Three major monetization models for online education!

In terms of monetization models, especially for the C-end, online education has three mainstream models, namely the one-to-one model, the training camp system and the live class system. This article explains in detail the advantages, disadvantages and applicable tracks of various monetization models according to the author's classification standards.

01 Introduction

An unexpected disaster at the beginning of 2020 prevented the people across the country from having a good New Year, and also had an impact on the education and training industry. Due to the severity of the epidemic, most cities have required offline training to be stopped during the winter vacation, which has made many educational institutions feel chilly. Fortunately, there is the form of online education, and peers have launched offline to online strategies in order to continue to survive and provide students with necessary teaching services.

In any case, online education will usher in new changes in 2020. Whether it will continue to burn money in the traffic war, or bet on offline to compete with traditional giants, or rely on external forces to integrate with offline, it will take time to test.

Since I entered the industry, I have been thinking about how to describe online education. Is it simply moving offline training online?

The author believes that the essence of online education is still education, but it is a business model based on the new infrastructure of the Internet. The benefit is to improve business efficiency, and what is delivered to users is still a solution with "content + service" as the core, which still meets the rigid needs of social selection, skill transfer, and personal growth.

Since the essence of online education is an Internet-based solution with "content + service" as the core, this means there are many monetization models and growth strategies.

In terms of monetization models, especially for the C-end, online education has three mainstream models, namely the one-to-one model, the training camp system and the live class system. As for growth strategy, it depends on how multiple factors such as traffic channels, product system, pricing strategy, marketing methods, etc. are combined, and it also depends on the development stage of the online education company. It is difficult to classify it directly. However, based on my own experience and industry observations, I believe that there are four combinations of growth strategies that can be used in the long term, which will be explained in the next article.

02 Three mainstream monetization models of online education

Someone has asked me before what to do if they want to enter the online education industry. My first suggestion is to think clearly about the monetization model, because online education is not a pure Internet business model. You can first generate traffic and then look for monetization directions. Traditional education and training itself has a stable monetization model, such as large classes, small classes, dual teachers, etc. After the transfer to online education, there are live large-class courses, recorded training camps, etc. Its benefit is that it can help you get cash flow in advance before you can consider expansion and financing.

Therefore, it is very important to think carefully about what kind of products to use to collect money. Of course, there are one or several monetization models in different educational segments. Some monetization models are very easy to use, while some are difficult. Next, the advantages, disadvantages and applicable tracks of various monetization models will be explained in detail according to the author’s classification standards.

1. One-to-one model

The one-to-one model is a relatively primitive monetization model in the education industry, especially for the offline education and training industry. The one-to-one model once created a golden age for the industry. The most typical example is a certain company, which has formed a three giants with a certain company and a certain company for a long time. Its ability to compete with the two industry giants for a long time is due to its initial attempts to standardize the one-to-one model.

The benefits of the one-to-one model are obvious. There are two main ones: first, the teaching model is simple. One teacher only needs to teach one student, and the effect is visible and easy to implement quickly. Second, it makes money quickly. A teacher can provide higher and more personalized services to one student, resulting in a very high unit price. You can see cash flow by recruiting a small number of students.

However, the one-to-one model also has disadvantages, and in the long run the disadvantages outweigh the advantages, which makes the one-to-one model uneconomical in scale. Currently, the online one-to-one model has reached this bottleneck. The author has rarely seen news about online one-to-one since 2019. Although a certain 1-to-1, a certain talk, a certain kid, etc. are still alive, they are no longer as glorious as before, and they are all trying to tear off the label of online one-to-one and develop new business models.

So, what are the disadvantages of the one-to-one model? The same two aspects.

The first aspect is that it is difficult to truly standardize. Although XueDa has innovated the one-to-one model by adding teaching consultants and reducing the importance of teachers by establishing connections between consultants and students, thus achieving initial standardization, the teacher’s teaching method cannot be solved through unified teaching and research like in class. Because personalization is the advantage of the one-to-one model, even if the teacher standards are lowered, for example, if a one-to-one course employs part-time college students, it is difficult to truly solve the problem. The best that can be achieved is standardization of teacher training, and the more core teaching methods still have to rely on teaching and research. The best way is to make extremely detailed teaching and research slices and use big data to assist teachers in coaching students, but this places high demands on growth and requires higher investment costs.

