The secret of user growth of “Geshuixue”

GSX is a domestic online education institution focusing on K-12. Through a dual-teacher model of live broadcast + tutoring, it provides courses in all subjects for primary, middle and high schools, as well as language, vocational and interest education. Strict admission standards are implemented for the main teachers of various courses, and talents with many years of practical teaching and research experience are selected to maximize the teaching quality. The author of this article summarizes the growth secret of GSX for us through practical thinking.

In September, a month that used short-selling reports as napkins, GSX released its Q2 financial report. Although the gross profit margin was as high as 78.1%, its marketing expenses were dragged down by its peers and increased by more than 7 times. Even with many preferential policies from the government and other parties, it could not escape the fate of losses.

After being severely beaten, the short-selling institutions saw this scene and laughed while eating melon seeds: You see, you lost money, and I just said you couldn’t hold on.

The outside world has always had doubts about the impressive financial reports of GSX, but there is still a consensus in the industry: if there is no problem with the financial reports, then this model will be a bright ray of hope on the difficult road ahead for the education industry.

Today I don’t want to clear the name of GSX, nor do I want to dig into whether GSX’s financial report is true or false. I just want to talk about what GSX did right to have such a good gross profit margin.

1. Course mode: large-class live broadcast and dual-teacher

In many people's minds, education and training is actually equivalent to selling courses. Several leading companies in the education and training industry started out by selling courses. Internet companies that started out by providing tools once dreamed of monopolizing a large number of users by focusing on Internet gameplay and then thinking about monetization methods.

For example, word memorization tools, information tools, etc., however, after acquiring many users, they found that they could only obtain positive cash flow by selling courses, so they obediently returned to "selling courses."

Of course, education is not equal to courses, and educational training is not equal to selling courses, but "selling courses" is indeed a necessary area for the education and training industry to make profits.

In this field, you don’t need to educate users anymore, nor do you need to work hard to explore unexplored user needs. Just meeting existing user needs is enough to keep you and your organization well fed and clothed.

Now that the exam scope has been drawn, what courses should I buy? How can I sell courses to get high scores and high returns in this field?

The answer from Who’s Teaching is: large-class live classes + dual-teacher model.

Some colleagues always feel disdainful and confused when seeing this answer. There are other companies in the industry that offer large-class live classes and dual-teacher models, but why is it that only Who’s Learning can succeed?

On the surface, it seems that Getuixue only uses large-class live classes and a dual-teacher course model, but in fact, Getuixue uses the MCN training model + semi-standardized service model.

1. MCN training model

It has to be said that the wild growth and exploration period of Who's Who in the past few years has allowed it to find a very interesting education MCN model: signing famous teachers, creating famous teachers, cooperating with famous teachers to share profits, and achieving mutual benefit and win-win results.

This model was first rolled out in the professional life field and achieved partial success. The platform was responsible for operation and promotion, and the teachers were only responsible for teaching. At that time, a yoga teacher on the platform could take hundreds of millions to tens of millions of dividends from the platform a year through cooperative teaching.

This model brings freedom and income to third-party teachers, as well as traffic and profits to the platform. However, this model cannot be replicated across fields. GSX has done a lot of exploration in the field of vocational education, but it is difficult to form scale and linkage due to the scattered demand of the vocational education audience.

Such a situation may seem difficult to break, but sometimes it can be solved simply by changing your perspective.

The K12 field has natural linkage and a longer life cycle, and the relevant user needs are of high frequency and rigid demand. In 2017, Gaotu Classroom was established. With the help of the mature online live large-class technology that supports 3,000+ people's interactions in 2014, Getuixue fully focuses on the online live large-class model in the K12 field.

Unlike the restrictions and constraints on the training of famous teachers by established education and training institutions, Getuixue, after tasting the sweetness of famous teachers, has maximized the advantages of famous teachers on the basis of mutual benefit and win-win.

1) Do a good job in retaining famous teachers and retaining the mechanism of profit sharing with some famous teachers

By linking the income of famous teachers with the income from courses, we can stimulate their enthusiasm. At the same time, when the Matthew effect becomes more prominent, famous teachers will not be able to obtain such huge profits by working independently or leaving for other platforms, which naturally reduces the risk of many famous teachers leaving.

