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Education services revenue opportunities in a COVID-19 world

Written by Bill Cushard

Published on October 6, 2020

Classroom training is the leading revenue generator for education services. TSIA reports that 79% of customer training revenue is derived from instructor-led training, 38% of which comes from onsite training and 26% from public classroom training. This translates to a whopping 64% of education revenue relying upon face-to-face training.

Clearly, the COVID-19 pandemic has delivered a blow to education services, which is no longer able to provide classroom or onsite training. TSIA survey found that a whopping 84% of organizations have cancelled scheduled public classroom training classes. Because education revenue is highly dependent on this type of training, you need to address other ways to generate revenue through training. 

Virtual training

Virtual instructor-led training is a live, synchronous event that includes the use of web-conferencing technology. It sometimes includes access to virtual lab infrastructure, which enables the completion of remote lab work. According to TSIA, following the COVID-19 pandemic, 80% of education organizations have seen an increase in virtual instructor-led training. 

Because most customer education organizations already had remote training capabilities in place, they’ve been able to quickly adapt to recent changes. But the real challenge is replicating a hands-on lab environment within this virtual setting. If you want your virtual training offerings to succeed, you need to be able to replicate the classroom/onsite experience. This includes web conferencing and a virtual hands-on lab environment.

Moving face-to-face training courses into a virtual environment is a clear option to still generate revenue during the pandemic—but there are still many other ways your organization can generate revenue through training. 

Pricing training when customers expect it to be free

Software companies usually fall into one of two pricing categories: some believe in charging for training as a primary business approach (a direct source of revenue), and others believe training should be part of the service in the software subscription.

Maria Manning-Chapman, VP of education services research at TSIA, states that you should offer both free and paid training—but many companies are scared that pricing training will somehow prevent customers from doing the training. 

In fact, the opposite is true. Free training has actually been shown to have lower completion rates. When training is free, customers can too easily say, “I’ll do that tomorrow”—and then never do it. But if customers pay for training, they will use it because they don’t want to waste it.

When setting the price of your training, it’s always better to start high. Some companies are tempted to price training products low at first to gain adoption, then raise the price over time. But when startups are in a pre-chasm stage, nobody knows how to value their product, so they have to establish the value up front. If you fail to do so, you’re devaluing your services from the start. Therefore, when selling training, you should start with a high price and then let the sales team make adjustments during the sales cycle.

Although free training can indirectly drive revenue through the increased retention and product adoption that results from training, paid training is more beneficial. With paid training, you can drive revenue through these indirect routes, and directly drive revenue through the sale of your paid training programs. 

If your company doesn’t already charge for training, pricing your training will allow you to generate significantly more revenue than simply giving it away for free. This is extremely beneficial to companies facing revenue loss due to the cancellation of face-to-face training. 

Create courses on implementation methodologies 

If your company runs customer on-boarding or professional services engagements through customer success or professional services teams, you can build a software training course about how to implement your software in order to generate more training revenue. Courses like this are outcome-focused—the outcome is a successful implementation. 

These courses can provide a new revenue stream for your company. A “How to Implement” course is a new product, with a new price level, targeted at a new customer segment. With these courses, your company can target new customers and also sell to existing ones. 

Courses on implementation methodologies are a no-brainer considering how easy they are to implement. Your company already has an implementation process and runs it with customers every single day. You already have the content—creating the course won’t  be a lot of work. 

Assuming your company already has their implementation process documented, you will just need to work with your CSM or PS teams and then translate what they do repeatedly with customers into a course format so that customers can learn the process themselves. The course development time should be very low compared to other new courses you create. 

With these low course development times, your company can quickly get this course to market. If the course is priced correctly, you can potentially open up an entirely new segment of customers to purchase this course. 

These courses appeal to the segment of customers who can’t afford a professional services engagement, but still need help implementing their software—mainly small and medium-sized businesses. To find this segment of customers, find the list of customers that did not purchase a professional services engagement from your win/loss reports and have the sales team target that group for this new training course.

These implementation courses allow you to create a new product and sell to a new customer, at a lower investment than it takes to create most other courses. Even if your company suffers revenue loss from the absence of face-to-face training, these implementation courses provide a great opportunity to quickly and easily boost revenue. 

Increase average selling price

One of your top priorities in order to increase revenue should be to increase the size of the deals being sold. The goal is to bundle multiple offerings together to offer more value to customers in a package deal—this increases deal size or average selling price (ASP). 

For example, when a sales team puts together a proposal, it could include the core product, customer implementation services, premium support, and training. 

When it comes to training, companies may think that they only have one course, and that one course may not be worth charging for, even when bundling it with product deals. However, by taking that one course and changing the format of it, you could make multiple courses out of that one. 

For each of these courses, you can charge a different amount to reflect the value of each customer education offering. Customers are also investing a large amount of time, resources, and money into their purchase, so these different price points also reflect the price a customer is willing to pay in order to ensure their teams learn and get the most of your product.

Another way to package training is to bundle them and allow customers to purchase multiple courses at once. Volume discounting could apply. Offering training bundles is a crucial strategy when selling to enterprises with larger teams or to customers who buy multiple products that each have training. 

If you offer a suite of products, and have training for each product, bundling education offerings is vital. This makes it easier for customers to purchase and therefore will increase your average deal size.

To maximize potential revenue, you should also create incentives to purchase larger bundles. For example, throwing in extra training at no extra charge or discounting the per-course rate base in higher purchases. Incentives to purchasing larger bundles will help customers in the middle purchase the higher bundle.

By breaking one course down into multiple course offerings, or creating bundles and incentivizing large bundle purchases, you can increase your average selling price and overall revenues, relieving financial strain from the recent decline in face-to-face training.

While the COVID-19 pandemic has delivered a blow to the education services industry, who largely relied on face-to-face training, you can find many other ways to generate extra revenue. By strategically pricing training, creating implementation courses, and increasing average selling price, for example, you can create new revenue streams and make up for the loss of face-to-face training revenue.

Originally published Oct 6, 2020 4:42:47 PM, updated Oct 6, 2020