So why can a certain kid do standardization so well? It is because for students, all foreign teachers are the same. The demand for children's English has not yet reached the test level but remains at the interest stage. It is difficult for students to continue learning after a certain stage. This dilemma has begun to become prominent.

Let’s look at the second disadvantage of the one-to-one model, which is that the cost of acquiring customers is too high. This is mainly because the one-to-one unit price is too high, the user decision-making cost is high, and sales staff are required to track and maintain single leads in order to have a stable conversion rate. In order to expand the number of users, sales personnel must be trained and incentivized, and traffic-based strategies such as advertising must be used, resulting in a surge in overall customer acquisition costs. This is the direct reason why many online one-to-one agencies suffer losses, layoffs, and run away.

One company that has done relatively well in customer acquisition is a certain kid. Its referral system has helped it keep its customer acquisition costs at a low level for a long time. Although it will also increase, from 1,000 yuan in the early days of the boom to 4,000 yuan in 2019, it is still better than other players in the track.

However, no matter how low the cost is, it cannot solve the growth dilemma of the one-to-one model. Once the bonus is over, the one-to-one model will lose the opportunity for sustainable and independent development, unless one-to-one is used as a supplement to class lessons like Moufang or Mousi, and class lessons are used to divert traffic to the one-to-one model, which not only solves the problem of model development, but also reduces customer acquisition costs, killing two birds with one stone. At present, many online one-to-one players are developing small or even large classes for this purpose. As to whether they can succeed, let us wait and see.

2. Training camp model

The author believes that the training camp model is an original monetization model that has emerged since the birth of online education. It is significantly different from other models in terms of operation, teaching and research, and tutoring. For example: training camps are mostly matched with communities, and the requirements for community operation are higher than one-on-one and live classes; for another example, training camps require concentrated classes within a certain period of time, which is not like live classes that have periodic and fixed classes, nor like one-on-one classes where the time is random as long as the class can be completed.

The author would like to focus on the composition of the training camp model, which can be expressed by a formula, namely, "training camp = ceremony + community + course + activity". The following will break it down according to this formula.

First, the ceremony. For everyone, there is a process of transition from one stage to another. This process often requires a ritual to reflect people's wishes and needs, or help self-realization, or bring identity recognition. This feeling is the sense of ritual.

For the training camp model, once users decide to participate, they have to make a transformation to some extent. Although this process is relatively short, by creating a sense of ritual, the user's desire to participate in the training camp can be greatly increased. This is why training camps often have opening and closing ceremonies.

Community is the second essential element of the bootcamp model. Communities can implement operational actions on users in a centralized and efficient manner. After all, humans are social animals, and blind conformity and emotionality are typical characteristics. These can be used to implement specific actions on the community, thereby influencing the minds and behaviors of group members.

For training camps, class-type communities are the most suitable community form, with two obvious characteristics: one is strong rules, and the other is a learning atmosphere . The so-called strong rules mean that group members must follow certain rules, otherwise they will be punished. By establishing rules and punishment measures, it can serve as a warning to users in the group and lay the foundation for creating a good learning atmosphere.

So what is learning atmosphere?

The most important performance is that trainees can take the initiative to initiate topics and discussions about the content of the training camp. This is too difficult for short-term communities. Even if the content of the training camp hits the pain points very much, the probability of causing spontaneous discussions is low, so strategic topic guidance and sharing incentives are needed.

The course is the core part of the training camp model and the key to attracting users. The course design mainly includes the following three parts:

1. Course objective: The course objective determines the purpose of the training camp. Generally speaking, there are two types of training camp courses, one that is biased towards a specific ability, and the other that is biased towards a specific knowledge, namely "ability-based courses" and "information-based courses".
2. Course content: The learning content of the training camp has three characteristics. First, there is a systematic framework, that is, a complete, clear, and logically progressive content outline; second, there is an advanced system, which can be used as an introductory course to the capability advancement system; third, it is transferable, that is, users who have completed the training camp can be retained in other products.
3. Learning session design: The learning session of a general training camp follows this process, namely "listening to lectures and learning - practicing and checking in - reviewing and summarizing - testing and evaluation", and the completion rate can be effectively improved with the help of the addiction model.

