SES Programs are gone, the College Board & Khan have made it difficult for small tutoring companies, and the ACT cannot seem to leverage the consumer angst generated by the impending SAT Test Change.
The educational service landscape has shifted to be sure but there may be more of a silver lining for test prep & tutoring than initially thought. There was, after all, much consternation from tutors and test prep outfits after The College Board announced its intent to make P/SAT prep free through Khan Academy.
We have 8 Reasons why 2016 should be banner year for well organized small to mid sized Educational Service firms. Before we get there, though, let’s quickly review some earlier assumptions.
In the past, I’ve used evolutionary biology to explain business strategy. To recap: when an environment changes, organisms with a high degree of adaptability tend to persist. In EB, selection is favoring the adaptation. This is a simplified view but it tends to work out well when applied to business as well.
To extend the metaphor and to recall some past articles, we’ve said adaptability = business strategy (things like: product segmentation, product line extension, new product introduction, and expense management); and the environment = the land of test prep & tutoring demand; lastly, the organisms have been = to our test prep firms.
Shifting back to the business environment, he sum total of earlier strategic recommendations (adaptations) in terms of products and product deliver would look like this:
Product 1 (p1): Academic Tutoring (STEM Focus)
Product 2 (p2): Test Prep Tutoring (SAT & ACT)
Product 3 (p3): College Admissions Consulting
p1 Delivery: 1:1 and Online
p2 Delivery: 1:1, Occasional Classes, and Online
p3 Delivery: 1:1, Online, perhaps Small Group Camps
Although we’re mostly focusing on resource acquisition here i.e.–how to obtain new $ without depleting existing resources– the point has been to become efficient and to diversify the business. By focusing on key products and segmenting those products into different offerings, one can appeal to a broader array of clients. Through refining the method of service delivery, one is able to extract a higher ROI for each dollar spent to deliver. Using the EB metaphor again, this means the organism refines and focuses on high yield activities to obtain the best resources available. Maybe fruit on the ground is more plentiful but often spoiled and fruit in the trees is safer to obtain and more healthy.
Nothing earth-shattering but taken together, these refinements (adaptations) position one to better exploit the environment when things are good (resources are plentiful) or when things are not good (resources are scarce). If you’re still with me, you know that most folks in test prep were concerned that resources would become scarce as soon as Khan started delivering free SAT prep online.
The good news in educational services seems to be that resources will not be as scarce as feared by most. In fact, firms with a good product and even a moderate degree of adaptability should benefit.
Here are 8 changes to the business environment which bode will for tutoring and test prep:
1. Every Child Achieves Act: passed recently. Decentralizes education decision-making to the states and has allowed for use of the ACT or SAT as the measure of high school success.
2. Most IECs are recommending students take the ACT (at least for this year) while the Redesigned SAT is in its early stages. This creates opportunity for any heretofore SAT oriented state.
3. The SAT and ACT are fighting a state-by-state battle to be the high school assessment tool of choice. Any state that changes from one to the other ostensibly becomes a big opportunity for test prep & tutoring “Test is Changing” marketing. Illinois & Colorado are notable here.
4. Both SAT & ACT continue to have scoring problems and therefore remain in the media. When this happens, it is free PR and test prep & tutoring companies generally get more phone calls and web hits.
5. STEM subjects continue to be a primary focus at the state and federal level and tutoring demand has increased.
6. Teachers are now bonus-eligible based on their SAT or ACT scores. No idea if this is good for test prep but it seems like another good reason to score well.
7. The free prep from Khan seems less strategic and more content-oriented which leaves the door open for deliberately conceived and sequenced preparation.
8. It remains likely that 40% – 47% of high school students will opt to take both the (r)SAT and the ACT (NY Times, 2013). In fact, a recent survey (Money Magazine) concludes that about 43% of students will do just that.
In terms of Test Prep & Tutoring Strategy, we suggest developing the ability to offer ACT vs. (r) SAT Diagnostic Testing Services but continuing to assume that many if not most of your students will choose both tests. We reason that most tutoring students fall within the 40%-47% of students who apply game theory and take both tests. This combined with a deliberate event strategy should serve the mutual interests of students and tutoring firms.
Pair down your tutoring to those subjects which deliver the best ROI
Look closely at expanding online service delivery.
Separately, begin cross-training your tutors with (r) SAT or ACT material (if you haven’t already).
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Why Test Prep & Tutoring Should Flourish in 2016