DEEP DIVE: The Least Talked About EdTech Growth Strategy
Grow your revenue by 31% without needing more leads
Jay Ashcroft
June 12, 2023
When it comes to scaling your EdTech business, the first thing most founders think about is generating more leads. More opportunities to sell = more opportunities to grow.
This isn’t wrong, but generating leads, especially if you’re an early stage company where budgets are tight, isn’t easy or sometimes even achievable. Marketing is an investment but it doesn’t always pay off.
Today I want to talk about how you can improve your growth by focusing on probably the least talked about part of EdTech - the first school sales meeting.
Why You Will Want to Get GREAT at School Meetings: The Power of Compounding Growth
Getting good (and then great) at running a school sales meeting is a cheat code for revenue growth.
For companies with any form of subscription, the law of compounding growth comes into play, meaning even small improvements lead to outsized returns as the years compound.
Let’s imagine you improve your win rate (the % of schools who sign up after you meet with them) and first renewal rate by 10%. When you read this, it doesn’t sound like it will produce a big return, but when you model it out, you see the true impact.
Let me show you. First we need some assumptions to run with. Let’s imagine your solution costs £1,000 per year and the following is happening:
You meet 50 schools per year
You turn 50% of meetings into sales
You renew 70% of schools at first renewal
You renew 95% of schools every subsequent renewal
Now let’s improve those meeting win and first renewal rates:
You turn 50% 60% of meetings into sales
You renew 70% 80% of schools at first renewal
In this scenario, there’s no need to generate more leads than what you’re already generating. No need to undertake more marketing than you’re currently undertaking. There isn’t even a need to hire more staff.
All you need to do is get better in sales meetings and over 7 years this is what happens to your annual revenue:
Compounding growth in action
Breaking the revenue down by year, you see just how quickly that 10% gain compounds. In Year 1, you’re £5,000 better off, but by Year 7, you’re £41,017 better off. In total you make £165,575 more over the 7 year period - 31% more than the original forecast.
Revenue breakdown by year
Renewal Revenue is the Foundation the Best EdTech’s Build Upon
It’s common sense to retain as many of customers as you can, but in my experience most EdTechs give too little focus to this area and expect customers to renew automatically.
The vast majority of focus goes towards marketing and sales, both in terms activities (events / tradeshows / advertisements), but also in terms of the calibre of staff that are hired.
I know a lot of companies who have a seasoned sales leader / marketer, but have a fresh University graduate acting as the sole customer support department. It’s pretty typical to spend 300-400% more on sales than on customer support / retention.
I understand why companies do this - growth is easy to think about it in terms of “New Schools Won.” It’s an easy mental calculation to make, but many founders don’t factor in the ‘drag’ that churning schools create on growth.
The best EdTech companies retain around 95% of their schools each year, however the sector average is more likely to be between 50-70%. That’s a huge loss for you and the school!
Back to our Scenario…
In our scenario above, we saw that over 7 years, we made £165,575 more. The driver of this compounding growth is the total number of school customers we have.
When you look at your active customer numbers in the below chart, you see why. By Year 7, we have 41 more customers, 33% more than our original forecast.
Total Customers by Year
The bigger your are (the more school meetings you’re currently booking per year), or the more your solution costs, the bigger these numbers become. You may already have hundreds of schools right now, so improving your retention by 10% this year could add tens of thousands to your business.
Specifics on How to Improve Your School Win and Renewal Rates
Let’s dive deeper into how your can improve your school win and renewal rates.
Imagination time again! A new school opportunity has landed in your inbox and you set up a meeting. Your goal is clear - to turn that school into a customer. However, the goal for the school is often more tricky to pin down. In your first meeting, a great opening question is “What’s your goal for bringing in our product / service?”
Usually the school will reply with something high level, such as;
“We want to provide more engaging learning resources”
“We’re looking to improve our management data to make better decisions”
“We’re looking to capture more data”
“We want to engage parents better”
“We want to save time / streamline a process”
It’s tempting to agree and launch into your pitch but it’s a missed opportunity if you do so because you don’t fully understand the goal of the school. The statements above are just broad visions and there’s no detail to work with.
You need to add more to this skeleton to understand what you’re working with, and what you’re working towards. SMART goals (Specific, Measurable, Actionable, Relevant, Time-Bound) are your friend here - although they’ve been around for so long that they feel unfashionable, they make the world of difference when it comes to school sales.
The Key Questions you Must Ask in School Meetings
1. Specific
“What year group / subject / student cohort (lower set, EAL, SEND, PP) is your main priority at the moment?”
It’s key to be specific about which students or teachers intend to benefit. Schools are full of various learning resources and content providers, and adding another option (your product) to the pile without a clear launch plan is a recipe for churn.
2. Measurable
“Once we know who the main users / students. next ask how the school will gauge that learning resource has made lessons more engaging (switch the benefit in here)?”
The typical answer is that the school will ask teachers for feedback. Teachers are extremely busy and relying on the school to capture anecdotal feedback at an undefined point in the future will leave your product open to receiving mixed reviews, which may led to churn.
A good solution to this this is to create a ‘feedback group’ where at agreed milestones you ask for feedback from the teachers on:
Whether they’re using your product?
How frequently they’re using it?
