Marketing Promotion: Learn New Oriental’s Growth Method through 3 Techniques!

Behind the growth of market value from 0 to 17.2 billion US dollars, the core strategy rooted in New Oriental’s genes is the insistence on creating “top-level products”.

Think before reading:

How did New Oriental start its growth from 0 to 1?

How to make the brand firmly occupy the minds of users?

What is healthy growth for a business?

Please enjoy below:

Growth is the eternal mission of the business world.

The founder of Nike once said: "If you're not growing, you're dying."

A company that does not grow may even be completely worthless for the stock market, which pursues return on investment.

Regardless of whether you are a CEO, a middle-level manager, or a business manager fighting on the front lines, "growth" is always the core proposition.

“A stone from another mountain can be used to polish a jade.” Regarding “growth,” we might as well learn from New Oriental , a company that has grown from a simple classroom to a listed company with a market value of tens of billions.

On November 16, 1993, "New Oriental" was born in a bungalow in Xisanqi in the northwest corner of Beijing. Since 1995, New Oriental has entered a period of rapid growth. The number of students enrolled increases by more than 100% every year!

In 2001, its enrollment had reached 250,000, while the number of students studying abroad was only 100,000 nationwide at that time. In six years, the number of students increased from 3,500 in 1994 to 250,000 in 2001. An increase of about 71 times!

At this point, New Oriental has established its dominant position in China's foreign language training market.

On September 7, 2006, New Oriental went public in the United States. In April 2017, the market value successfully exceeded 10 billion US dollars.

In 25 years, New Oriental has grown from a language training school into a large comprehensive education technology group integrating education training, educational product research and development, and educational services.

According to data, New Oriental now has 103 holding companies across the country, with enrollment ranging from 0 to 20 million, and its highest market value reaching US$17.2 billion.

What is New Oriental’s strategy for growth? What stories and details are worth learning from?

1. From 0 to 1: Deriving the “essence of business” from “low-cost customer acquisition”

Turn the clock back to 1990. Yu Minhong submitted his resignation report to Peking University. After leaving Peking University, the three words "Yu Minhong" can be said to be "worthless."

With the help of his friends, he rented a leaky 20-square-meter house in Zhongguancun as his admissions office.

This "office" is located in a small alley and requires 18 turns to enter. When the students saw it, they thought it was a scam and the scammer ran away with the money.

Even with the method of posting various small advertisements on the streets, there were only a few students coming.

In this context, how did New Oriental start its growth from 0 to 1?

1. Insight into students’ rigid needs and position themselves as “training for overseas examinations”

Since the founding of New Oriental, Yu Minhong had no intention of positioning it as an ordinary English training institution. Because in the end, it will most likely be a small English training institution.

In his long-term communication with students, Yu Minhong found that many students expressed their desire to study abroad by taking the TOEFL or GRE.

This means that "training for overseas exams" is a real necessity for students. This source of students is also more sufficient than those who simply study English.

Matching the differentiated positioning of "training for overseas examinations" is Yu Minhong's "unique ability" in this area.

During his six years of teaching at Peking University, Yu Minhong's English level improved greatly because he had to cope with the "challenge" of Peking University's top students.

At that time, few Peking University teachers were willing to teach the GRE, because the basic requirement for teaching the GRE was a vocabulary of around 20,000 words. "No one would be so bored as to memorize 20,000 words," said Yu Minhong.

But Yu Minhong had nothing to do after eating, so he memorized 20,000 GRE vocabulary words while lying on his hospital bed due to tuberculosis and became the "No. 1 GRE vocabulary teacher in Beijing."

Not only that, in order to prevent the lengthy TOEFL and GRE exams from "torturing" students, Yu Minhong requires that his lectures must be humorous and must have a human and inspirational feel.

The insight into students' real needs, the differentiated positioning derived from this, and the ability to match the positioning, laid the foundation for New Oriental's growth from 0 to 1.

2. Build trust with students through the “free strategy”

Nowadays, most online customer acquisition relies on attracting people with free stuff. And 25 years ago, Yu Minhong had already used this method to acquire customers at low cost. But he did it differently. He did two things:

(1) Print out whatever TOEFL and GRE test papers you can get and send them to students for free so that students can get the latest information and test questions;

(2) After thoroughly studying the topic, give free lectures to students.

At that time, he couldn't rent a classroom, so he went to the playground of Zhongguancun No. 2 Primary School; there was no audio equipment, so he used his voice to "shout" to the students in the playground.

The first free lecture attracted more than 100 people. The high-quality course content and occasional "Yu-style humor" attracted dozens of people to sign up after the class.

Yu Minhong recalled: "The venue cost was free, and the lectures were free, which was equivalent to taking the registration fee for free. This was a very low customer acquisition cost."