2) Promote famous teachers and use the famous teacher effect to enhance brand marketing and acquire more users

GSX has reaped the benefits of social media in terms of marketing. When WeChat had not yet restricted fission software such as Taskbao, it had already used its own media and communities to carry out extensive marketing promotions.

In order to prevent famous teachers from becoming too outstanding, other companies in the industry choose to standardize faculty, teaching, and research. When promoting their products, they can only give priority to endorsement by institutions, which inevitably leads to restrictions. With the combination of GSX and the effect of famous teachers, the conversion rate of this type of promotion is often higher.

3) Do a good job in teacher training, use famous teachers to train our own teachers and tutors, and shorten the training cycle

Teacher training has always been a major concern for many educational companies. It often takes several months to several years to train a qualified teacher. Currently, GSX has increased its efforts in training its own teachers and will directly recruit students from prestigious schools as reserve teachers.

A few months ago, the recruitment platform showed that the salary of self-recruited lecturers at GSX was 50-80k/month, and the salary of tutors was 0.8-1.5k/month. Currently, this figure is decreasing, with lecturers making 25-60k/month and tutors making 5k-8k/month.

The main teacher is responsible for classroom teaching, explaining knowledge content to students, and focusing on teaching research and course polishing; the tutor is responsible for answering questions and providing guidance, leading students to preview before class and provide guidance on homework correction after class, etc.

Public information shows that in terms of the selection of main teachers, the average teaching experience of the main teachers at Who’s Teaching is 11 years, 5% are from the top offline teachers, and the average interview pass rate is 1.87%.

In a teacher's growth path: professional ability, teaching experience, and mentoring are all important links. Compared with direct long-term closed teacher training, collaborative teaching, teaching research and traffic input under the power of famous teachers can effectively help new teachers grow.

The influence of famous teachers can bring teaching opportunities to self-trained teachers, and the courses of famous teachers can also provide important references and inspiration to self-trained teachers, which can directly shorten the teacher training cycle.

To put it bluntly, this model is somewhat similar to the star training model in the entertainment industry. For example, after Yang Mi became famous, she set up her own studio, signed a series of young actresses such as Di Lieba, and used her own resources to promote her stars. Dozens of episodes of the "Eternal Love" series made Di Lieba a top star and also found more performing opportunities for other stars under her.

The role of famous teachers in GSX is increasingly tending towards brand power and professional assistance. As the number and quality of self-trained teachers continue to grow, GSX's brand and professional endorsement will become more solid.

2. Semi-standardized service model

The large-class live broadcast and dual-teacher model is essentially a combination of standardized basic courses and personalized service follow-up, using tutors to retain course experience and personalized follow-up.

Education itself is a personalized service. Every student has his or her own unique characteristics. Students also need special attention in order to establish effective dependence and connection between students and teachers.

A tutor is such a role. According to the information, the current large-class courses of Who's Who can reach at least 1,700 students per class. After being divided into small classes, each class has 100-200 students. The tutors will follow up the students' entire learning chain, such as preview, review, homework, etc.

In terms of tutoring effectiveness, this method is indeed not the best. The best user experience is of course true 1v1 service.

But starting a company is not charity. Not only GSX, but any educational company cannot do this. What educational companies need to do is to infinitely improve operational efficiency through technology and other means, so that a tutor can cover more students with limited energy.

The focus of K12 education is mainly on repeat purchases and subject expansion. From the perspective of the institution, the main responsibilities of many tutors include tutoring, operations and sales.

But in order to sell it, you must first provide excellent services and training results that can satisfy users, which links the tutor's work performance and actual benefits.

The tutors at Who’s Teaching must prioritize the seven necessary service steps for users in order to bring in reliable follow-up benefits.

The 7 steps are: summarize review key points and assign homework after class - follow up with each student to review and consolidate the new knowledge points learned - provide learning reports - follow up on each student's daily practice - grade homework and provide personalized feedback - respond to questions and answers - provide effective feedback to parents.

