Three Elements For Designing More Successful Online Courses

Producing content is a difficult, slow and often expensive process. Although the cost of production has gone down thanks to new technologies and desktop editing, it is still a logistical hurdle. And many discover that after so much effort, there is risk that the content will have limited appeal to the students. All of these are legitimate concerns when it comes to course authoring. For these reasons, many instructors are reluctant to author courses and forego on a wonderful opportunity to make the world a better place and earn some money in the process.

However, quite often an independent instructor’s course gets a ton of success, scales well, spreads quickly on the web and brings its author a considerable income: in some cases in the hundreds of thousands, and in exceptional cases – millions of dollars. While multi-million dollar success stories are exceptional and extremely rare, an average online course of decent quality generates anywhere in the range of $3,000 to $30,000 of revenue a year.

How do you get there? First and foremost, before you think about marketing, distribution and other business issues, the content of the course has to be relevant, useful and interesting. We are convinced that webinars are an excellent tool for iterative development of online course content, and here’s how the whole setup pans out:

1. Agile development

At Rukuku, we are big fans of agile development and customer discovery. Last year, we were blessed to have been selected for the National Science Foundation’s iCorps training program at UC Berkeley. It is not surprising therefore that we think that lean methodologies and iterative development should be applied to course authoring. Agile development methodologies for course authors can be summed up as:

  1. build your course in small increments one piece of content at a time – Rukuku Composer is perfect for that
  2. collect data and feedback on each additional piece of content – see point 2 below
  3. improve the content
  4. repeat

   2. Customer discovery

Collecting feedback is all about getting out of the building and talking with people. Pick up Steve Blank’s book, read Alexander Osterwalder’s book, or better yet – take Steve Blank’s free course on Customer discovery. This methodology is a reliable and tested approach to discovering what is right for your target customer. Simply, it boils down to doing three things in a structured and organized way:

  1. talking to your customers
  2. recording and organizing customer feedback
  3. analyzing this feedback and acting on it

3. Webinars

Use webinars as your Minimal Viable Product (MVP) testing environment. Rukuku is perfect for doing webinars, whereas webinars are an amazing way to test your content. When you are hosting a webinar, it is easy to collect feedback from your audience. You can ask the attendees to provide feedback during and after the webinar, as well as analyze the questions posted during the Q&A session or while you were going through your slides. Besides, recording the webinar and analyzing it is a great way to take a step back and look at your presentation skills and course content: pay attention to how you use your voice and how you present yourself on video; take note on the structure of your presentation, engagement of your audience, quality of your visuals and handouts – all of these elements can be tweaked to create a better course. Perhaps the best part about webinars is that you can collect payments from participants and offset the costs of producing your amazing course.

Start using Rukuku for webinars. Take your Rukuku course

Please Separate Pricing And Discounting Channels

valueI concluded in my last post that content marketplaces – education and training marketplaces included – should never offer drastic discounts without any regard to the content lifecycle stages. In other words, don’t do discounting the way Udemy or Tareasplus have been doing it.

I once had a conversation with a founder of a leading CFO training company about allowing a known online delivery platform manage his content. He told me that his value proposition was different from that of the platform in question, and didn’t want his content to be “regularly discounted” as he was worried that would lead to erosion of his core customer base and his entire business.

It is quite difficult to expect a discount on music on Apple iTunes or movies on Netflix or Amazon Instant Video. Apple never discounts anything new directly on iTunes, and the only way to get a discount is via gift cards, which can sometimes be discounted at third-party distributors. Just as luxury retailers have a clearly isolated channel for discounted products, so does Apple.

Netflix may occasionally run discounts on annual or monthly membership payments as part of their user acquisition strategy. However this approach never directly affects the price of programming that the service provides. Because Netflix redistributes revenues to content providers based on views, the brands of film studios are well shielded from any pricing incentives Netflix may provide to the consumers.
Amazon Instant Video content streaming service is bundled under the larger Amazon Prime umbrella – an enhanced high-speed delivery service, which provides fast access to both physical goods via fast shipping and video content via fast streaming. Amazon Instant Video approach is a hybrid between Apple iTunes and Netflix models because in addition to providing bundled content for the price of annual membership, Amazon also sells the hottest movies or TV episodes for a set fee. No discounts.