After implementing the "free strategy" for a period of time, Yu Minhong found that there were only 20 students in a class when it was enrolled, but there would be 40 students at the end of the class.

It turned out that the other 20 people were brought by his classmates because of the high quality of his lectures.

Yu Minhong's reputation for lectures spread to universities such as Peking University, Tsinghua University, Renmin University, and Beijing Normal University. The cost of acquiring customers is also getting lower and lower.

In addition to "shouting classes", "speech" was also a very effective way to acquire customers at that time.

One December day, New Oriental posted an advertisement for a free lecture at the Capital Library, where the auditorium could accommodate about 1,000 people. No tickets were issued at that time because Yu Minhong thought not many people would come.

But in the end, more than 3,000 students came, more than 1,000 entered, and some left. More than 1,000 students were still standing outside in the cold wind, refusing to leave. The result is a crowding effect.

Later, another group of police came, but they couldn't drive the students away.

Because it was too crowded, Yu Minhong climbed out of the auditorium window. After he climbed out, he was caught by the police.

The police asked, “What are you doing?”

"Let me give the lecture to the students, I will explain it to the students, otherwise there will be problems." Yu Minhong also saw two tall trash cans nearby.

The police asked, “What do you do?”

Yu Minhong said: "I am the organizer of the lecture."

"I just happened to be looking for you. Come with us to the police station."

"I can go to the police station with you, but you have to let me finish teaching the students first, and then I will go with you to the police station. The students are here to listen to my lectures."

Yu Minhong happened to be standing on two large trash cans. There were more than a thousand people below, and Yu Minhong spoke for 40 minutes.

More than 1,000 people left satisfied after listening to the speech.

After the show, the police took Yu Minhong to the police station and said, "I am going to detain you because you have caused a public safety incident."

Yu Minhong said, “You see, it’s not easy for us to run New Oriental…” He told his story again and added, “You can come to me if you want to learn English in the future.”

Later the police said, "Okay, I'll let you off this time, but next time you give a speech you must sell tickets. Otherwise, if someone gets trampled to death today, how can you continue to run New Oriental?"

At that time, "speech" became a "free traffic entrance" for New Oriental, and in the end New Oriental almost stopped posting advertisements on the streets because the advertisements had already been distributed during the speeches.

These experiences made Yu Minhong deeply aware of:

“The essence of doing business is how you can get the most reliable customers at the lowest cost. And these customers become promoters of your brand, and they are willing to bring in new customers.

No matter how good your advertising is, if customers come and are disappointed with your product, then no matter how much money you spend, you will not be able to succeed. ”

The key to achieving this is to continuously reduce the cost of acquiring customers through "top-level products" .

2. 2 strategies to firmly occupy the minds of users

During the growth process, New Oriental has been very successful in brand communication. In terms of the brand’s mental capture, to this day, when people talk about English training and overseas training, the first thing that comes to mind is New Oriental.

Yu Minhong later concluded that it was mainly because he achieved two factors at that time:

The first is called top-level product, and the second is called hunger marketing.

At that time, Yu Minhong proposed a strategy: "No classes will be offered without famous teachers, and the number of classes will be limited."

1. Top-quality products

In the 1990s, when Chinese people did not have money, 99% of Chinese students could only study abroad with full scholarships from Americans, which required students to have high scores in TOEFL, GRE or GAMT.

Therefore, cultivating students to get high scores has become the core goal of New Oriental.

Moreover, high scores will play a significant leading role. As long as someone gets high scores, it means that this student can influence a large number of students to study at New Oriental.

Therefore, Yu Minhong requires teachers to teach every course as a high-quality course and prepare every course thoroughly.

For example, a teacher has to give ten lessons. From the first to the tenth lesson, Yu Minhong can only teach students after he feels that the lesson is up to standard.

Through repeated repetition and Yu Minhong’s strict review, all teachers’ classes have become “top products”.

2. Hunger Marketing

"It doesn't mean that you can recruit unlimited students just because they are rich or willing to take your class," said Yu Minhong.

Due to the class limit strategy, everyone helped New Oriental with publicity. "If you don't sign up quickly, you'll have to sign up next year, which will delay your study abroad for a year."

The implementation of this strategy created a very spectacular scene at that time.

Generally, when students register for summer vacation, they have already started booking the next winter vacation courses. When registering for the winter vacation, you will book the next summer vacation course.

In order to sign up for New Oriental classes, students would rather wait in the queue all night with their quilts in the middle of winter than go somewhere else to attend classes.

This has led to New Oriental’s TOEFL classes, GRE classes, and GAMT classes being almost “unrivaled in the world.”

As the number of students increased, Yu Minhong also strengthened teacher training and continued to discover teachers with potential. The class capacity is also expanding, so almost all the outstanding students are in New Oriental, and students from all over the country come to New Oriental.