The main teacher provides "standardized" course content for the entire large class, and the tutor provides personalized follow-up services for students in the small class.

Everyone knows that standardization is the cornerstone of scale and profitability, but in the field of education, personalization is the core of cultivating children with different foundations to achieve the best results.

Companies that pursue standardization break down each process such as research, teaching, and service in detail, sacrificing some effects in pursuit of replicability; companies that pursue individuality take 1V1 to the extreme, sacrificing the profits that the company can obtain.

It seems that the latter is more "conscientious" in doing education, but with the high operating costs and marketing costs in the education field, the low profit margin will have a great impact on the sustainability of the company's operations and the expansion of the company's scale.

Therefore, disassembling the entire process and achieving partial standardization has become the exploration direction of many institutions.

Some people may not agree with these, but when you think about it clearly, you will find that personalization of education is indeed like this. It does not actually need to be personalized all the time, and there is no need to pause teaching to answer questions for someone. It only needs to follow up in time when the user has special questions and ensure that the customer feels that you are always there for him. That's enough.

Perhaps, the development of the education field does not require "geeks" but rather "moderation".

2. Technical means: improving operational efficiency

Education is a service-oriented thing. People generally think that service should be delivered by people, and things that technology can do should be given priority.

Therefore, companies engaged in technology development in the education field often focus on optimizing the technology platform on optimizing the customer experience, investing a lot of manpower, material and financial resources, but ignoring the operational efficiency that the company's business itself should improve the most.

Perhaps GSX only wants to convey one thing in this part: What is the relationship between education and technology?

Before we talk about these, let’s first talk about the “new” applications of technology in the education sector in recent years (only talking about technology, not referring to any particular company): photo search, intelligent recommendation, AI adaptive learning, video playback, live interaction, gamification learning, adaptive homework grading, data analysis…

If you search for technology in your mind, you will find that many so-called industry-leading concepts are nothing more than a combination of different small technologies; and most of the technology implementation goals are centered around the entry and experience of C-end users, which are very suitable technologies for PR. The influence brought by new technologies and new concepts will bring a certain amount of users, but it is actually very limited.

The B-side technology within an enterprise will not directly bring in revenue and attention. Instead, it is an area that is more likely to be criticized. Even in the eyes of some product managers, the advancement of B-side technology that is not sold externally has limited growth and sense of gain.

But for educational companies, the optimization of efficiency and effectiveness through internal technology will save the companies a lot of costs.

GSX’s investment in technology is very simple. It does not make too much investment. There are only two major aspects: one is the live broadcast experience, and the other is internal efficiency.

In July 2014, GSX's live broadcast technology was already quite good, supporting more than 3,000 online interactions. After so many years of iteration, it can now support tens of thousands of people online at the same time, which is beneficial to the company's scale effect and the subsequent development of the large-class model.

In terms of operational efficiency, GSX has freed up some of the tutors' work through personalized course recommendations and automatic Q&A. The backend system can also collect information such as course schedules, student preferences, learning progress, practice status, completion rates, etc. by setting up automated workflows, making it convenient for employees in each sequence to directly conduct analysis and follow up without having to spend time on statistics.

The essence of operation is work efficiency per unit time. Especially in a service-intensive industry like education, if the technology cannot keep up, everything can only be done manually.

Assuming that one operation service staff can serve 10 users, 10,000 operation service staff are needed for 10,000 people. If one operation service staff can serve 100 users, 10,000 people only need 100 operation service staff. If technology can enable one operation service staff to serve 1,000 users, then only 10 people are needed.

Assuming the salary remains unchanged (assuming 10k/month), the operating costs for the above companies to serve 10,000 people per year are: 120 million, 12 million, and 1.2 million respectively.

Everyone, please taste it.

Technological innovation based on the education industry has been developing for many years. Some technologies are indeed visible to users and can improve user experience, but the essential needs of users in the education industry are not technology, but educational results.

Therefore, educational enterprises need to recognize the tool attributes of technology for the education industry.

3. Profitability Method: Unit Economic Model

Educational research may be suitable for the pursuit of extreme research and dedication, but educational enterprises should not do so. Having the ability to choose what to do and only doing the right things is a fact that every entrepreneur needs to recognize.

