Profitability : Education Provider ( Revenue Decline )

Your client is a South African education provider. Their revenues have been declining and they are trying to figure out the reason and define a plan of action for revival.

Alright. Can you tell me what exactly an education provider is? Are they a school?

The client operates after the grade 12 level. They basically provide undergraduate and post-graduate courses. Some courses are completely offline, some are online, and some are hybrid.

Okay. Can you tell me how long this issue has persisted and what has been the quantum of decline in profits? Additionally, can you please tell me where exactly in South Africa do we operate?

The issue has been going on for about 1.5 years now. The decline is significant but let’s not get into any numbers. You can consider that we operate in the urban provinces of South Africa.

Alright. What is our primary target segment in terms of students?

We primarily cater to working adults between the age of 20-45 who wish to get formal certifications to improve career prospects.

Interesting. That is good to know. Further, can I know a little bit about the competitive environment? Are the competitors also facing the same issue as us?

There are about 6 major players including us. All other players are witnessing healthy growth. Previously we were 2nd in terms of market share but have now dropped to 3rd over the past 1.5 years.

Okay. So, it seems to be a grave problem. The decline in our profits can be a cost issue or a revenue problem. Can I know where I should focus?

Please focus only on revenues. What do you think are the revenue streams of such a player?

I can think of 3 major revenue streams. One being enrollments, the second being the money we earn from research and publications and the third being donations to us by third parties. Does this seem comprehensive? Is there any one you want me to focus on?

Yes, this seems good. Please focus on enrolments.

Okay. To dive a little deeper. Is this decline in enrollments focused on any specific geography or course? Also, can I know what domains do we cover?

The Durban province has suffered more than the rest and the most impact has been on undergraduate courses. Most of our courses are in the business and management domain, almost 80% in fact.

Okay. I think I have enough information to proceed. I shall focus my analysis on undergraduate courses. The revenue from enrollments can be dependent on the number of students enrolled, the portfolio of courses we offer and the fee per course. Have any of these changed?

The number of students enrolled has dropped.

Alright. The number of enrolled students could have reduced at 3 junctions. Pre enrollment which depends mainly on our brand value, the variety of courses we offer and accessibility of our program to everyone. The 2nd junction is drop offs during enrollment which depends on the pricing and the process. Finally, is the post enrollment which can be any early drop-outs from the course.

The major issue we see is during enrollment. Can you elaborate more on the prcoess aspect within during enrollment? 

Okay. I think the process would include 2 major factors – the eligibility criteria and the time & effort when it comes to the active administrative process.

We have had to reject many applicants as they do not have a higher degree pass which is required for many undergraduate courses. 

Okay. That is a big problem. Why does our competition not face this?

All other competitors also offer higher certification passes as part of their curriculum which we don’t. This is mainly needed for undergraduate courses.

Okay. I think I have identified one of our major issues. Now I want to understand why theDurban province is suffering. Can you tell me how this province is different from others?

Many manufacturing firms have now set up operations in Durban.                                                                       

Is it fair to say that our course offerings that are focused on business and management don’t cater very well to getting a job within the Durban market where technical skills are necessary?

Correct. Many of our competitors offer technical courses and are doing vey well in that region. I think you have identified most of the problems. I had one additional question; we feel that our marketing efforts are not as effective as they were before. Can you help me identify why?

Effective marketing requires 3 factors – The right channel, the right message and the right spokesperson. All these must be aligned with our target customer. Can you tell me a little bit about our current marketing strategy?

We predominantly advertise through newspaper and TV ads. We feel that our messaging is fine as it is so, please ignore that for now.

Okay. I feel that given the changing times, LinkedIn, Twitter and other social media must be tapped into for advertising. Further, we can partner with workplaces as a training partner to upskill their employees. High value moves like sponsorship or celebrity endorsement can also be evaluated to generate massive publicity.

That seems like a good idea. Can you please highlight the broad plan of action to revive the firm

Sure. Can I take a minute to structure the action plan?

Please take your time.                                                                                                          

Alright. In the near term, as a priority, the firm must look to offering a higher certification pass to solve the present eligibility issues. In the longer run, we should do a cost benefit analysis to evaluate its basket of courses and analyze if any additional domains can be added. Finally, we must continuously invest in marketing with specific focus laid on our new initiatives. Appropriate channels must be chosen to implement this marketing plan.

Thank you. That was all! 

Your client is a South African education provider. Their revenues have been declining and they are trying to figure out the reason and define a plan of action for revival.

Case Facts 

• South African education provider
• Target segment is adults between 20-45
• Present in urban provinces
• Majorly business related courses
• 6 major players in market, we are 3rd in market share

Interviewee Notes

• 3 revenue streams – Enrolment, research, donations
• Ignore costs
• Issue with enrolments in undergraduate
• Large issue in Durban province