In addition to courses, corresponding activities are also indispensable. There are three main types of activities common in training camps. The first is student sharing, which is to invite outstanding students, former students, etc. to share their learning experience. The second is team competition, which allows students to form teams freely to study, and provides material rewards to the group that persists in studying the longest. The third type is welfare activities, which is to add some small benefits to enhance community activity.

It can be found that the training camp model has very high operational requirements, especially the standardization of community operations is the key. This is the first monetization model for online education companies that use WeChat as the main traffic channel, such as Moumou Play English.

3. Live class mode

The live class model is currently the online education monetization model that is closest to being successfully implemented. This is mainly due to the advertising war in the summer of 2019, when several K12 online education institutions competed for the traffic of low-priced classes. This made investors see that new giants may emerge in the online education track, and they all considered making heavy bets.

However, the live class model is not a new monetization model, but has existed for a long time, and includes several major sub-forms such as large live classes, large live classes with two teachers, and small live classes. The one-to-one model and training camp model will also involve live broadcasts. Among all types of live class models, large live classes are the easiest to implement but have the worst effects. Small live classes are closest to offline effects but are the most difficult to operate and are not easy to completely standardize, and require higher investments. As for the live broadcast dual-teacher model, it is currently closer to the offline teaching effect, and its operation is relatively mature, the degree of standardization is relatively high, and it is relatively easy to implement. At present, the leading unicorns in the K12 online education track all use live streaming with two teachers as their core profit.

So, why did live streaming dual teachers explode in 2019?

It is necessary to interpret the advantages of live broadcast with two teachers.

• First of all, live streaming is currently the best way to learn online. It can only be watched at a fixed time, and the speed and progress cannot be adjusted like recorded broadcasts. You can also interact with teachers and answer questions in a gamified way, which increases the immersion in online learning. More importantly, it can occupy users’ time.
• The second is the dual-teacher configuration, with a main teacher teaching unified content to all students, and a tutor providing targeted follow-up tutoring to students in the class. The entire standardized operation can be solved through training to ensure a basic balance between standardization and personalization.

The good live broadcast experience and the dual-teacher configuration that guarantees results have allowed this model to develop rapidly, and after continuous iterations in the industry, a replicable operation plan has basically been formed. As long as excellent teachers, content and services are guaranteed, results that exceed offline results can be expected. At present, the repurchase rate of K12 online schools is basically close to that of offline schools, reaching more than 70%. Several large online education institutions can reach 80% or even more than 90%, which shows the power of this model.

Of course, the live broadcast dual-teacher model also has drawbacks.

The first thing to be affected is the live broadcast experience and effect guarantee. Although live broadcast with two teachers has great advantages compared with other online learning methods that cannot be scaled, live broadcast lag, low attendance rate, high playback rate, poor self-control of students, and uneven stratification of students are relatively obvious problems. These are the key factors that restrict the live broadcast model from expanding its audience range.

Secondly, the high turnover rate of tutors and uneven service levels are also major problems. Although the training cycle and screening threshold for tutors are much lower than those for main teachers, the quality of the talents introduced will inevitably be uneven. At the same time, the narrow growth space for this profession is a key factor in retaining tutors. Pure material temptation is difficult to retain or attract real talents. Providing diversified capability models and job channels will be a necessary measure.

In reality, many people think that training camps are similar to live classes and have a dual-teacher model. In fact, this is a misunderstanding. There are actually no dual teachers in training camps, only "one teacher + n teaching assistants". The teaching assistant is also called the class teacher. They are basically not responsible for answering questions but are responsible for group operations, and most of them are part-time. The real dual teachers are that both parties have teaching skills, but one of them is responsible for teaching and the other is responsible for tutoring. The latter is often a full-time employee with higher ability requirements and selection standards than teaching assistants. Answering questions and group operations are basic jobs.

The above are the three mainstream monetization models summarized by the author. As of now, the live class model and the training camp model are relatively clear and easy to implement, and there are also consensus operation plans in the industry. Latecomers can give priority to these two models as monetization entry points.

The following table compares the main features of the three monetization models of online education, for reference only.