Teacher Chen Xiangdong gave a good answer to the question "What is the right thing to do":

"In the unit economic model, how much money goes to the main teacher? How much goes to the tutor? How much goes to technology? How much goes to content development? How much goes to administrative support? How much goes to rent? How much goes to marketing? How much goes to the sales staff's salary? Just do the math and you'll have a general idea."

Zhu Xiaohu also said, "Today I tell all our invested companies: "Never burn money." The unit economic model (UE) must grow very healthily. Today's market environment does not encourage an economic model that purely burns money."

The unit economic model, in simple terms, is a profit and cost change model based on a certain product. Amazon once used it to simplify the product selection process. It can directly provide feedback on the relationship between every change in cost data and the final profit.

It is for this reason that when the cost of a single cup of coffee at Luckin Coffee dropped from 28 yuan in the first quarter of 2018 to 9.7 in the third quarter of 2019, it triggered a frenzy of capital pursuit. If the data is real, the healthier the cost and profit data reflected by the unit economic model, the better the profitability of the entire business will be after scaling up.

Changes in Luckin Coffee’s unit economic costs

The same is true for the education industry.

The main costs of educational products include teacher costs (main teachers + tutors), service costs (operational service personnel), content development costs, technology development costs, marketing costs (marketing + sales costs), and other administrative costs (including costs of teaching materials, office space, consumables, etc.).

Among them, teacher costs and marketing costs are the biggest ones. Service costs can be spread out by controlling labor efficiency and optimizing technology. Although R&D costs and administrative costs are relatively high due to the large number of classes, they can be almost negligible after being spread out.

For GSX, famous teachers with high traffic volume are brand resources and traffic resources that can bring customers to the company. The commission-based income of some famous teachers should be included in the sales expenses, while the tuition fees of its own employee teachers are included in the operating costs. This makes its operating costs not high all year round.

The cleverness of Who's Who in Learning is not to scare people away by increasing the gross profit margin, but to properly utilize the resources of famous teachers. Other companies' famous teachers mainly teach and occasionally cooperate with the company in some marketing activities, but Who's Who in Learning positions its famous teachers as the market and only occasionally cooperates with existing teachers to teach.

Based on this idea, the basic algorithm of its unit economic model has been greatly adjusted.

Taking the high-priced courses of Who's Who as an example, assuming the course price is 4,980 yuan (the unit price of Who's Who's courses is between 99 and 4,980 yuan), this course is taught by a famous teacher + a tutor. According to the proportion of various expenses in 2019, the 4,980 yuan may include: tutor salary + consumables cost + venue cost, etc. 1,253 yuan, sales expenses 2,704 yuan, R&D expenses 48 yuan, and operating profit 51 yuan.

Part of the marketing expenses is commission from famous teachers' courses, which may account for 10%-20%, and the rest is sales staff salaries, renewal commissions, market investment, etc.

If this course is taught by a self-trained lecturer + a tutor, the 4,980 yuan may include: lecturer + tutor salary + consumables cost + venue cost, etc. which are expected to be slightly greater than 1,253 yuan, but should not exceed 1,300 yuan (the lecturer's fee is far less than that of a famous teacher. According to the large class that can recruit up to 1,700 people, the cost is not much), sales expenses of 2,704 yuan, R&D expenses of 48 yuan, and operating profit of 51 yuan.

In this type of courses, famous teachers can be regarded as one of the channels for attracting traffic. Part of the marketing expenses may be commission given to famous teachers for their courses, and the rest is mainly for sales staff salaries, renewal commissions, market placement, etc. More funds will be used for marketing and other aspects in these courses.

The above is just a deduction, but under such a model, we can find that the basic profit of Who's Who is actually controllable. The effect brought by famous teachers feeds back to other courses, and the improvement of operational efficiency brings about cost reduction.

External marketing expenses are adjusted according to different courses, turning the uncertain market into a controlled variable in the laboratory. Although many unexpected events may occur, the general direction is worth referring to.