The more students there are, the higher their level will be. At that time, a perfect TOEFL score was announced, which caused a sensation. Soon after, there were five or six full scores for TOEFL, and then there were full scores for GRE and GAMT.

Before this, there were no full marks in these exams in the United States, and all the full marks came from New Oriental.

Everyone thought that this was caused by the leak of the test paper.

Not at all. Because the students' level was relatively high at that time, and the teachers' level was also high, the frequency of mutual learning was very high, which ultimately led to a very high level of students.

The students’ solid high scores and high evaluations from every student have enabled the New Oriental brand to achieve explosive word-of-mouth communication.

To this day, New Oriental remains the number one brand in the field of overseas exam training!

The key is to create "top-notch products" and spread the brand through word of mouth among users .

III. Reflections after “resurrection”: Healthy growth cannot deviate from the core strategy

New Oriental’s growth has not been smooth sailing. In 2014, New Oriental had some problems.

After any company goes public, the topic of "growth" cannot be avoided. A company without growth has no value to the stock market.

Therefore, growth becomes the main theme of any listed company. New Oriental is no exception.

Under the pressure of the capital market, New Oriental has formulated two strategies to further accelerate its growth:

One is to open a campus, the other is marketing.

New Oriental believes that part of the reason why the growth is not fast enough is that the students are too far away from New Oriental campuses. So within a year, New Oriental added 200-300 teaching points and then started to do a lot of marketing. In the end, New Oriental's revenue soared by 70%, but later a large number of parents and students demanded a refund.

New Oriental began to experience a collapse effect:

Parents requested refunds, reputation declined... At the end of 2014, New Oriental's total revenue only increased by 14%, and its net profit margin decreased by 8%. What was even more serious was that the number of students decreased by 11%.

By 2015, New Oriental's business system and brand were on the brink of collapse.

What did New Oriental do wrong?

Yu Minhong said: "In the field of education, high-quality educational resources are limited."

Through marketing and opening campuses, the huge increase in the number of customers may make it impossible for them to have access to the services of the original good teachers.

A large number of new teachers who were hired on a short-term basis have not received any real training before teaching, and parents and children can feel it.

The dilution of high-quality educational resources has led to a significant decline in New Oriental’s teaching quality, which in turn has led to dissatisfaction among students and even parents.

This incident made Yu Minhong deeply understand that if the quality of any teaching point is poor, there will be no chance of making a comeback within three years. Because once the people are fooled, they will never trust you again within three years.

But Yu Minhong found that this was not the core reason for the "collapse effect".

After learning from the painful experience and looking inward, he found that the core reason came from the "rough assessment indicators" set after New Oriental went public.

The initial assessment indicators for all principals and general managers of subsidiaries were only one indicator of revenue and profit, for example, the revenue must increase by 30% and the profit by 20% this year.

But as the saying goes, "the head follows the butt." The assessment mechanism is the compass for the actions of everyone in the company. The type of assessment will determine the direction of your efforts.

With only income and profit as assessment indicators, a large number of principals and general managers have to constantly change their actions, make sales, and produce extremely exaggerated advertisements that cannot deliver on their promises in order to meet the indicators.

They even offer many high-priced products, and some schools collect money from students' parents for three years.

Although Yu Minhong discovered this phenomenon and tried to stop it, problems still continued to emerge.

In 2015, Yu Minhong realized that the problem had become very serious, so he made up his mind to make management changes and put forward the company's core strategic policy:

"All New Oriental's actions must be focused on improving teaching quality and teaching products."

The implementation of the strategy will be achieved through the reform of the assessment mechanism.

Yu Minhong requires that any assessment indicators of New Oriental should not be directly linked to revenue and profit, and at most be a combination of both.

All assessment indicators with 100 points must be directed to the improvement of teacher level, teaching quality and customer satisfaction:

• All teachers must take the exam. For example, teachers who teach TOEFL must have a TOEFL score of more than 100.
• Based on the teacher evaluation, teachers will be given a salary increase, and unqualified teachers will be eliminated;
• The average salary of teachers nationwide must be increased by about 30% within a year, and excellent teachers must be trained;
• Assess customer satisfaction and customer recommendation rate;
• …

One year later, New Oriental's revenue grew by 25%, its profit grew by 4%, its stock price rose to over $40, and the number of students grew by 30% in the following years.

New Oriental “comes back to life”.

Moreover, New Oriental commissioned a third-party independent research company to interview students and parents studying at New Oriental in the market and asked them about their impressions of New Oriental. Basically, the conclusion they came to was "New Oriental has high teaching quality and really cares about students..."

On the brink of collapse, the key to New Oriental's breakthrough remains to include the creation of "top products" in the company's core strategy.

Source: Notesman (ID: Notesman)