The Only Way To Build An eLearning Consumer Business
Sergey Nivens/

How To Build An eLearning Consumer Business

eLearning is one of the most promising industries, according to many leading analysts.

Given such a scenario, you may be wonder about launching your own eLearning academy: you feel mastering a certain subject, being a great Instructional Designer and engaging public speaker. So, why not?

Because your strengths above are just the baseline to start thinking about launching your own academy. To ensure it has legs in the long run, you should consider an additional layer of thoughts.

Those thoughts should be focused on designing a financially sustainable academy, which allows you to pay the bills at the end of the month.

Said that it comes clearer that the only way to build an eLearning consumer business is to design a financially sustainable business model to support it.

The question now is: how to build a financially sustainable business model for an eLearning consumer business? There’s one criterion to do it: what a student pays during his trainee life at your academy should be worth the spend in marketing and communication to let him know the academy exists and to convert him to enroll the first time.

The criterion, expressed here as a long concept which may take a little to be digested, can be finally represented by a number. Such a number will reveal to you how much the academy is built on a strong basis. Let’s see how.

How To Compute The Revealing Number

First of all, when a student enrolls to one of your courses, he pays a certain amount of money. Such amount of money, when transacted, can generate some direct costs to be paid, like the transaction cost you pay for example to Stripe or Paypal (the payment gateway, more generally speaking).

The course price, minus VAT and all the direct costs, determine the contribution margin of the course sale.

In case you are thinking about running the academy and have teachers to help you with the course content, you may pay them a royalty fee on the course sale. The royalty fee would hence be one of the direct costs which lower the contribution margin.

If you got the point so far, we are very close to getting to the point. There’s just one last concept introduce. And this is.

The trainee who enrolls the first time once completed the course, will hopefully get back to enroll in another course. You may call this factor the average repeat enrollment per trainee.

Well, the contribution margin multiplied by the average repeat enrollment per customer is called the Trainee Lifetime Value, hence how much a trainee is on average worth for the academy.

But the revealing number we were looking for is not here, yet. To have it, we should first think about how much was the spend in marketing and communication of the academy to have one new trainee to enroll the first time: the Trainee Acquisition Cost.

This value is not so easy to retrieve, especially if you are not operating the academy yet. It is usually retrieved by experience in different ways, where the simplest is to divide the marketing and communication spend of a given period by the number of new trainees who enrolled in a course.

The Trainee Lifetime Value minus the Trainee Acquisition Cost provides a measure of the operating profitability of the academy and therefore a glimpse of its sustainability.

The Trainee Lifetime Value minus the Trainee Acquisition Cost is the main driver of the Business Plan and determines the choice in terms, for example, of the LMS price range you can afford, as well as the budget for developing a course.

Which Are The Key Factors To Build A Sustainable Academy

The key factors towards sustainability are hence multiple. But, the most relevant are probably these 3:

1. Selling With The Lowest Direct Costs Possible

Keep high the sale margin is the first thing to look for. This means keeping low the royalties, in case you have, and keeping low all the other costs like the transaction costs of the payment gateway.

2. Selling At The Highest Possible Rate

Selling at a good price seems a mainstream consideration, but it is not. It is determining the success of your academy and hence should let you think how to design the academy itself to provide premium-tire education for which people would pay a premium price. Is it by discussing niche subject or provide hyper-digestible, well-designed content?

3. Focus On Loyalty And Repeating Enrollments

This is definitely the key point of the whole picture. It is probably difficult to reach the academy sustainability if each and every trainee enrolls in only one course. So you should design a strategy for pushing the trainee upwards in his skills development. To do it, you can’t do without a great Instructional Design and engaging content to make people complete the course fast. Moreover, the subject you cover should be broad enough to lead to have multiple courses.