Whether they’re seeing any impact?
Whether they’re experiencing any problems?
You can do this by email, with a Google Form or via your main contact at the school. It’s beneficial to the school as you’re taking over part of the admin they would need to do on the project.
Run a teacher feedback session at the end of the first 30 days and you will significantly increase your win rate and renewal rate. You will build long-term customers.
Now I know what you’re thinking… You’re busy and this seems like overkill, but don’t forget you only have a small window in which to implement / launch your product into the school. Excitement quickly falls off as the next project comes along and displaces attention on yours. Getting your initial onboarding / trial period right is critical. This is one of the main reasons why many product trails don’t convert into sales. Lack of structured onboarding.
3. Attainable
Above we’ve ‘scaffolded’ the rollout to improve how quickly we can deliver the goals. Scaffolding is a great term to use when talking about rollouts / implementation as it’s terminology that teachers understand very well. Each day they ‘scaffold’ learning for students by breaking down tricky concepts into smaller, more management chunks. Rolling out a new system, technology or product is no different. There are lots of moving parts with multiple people involved so the more ‘bite sized’ you can make things, the better the experience for the school.
By now you should better understand what the school specifically wants to achieve, and together we’ve developed a way in which we can measure whether you’re delivering on that. Let’s imagine everything is going well, and your product is delivering upon what’s was imagined. It’s now time to talk about wider role outs or turning it into paying usage. The next question is all about whether it’s actionable for the school to buy your solution…
This is important to ask as it will uncover other stakeholders within the school who need to be engaged, and who might otherwise have remained hidden.
If you’ve been in EdTech for any time, I guarantee you’ve experienced this - think about that school where you had the great meeting, you got really positive feedback and you were sure the email confirmation was coming. What happened next? They went silent never to be heard from again!
In almost every situation, the person you were meeting didn’t have the power to make the decision alone. Headteachers aren’t exempt from this either. I was a COO in a MAT, and our headteachers were regularly taking meetings with prospective companies even though we had ultimate sign off. On more than a few occasions we had to block a purchase in its tracks because of a bigger priority.
With schools you will usually get 2 meetings after which point the school will make a decision behind closed doors. If you haven’t engaged all the stakeholders you need to by this stage, you bet they’ll vote against bringing your solution in.
4. Relevant
Relevancy is how well your product and this ‘project’ aligns with the greater school or Trust goals. There’s a few ways this comes into play. Here’s the main ones:
Result of a review / judgement: Perhaps Ofsted, the LA or even the Trust have reviewed the school and found an issue or failing. The school are urgently working to find a solution or improve that area. It’s useful to understand the background here as if you don’t deliver the expected benefits, the school is likely to be very unhappy and could be vocal about this to local schools / schools within the Trust. Generally this ‘driver of change’ is more focused on back office and administration software.
Result of new student influx: This is common when children with additional learning needs join the school and the school don’t have an existing solution for them. As with above, ensure that you can deliver the intended benefits. Ensure that the SEND, EAL, PP lead is part of the initial meetings - this might be common sense but sometimes they’re not engaged until further down the line and might have already researched a different solution than yours.
Result of alignment: Sometimes this can happen in larger secondary schools where they begin to look for alignment of resources across departments, but generally, the driver of this change is Multi-Academy Trusts. Trusts are increasingly parring down the breadth of their suppliers in order to achieve cost savings, reduce administration, and align curriculum. Often the lead school within a Trust will be ‘piloting’ new solutions with the idea of testing them prior to a wider Trust rollout. Ask if this is the case, and if so, look to potentially take the pilot wider and engage with Trust and SLT from other schools.
Result of cost savings: At the school level this one is simple to workout - the school want you to beat their existing supplier. At a Trust level, the same dynamics as 3. might come into play so ask if the Trust is looking to save money. It’s important to have Trust pricing and discounts available (and in some form of document whether that’s a brochure or presentation). Suppliers who are strong at selling to Trusts have this ready, while many don’t. Trusts are increasingly staffed by people from commercial backgrounds so if you don’t have your sales assets ready, don’t expect to win many Trust opportunities. Typing it out in emails alone won’t suffice.
5. Timeline
Last, but definitely not least, we have to talk about timeline. There are 3 questions you not only need to ask. You HAVE to ask. Schools generally fall into 2 buying categories:
IMMEDIATE: I need a solution as fast as possible
RESEARCH: I’m looking for a solution for next year
You might have had 10 great meetings this month, but if the schools aren’t thinking about starting for another 7 months, you’ve got a big problem! Always, always, always ask a variation of these 3 questions:
When are you looking to make your decision / start?
How quickly do you want to see impact in your school?
What is our next step - should we arrange a second meeting?
You’ll be surprised by how many schools are just in research mode right now.
That concludes our deep dive! Great work on making it this far - I’ve thrown a huge amount of information at you in this article so don’t worry if it doesn’t all make sense immediately. Try to implement what you can as I know it will make a difference to your revenue.
If you’d like to talk through anything I’ve covered here, or want to discuss anything else EdTech related, you can book a free 45 minute video call with me by clicking here.
If you have any feedback, feel free to drop me an email or complete the poll below. It’s always nice to hear what you’re up to.
Thanks for reading and see you next time,
Jay
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