for the first time. Yuanfudao's exclusive original course "Dolaimi" Classical Music Enlightenment Class" was selected as the "Learning Strong Country" and was recommended.
• Top scholars were invited to give free lectures on master humanities classes, bringing together scholars such as Zhou Guoping, Yu Qiuyu, Meng Man, Yi Zhongtian, Kang Zhen, Ji Lianhai, and Liu Yong to teach Chinese culture live.
• In August 2019, Lin Yuanfudao invited Academician Lin Qun to attend a special sharing session, which brought the mathematician's in-depth thinking to Yuanfudao's mathematics teaching and research team, as well as his insights and experiences accumulated in years of mathematics research and education and teaching.

Method 3: Supporting public welfare

• In the 2020 epidemic year, Yuanfudao responded to the government's call for silence and not to stop learning, and launched free live classes as soon as possible to launch online mock exams for the Chinese Communist Party's college entrance examination candidates.
• On January 25, 2020, it was announced that Yuanfudao has donated RMB 10 million to Wuhan to fight the new pneumonia epidemic. Donations are mainly used to purchase medical protective materials, testing equipment, etc. urgently needed by front-line medical institutions.
• In 2021, we participated in the award ceremony for CCTV's large-scale public welfare event "Looking for You in the World - 2020 "Looking for the Most Beautiful Filial Boy" and provided scholarship funds for the teenagers.

Method 4: Establish a live broadcast platform and invite anchors to bring goods

In April 2020, Yuanfudao invited Luo Yonghao to sell classes for Yuanfudao online on Douyin, which had both sales and brand promotion, and achieved very good results.

2. Inspire user activity

For users who download and register an APP, they need to activate the user to open and use the APP to improve the user's daily and monthly active users. Yuanfudao increases user activity through the following methods: push messages and teacher phone reminders.

3. User retention

Gold Coin Task System: You can get gold coins by signing in before class, completing after-class exercises, correctly answering test questions, full attendance in live classes, etc., and redeeming gifts (similar to the points system).

4. Increase income

This content is described in detail in the commercial value analysis process and will not be repeated here.

5. Share and disseminate

In order to acquire more users at low cost, Yuanfudao has done the following in terms of user self-dissemination:

• During the epidemic, in response to the government's call for "suspension of school and classes", free live courses were opened for primary and secondary school students across the country to study at home.
• At the same time, in order to alleviate the employment pressure of 2020 college graduates, Yuanfu guided to issue employment notices to more than 3,000 fresh graduates in Wuhan.
• Set up sharing functions on the course introduction and teacher details page, and launch red envelope activities to receive course purchase sharing.

8. Conclusion

Above, the author analyzes the reasons behind the rise of Yuanfudao from seven parts: industry, competitors, user value, commercial value, product iteration, product structure, and operation. It can be seen that the success factors behind a product are very complex.

1) Under the influence of common favorable factors such as policies, economy, technology, and social culture, the rapid development of the K12 online education industry in recent years and will maintain stable and rapid growth in the next few years.

2) In the field of K12 online education, various industries are rushing to enter, including non-education giants such as Baidu and Byte. It can be seen that the online education industry has fierce market competition, but under the promotion of the epidemic, the Matthew effect has been significant, accelerating the reshuffle of the K12 online education industry, and the industry structure has gradually become clear. But at the same time, due to the complex demand of the education industry, there are many subdivided tracks, and monopoly companies cannot appear, and the market opportunities are still huge. There are direct competitors between each track. Zuoyebang and Yuanfudao user groups are similar, with similar scales and the same core businesses. They are direct competitors. Who can be better in the later competition or form a monopoly of acquisitions remains to be seen.

3) In Yuanfudao, there are three main participants: students, parents and platforms. If the platform wants to achieve long-term and stable development, it needs to meet the needs of children and parents well. For educational needs, only by improving product quality and user experience can we obtain user support and generate user value.

4) From the previous analysis, we can see that Yuanfudao has also made a series of actions to improve its own GMV, but at this stage, Yuanfudao has not yet achieved profitability and still relies on capital blood transfusion to compete for the market. This is also a common situation in the industry. In the subsequent development, how Yuanfudao can achieve profit development is also the top priority.

5) Yuanfudao's product iteration can be roughly divided into three stages: cold start stage, improving basic functions, exploring and verifying user needs; building operation tools, improving user experience stage, and launching sharing and red envelope activities based on sharing functions, and launching online class adjustment and online customer service functions to better meet the various needs of users after purchasing classes and in the entire purchasing process; increasing learning scenarios and seizing market share stages, Yuanfudao has continuously launched learning scenarios such as text reading, role-playing, replaying and testing, and foreign teacher animation, which further meets the needs of users. At the same time, with the injection of a large amount of capital, Yuanfudao, which has the advantage of cash flow, began a "money-burning" marketing war in brand promotion and achieved remarkable results.

6) From the above review of Yuanfudao's functional structure diagram, we can see that its functional structure is simple, but it is designed around the user's demand scenarios before, during and after purchase, and can meet most of the consumer's needs well.

