SAT Spring Discount Strategy
If you’re like me, you are probably being inundated by Cable/Satellite/FioS mailers and email campaigns. Generally speaking, each company is incentivizing consumers to sign up for their service. Sometimes this can be a tangible incentive (I got a small flat screen TV some years back); other times it comes in the form of things like “feature-based” messaging, price-locks, or discounts. The ultimate goal for the purveyor of the incentive is to gain market share through a customer commitment. These days Test Prep is no different. Because Test Prep has become commoditized, Test Prep companies have become equally aggressive with incentives. At this time of year SAT Discounts are ubiquitous.
Why now and why discounts? Essentially, this boils down to capturing and keeping market share ahead of the June and October SAT Exams (the two largest). Since classes start in one form or another between now and the Fall exam, this time of year is ideal to fill classes as quickly and as efficiently as possible. The fact that many consumers receive tax refunds in April-May does not hurt either.
The major players in Test Prep will offer something like $100 Off for a defined period of time. Discounting has become more nuanced with the advent of Social Media Marketing and Brand Communities. Twenty-four hour discounts, or something similar, for Facebook Fans is a simplistic example. But for our purposes, and on a more basic level, one can find post-cards and emails with $100 Off offers just about everywhere.
Getting back to the main point about market share, selling two test dates vs. onecreates the potential for a better marketing ROI (return on investment). On a more strategic level with regard to positioning for the October test, the more students one can enroll early in an enrollment cycle the greater the opportunity to fill classes, gain market share, and re-position for the late Summer offerings. If I fill all my classes now, I can decide to add boot camps, weekend-only classes, or even late starts if demand dictates. I can also capture revenue in the form of deposits and thereby increase cash flow which is never a bad thing.
How have we gotten to this point? The fact that there are few barriers to entry combined with the fact that many SAT course features are often seen as roughly equivalent are at least two forces driving the commoditization phenomenon. This leads to a dynamic where differentiation is being fashioned through aggressive pricing strategies such as early or late discounts.
So what can you do if your not one of the Big Test Prep concerns but have a good SAT course? Simply put, nullify any perceived competitor advantage:
1) Make sure your features are as good as or better than the competition (think number of class hours and proctored exams).
2) Compete using a “convenience factor.” (think location, times, days of the week your classes are offered).
3) Determine your margin if you were to offer a discount. If you have to sacrifice a % point or two to fill your classes earlier in the season and increase your cash flow, you may be pleasantly surprised with the overall volume of enrollments resulting from this tactic.
4) Look to current or past clients. If you have an existing client base, discounting becomes a bit easier implement and much more deliberate in nature.
5) Finally, and this is key, look to develop Hybrid Course Offerings through online classes, test questions, etc. There is a least one company out there whose products are designed to empower smaller concerns (link provided above). The purpose here is to compete more effectively with feature-laden courses.
At the end of the day, the dynamic facing Test Prep and Tutoring providers boils down to a form of Game Theory: if one can nullify a competitor’s advantages one has a better chance to compete on value and reputation. Said differently, if features, access, and pricing are perceived to be equivalent, one can compete on the quality of the classroom experience. Assuming you have a good course staffed by good instructors, consider a short term discount to grab some market share.