IV. Postscript

2020 was a difficult year. Everyone was exploring and every company was moving forward under heavy burdens.

It is easy for us to see the beauty of some companies' retrograde achievements, but we also need to note that any success has its visible and invisible prerequisites. I hope to discuss these small issues with more partners.

1. Why did the large-class live broadcast with Who’s Learning succeed?

I have to admit that from my personal understanding, Getui's operations are pretty good. From external customer acquisition to back-end services, technology upgrades and efficiency improvements are the result of years of failures and experience.

The core of large-class live classes is not the main teacher but the tutor. The main teacher is like the trunk, providing nutrients and framework, while the tutor is the branches and leaves that allow the tree to flourish.

In terms of work results, standardizing the work content of tutors and personalizing the service perspective are the core to improving users' learning outcomes and learning experience; in terms of the work process, internal technology research and development, using technology to gradually free up tutors' time from trivial matters and allow tutors to have more energy to serve users, is the fundamental way to improve labor efficiency.

The personalization of education is essentially the redistribution of time and energy.

2. Is the dual-teacher model replicable?

Dual teachers need to meet several conditions: first, the content explanation must be consistent, and teaching and research must be unified; second, the brand/famous teacher must be strong enough, and users are willing to accept this form; third, the team must cooperate, and the auxiliary teachers must be professional but not overshadow the main teacher.

The first two require the institution to have certain strength and to have its own teaching and research, faculty and brand. It is not appropriate to rely on third-party teachers. The third point requires the institution to have a certain division and management of faculty.

The dual-teacher model will, to a certain extent, affect the average order value of some institutions. From the user's perspective, some institutions use the OMO model, with the main teacher giving remote lectures and the tutoring teacher assisting in teaching the students. This is unacceptable to some parents.

3. Do we need to consider the unit economic model at all times?

This is indeed the case in the current market.

Several years ago, when offline training was very profitable, the profits of some institutions were hundreds or thousands of times their costs. At that time, there was really no need to think too much about these things, because the cost of teachers and marketing costs were low enough, and everyone would be happy if the average customer spending was slightly increased.

But the situation is different now. The cost of teachers, technology and market are all getting higher and higher. The Internet has increased market transparency. Slightly increasing the average order value may mean giving users to competitors.

As companies face more restrictions, some people will try to break through.

But when it is difficult to break through the siege, we should also look for ways from within the siege. The unit economic model is most easily considered in the early stages of a company's establishment when it has a single product. However, when a company grows to a certain scale, as the company grows and its business departments expand, it is easy to overlook this issue.

The development of a company will bring about changes in product positioning and revenue. Although this will make the unit economic model more complicated, the company's development strategy and financial strategy are still inseparable, requiring companies to think in a collaborative way.

4. How to obtain low-cost, high-quality and stable teaching staff?

The departure of famous teachers has caused great losses to educational companies, and many companies have suffered losses at the hands of famous teachers. Therefore, it is generally believed in the industry that cultivating famous teachers is an unwise choice.

But I actually think that as a teacher, especially a teacher in a training institution, as a content IP, we can no longer simply understand and train teachers according to the model of school teachers.

The training of teachers is becoming more and more like the training of stars.

For teachers, as they grow from zero to become famous teachers, their teaching ability and market value will gradually improve; for institutions, they need to look at teaching value and market value separately, and in terms of teaching, it is the tail tutors who will truly increase profits.

In terms of the market, it is the top teachers who really bring in brands and traffic.

Therefore, tutors with teaching abilities ranging from 0-1, mid-level famous teachers with teaching abilities ranging from 1-100, and top famous teachers with teaching abilities above 100 all need different considerations in terms of training models, cooperation models, and retention models. The current fully standardized teacher training system is obviously no longer very applicable.

In the end:

I don’t like to interpret companies directly, nor do I like to teach you how to read financial reports. However, I recently had some very interesting ideas and discussions with industry partners, and I hope to share them with you.

The information and data in this article are collected from public platforms and are based on assumptions of in-depth views. They do not represent the internal data of GSX. Please refer to them with caution.

Author: Lu Chenxin Source: Lu Chenxin