7) As stated in the book "Light of Operations", products are responsible for defining and providing long-term user value, and operations are responsible for creating short-term user value and assisting products in improving long-term value. In terms of attracting new products, Yuanfudao focuses on building its own brand image and popularity, with clear goals, and continues to be named and formed strategic cooperation with CCTV education knowledge programs, with remarkable results. At the same time, the subsequent improvement of users' activity, user retention, revenue, and sharing and dissemination is also very stable, and the control and coordination between products and operations is perfect.

IX. Future Outlook/Optimization Suggestions

Through the above analysis, we have learned about the reasons for the rapid rise of Yuanfudao. So where will this unicorn go in the future? Next, the author will use the SWOT model to conduct a system analysis, hoping to draw effective conclusions from it.

1. Strengths

• The course model of "dual-teacher college class" and excellent teacher resources can well solve the needs of parents and children.
• The course covers a wide range of courses and includes course tutoring from elementary school to high school. Relatively speaking, its user base will be larger and more competitive.
• Brand influence, unlike other companies, Yuanfudao is not promoting its own brand, but is not seeking "traffic" cooperation, but long-term strategic cooperation with CCTV's educational knowledge programs, which makes its brand image as an educational product more deeply rooted in people's hearts.
• The user experience is good and can meet the needs of users in different scenarios before, during and after class purchase.
• There is a complete product matrix, Yuantuku, Xiaoyuan Search and Xiaoyuan Oral Calculation, all of which provide Yuanfudao's core product with continuous traffic, and the converted user loyalty will be extremely high.
• In this industry, Yuanfudao has obvious advantages in corporate revenue and user scale, deep moat, and obvious Matthew effect.

2. Weaknesses

• The business model seems to be successful, but it still mainly relies on capital transfusions, and is still a bit far from large-scale profits.
• Players competing with the market have not formed differentiated competition and are not competitive enough.

3. Opportunities

• Common factors of policy, economy, social culture, technology and other factors have promoted the great development of the K12 online education industry in recent years, and will continue to maintain a certain high growth rate in the next few years.
• Whether it is the development of online education or offline education markets, they are mainly concentrated in first- and second-tier cities. With the competition in the education and training markets in first- and second-tier cities becoming more intense, the sinking market has become a new focus.

4. Threaten

• Zuoyebang's core business is the same as Yuanfudao, with similar user scale and smooth financing. Behind it is Baidu's strong technical support and is a very tough opponent of Yuanfudao.
• Behind the hot scene of high growth and high financing amounts, the continuous increase in customer acquisition costs and general losses in the industry.
• With the continuous development of online education, it is also facing stricter supervision from government departments, and its compliance costs are increasing.

In order to gain stronger comprehensive competitiveness and continue to develop in a positive and long-term manner, the author believes that Yuanfudao should also:

1) Expand business model horizontally. In addition to exam-oriented courses, Yuanfudao is also a very good choice to expand course types from other directions, such as opening interest classes, such as musical instruments, Go, etc., to form differentiated competition with opponents.

2) In-depth exploration of user needs. The author believes that for children who are in the school stage, especially children in the junior and senior high school stage, psychological problem counseling is a very large demand. Junior high school children are in adolescence, and with the pressure of going to school, they are prone to being disgusted with school and rebellious. For high school children, the psychological pressure at this stage is very huge, but they are usually rarely or unwilling to communicate with their parents. If psychological counseling services can be offered for children with junior high school and senior high school, the author believes that it will be one direction, but psychological counseling courses are difficult.

3) Strengthen the review of teacher qualifications and strictly enforce the recruitment process. With the stricter supervision of online education industry standards by government departments, policy restrictions are the sword of Damocles on Chinese companies. If Yuanfudao wants to achieve more lasting development, it must strictly abide by national regulations. The establishment of a brand image is not overnight, but the collapse is in a flash.

4) Vertical expansion, in addition to expanding the types of courses, expanding the scale of service users is also a direction. For users who enter the university stage after graduating from middle school, there are still many rigid needs, such as CET-4, CET-6, computer examinations, etc.; users who enter society after graduating from college still have many needs, such as junior college to undergraduate, civil service examinations, etc. For the old users of Yuanfudao, they have formed a sense of trust in the platform. Yuanfudao can once again develop new and old users and develop adult education business on this basis.

5) In the face of fierce competition in first- and second-tier cities, focus on investing in the sinking market, and combine the characteristics of third- and fourth-tier cities to launch regional special courses. For example, purchasing online courses in Yuanfudao, the tutoring class teacher will organize classes in the local area to watch online courses in a unified manner, and the tutoring class teacher will be responsible for answering questions and correcting homework offline. By capturing users in third- and fourth-tier cities, we will continue to expand the market scale and enhance competitiveness.

The above is an analysis report made by me for the purpose of being familiar with the K12 online education industry. Because of my limited personal abilities, it is inevitable that there will be inadequate analysis. Please give me some advice and corrections.

Author: Yes

Source: Yes