How to Build and Scale an Education Business Like Harvard

TL;DR

To scale an education business, build a brand that supports future demand and separate one-time teaching from offerings that deliver recurring value. Harvard illustrates the model through selective admission, no promised outcomes, and standards that mean not everyone passes; its students also leave after four years. Read on to understand continuity, sellability, pricing plans, and why customer graduation is not necessarily churn.

Transcript

Here's how to actually scale an education business. You feel like you're losing customers. You're not sure how to expand. And so education businesses, one, are they sellable? Two, are they valuable? And then three, where do they go wrong? I'm going to cover it all right now. Back streets back. All right. Or is it let's go? I don't know. I actually ... Read More

Key Insights

• Harvard's success is due to its high standards, lack of promises, and not everyone passing.
• Education businesses should distinguish between one-time value and consumable offerings.
• Creating a brand that guarantees future demand is crucial for business sellability.
• Consumables, such as updated resources or community access, can drive continuity.
• Pricing should reflect the value of one-time offerings versus ongoing consumables.
• Continued education can provide a model for recurring revenue in education businesses.
• Building a valuable business requires solving for customer retention and high gross margins.
• Understanding customer needs and timing of offers is crucial for upselling and retention.

Questions & Answers

Q: How do you scale an education business successfully?

Build a brand that can support future demand, and distinguish one-time educational value from consumables that customers need repeatedly. Do not treat a long payment plan as recurring value, and recognize that successful students may leave because they have learned the skill and graduated.

Q: How can an education business become more sellable?

A sellable business needs reliable future cash flow, meaning a high likelihood that it will continue making money. For an education business, the speaker argues that this requires a brand that supports future demand or offerings that continue providing value after the initial teaching is complete.

Q: What can education businesses learn from Harvard's model?

Harvard maintains standards: many people apply, only a few get in, and not everyone passes. It also makes no promises about specific outcomes, while its brand, in-person experience, and curated network help distinguish it from most other education businesses.

Q: Why shouldn't an education business accept everyone who can pay?

Accepting everyone with a credit card does not demonstrate a high admission standard. The transcript argues that selective entry helps create an education brand, following Harvard's example of having more applicants than available places.

Q: What is the difference between continuity and a payment plan?

A payment plan spreads the price of one purchase across multiple payments, but it does not create continuing value. If a $12,000 program provides one year of access at $1,000 per month, customers who finish have graduated; their departure is not necessarily churn.

Q: Why do customers leave education businesses?

Customers often leave because effective education teaches them a skill they can continue using without further instruction. Once someone knows how to sell or generate leads, the skill still provides value, but the original teaching no longer provides new value.

Q: How should an education business separate one-time and recurring value?

Create two columns: one for material used once to gain lasting knowledge, and another for consumables or services that continue delivering value. A foundational course such as communication 101 belongs in the first column because students do not need to retake the same class after learning it.

Q: How can continuing education create recurring revenue?

Continuity can come from new courses and an evolving curriculum offered every quarter. Existing fields also identify ongoing certifications and updates as a continuing-education model, rather than repeatedly charging customers for the same lesson.

Summary & Key Takeaways

• Scaling an education business requires adopting high standards, similar to Harvard, where not everyone is accepted or passes. This creates a brand that stands out. Additionally, distinguishing between one-time value and consumables can help in structuring offerings that provide ongoing value, ensuring customer retention and business continuity.

• Pricing strategies should reflect the distinct values of one-time educational content and recurring consumables. By focusing on consumables that customers need repeatedly, businesses can ensure a steady cash flow and potentially increase their enterprise value. Continued education offers a model where recurring revenue can be achieved through constant updates and certifications.

• To enhance business sellability, focus on creating a brand that ensures future demand, similar to Harvard's model. This involves understanding the importance of consumables, customer retention, and strategic pricing. Employing marketing skills on consumables that customers consistently need can lead to a more valuable and sustainable business model.