6 Keys To A Profitable Bespoke eLearning Business

Over Unicorn’s 25 years, we have seen the evolution of the bespoke eLearning business from a small fragmented cottage industry into today’s much larger fragmented cottage industry. So what differentiates your bespoke eLearning business? Is it great writing, great design, a specialist eLearning industry focus? Or something else altogether…..

Here are a few suggestions as to what I believe are key to a profitable bespoke business.

1. Raise Barriers To Entry

The eLearning industry has always suffered from low entry barriers. These have made for plenty of competition, but also driven down margins and, in the longer term, that constrains growth. In the early days, there were some excellent authoring tools around, but these required a degree of technical programming skill to use them effectively. The rise of rapid development tools that don’t require coding skills such as the PowerPoint Add-ins from Articulate and iSpring, have lowered entry barriers further.

2. Create Switching Costs

Bespoke eLearning companies need a constant stream of new business and when switching costs for your clients are low and price competition fierce, stable growth is tough.

3. Employ Great Instructional Designers

There is still one important constraint on new entrants - instructional design skills. Anyone with experience of the eLearning industry knows how difficult it is to find good instructional designers who understand the subject matter, the principles of effective learning and have the creativity to be able to engage the learner. These skilled resources are a key limit on the ability to maintain high quality when trying to grow fast, although that has not always been a sufficient deterrent. We’ve all winced at examples of ‘Click Next 150 times then answer three badly written questions’!

4. Outsource Non-Core Activities

Over the past decade, better communications have exposed providers to global competition, resulting in further downward pressure on prices, but also opportunities for cost saving through offshore outsourcing and crowd sourcing. Unfortunately potential cost savings are rarely fully realised as the reduced direct costs can be outweighed by additional management costs in ensuring that quality, creativity and cultural relevance are not compromised.

5. Two Plus Two Doesn’t Equal Four

A strategy of growth through acquisition requires a very different skill set from organic growth. The history of the eLearning industry is littered with failed or overpriced mergers and acquisitions. A public listing is only for the brave, the deluded or those looking for a quick exit before it all goes pear-shaped! The tarnished history of mergers and acquisitions highlights there are few advantages in size in bespoke eLearning companies, and management problems tend to multiply as teams get larger and more dispersed.

6. Find Your Niche

A route to profitable growth is apparent in the examples of successful niche players, who focus on market verticals where they have specialist expertise and can talk the language of their clients. Whether it is oil and gas, pharmaceuticals, healthcare or, as in Unicorn’s case, insurance and banking, you can create strong barriers to entry and high switching costs, and build profitable, enduring business relationships.

The exponential rise of mobile platforms expands the market and brings in more players, but the basic economics are unchanged. We will continue seeing new entrants with new ideas and a low cost base challenging the established players in an increasingly global cottage industry.

*To celebrate Unicorn’s 25th anniversary year, and in co-operation with eLearning Age magazine, we have produced, a one-off digital supplement, reflecting on and taking an irreverent look back at the industry and stargazing about the future alongside some more thoughtful articles. You can read the publication here.

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