Apple, Netflix and Amazon Instant Video have chosen simple yet brilliant price-discount decoupling strategies that enhance brands and provide value to both content providers and consumers.

To sum up, these corporations push discounts indirectly, in ways that enhance value of their content.
In online education and training, this same approach has been successfully implemented at least twice: Lynda.com is charging consumers a monthly subscription and so is Infinite Skills, Inc. This approach to pricing together with high quality content created a ton of value and both companies have been recently acquired.

Start creating and selling your courses with Rukuku

Discounts On Online Courses Are Wrong

Never discount unique and fresh online content! Competing on price in content sales is dumb. Just imagine if Hollywood studios started to offer gradually lower prices on their new movies trying to outdo their rivals on price. One can expect a bit of a price drop on old titles, but those reductions are carefully controlled.

In contrast, current prevalent marketing approach of many major online education content providers is based on extreme discounting of their courses regardless of the lifecycle stage of those courses. Companies that engage in this practice are confusing consumers, destroying their brands and killing customer loyalty. This apocalyptic scenario is well pronounced for B2B2C (business-to-business-to-consumer) companies whose direct and most important customers are course authors.

To illustrate the trend, consider the following messaging from several providers. Here’s how Udemy kills course author loyalty, and confuses consumers. First, they email with “top 10 trending courses”, note the prices:

Udemy email encouraging me to buy courses

Then a few hours later they follow up with a discounted offer:

Discounts on Udemy are confusing

Will anyone ever buy at full price? – Nope. And one cannot imagine the frustration of becoming a course author for Udemy – whatever price the course author may think their course is worth, Udemy will always undercut the author via one of these “campaigns”.

Tareasplus tries hard to lead Udemy in the race to the bottom in Latin America:

Steep discounts on Tareasplus kill any desire to buy at full price.

In Spain, an English language course provider ABA is pulling the rug from under its own feet:

65% discount! Really?

And so on…

It seems that these companies are not aware that they are selling content. They behave like clothing retailers who need to liquidate out-of-season fashions to bring in the next season’s collection. Except, retailers know all too well what exactly their respective brands stand for: convenience, value-for-money, status statement, luxury, etc. Online education content providers do not know the exact value or positioning of their brand.

In clothing retail, the seasonal approach to inventory management is sound and explicable, although most high-value brands will never run steep discounts – or any discounts – in stores even at the risk of having unsold inventory between seasons. For instance, it is unheard of for Luis Vuitton bag at a 50% discount – unheard of! These companies liquidate unsold inventory in special “premium outlets” – stores usually situated at a great distance from key retail locations. Some companies sometimes run special and carefully controlled online sales. These measures allow the vendors to isolate the effect of discounted products on their core business and to keep and enhance the value of their brands.

To understand why discounting content is an absolute disaster and a great danger for the content provider’s brands, look at Hollywood’s war on pirating. The same is true for software giants’ fight on illegal software copying. Media industries understand very clearly that they produce unique products that can and do provide long recurring cash flows to their owners.

Education marketplaces that regularly wreck their foundations with extreme discounts need to reconsider their pricing strategies. Carefully tracking the lifecycle of a course is an important thing to do. When the course is new and you have something unique to sell it is incredibly dumb to run discounts.

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Rukuku Offers Free Service To Unsafe Schools

Safe Connection Program

Recent barbaric attacks on school children have made headlines around the world and shocked everyone.

As our contribution to world piece, we at Rukuku decided to launch the “Safe Connection” program for schools and training organizations where student and instructor safety is a concern. If you represent such a school or training organization please email us with an explanation of your needs. We will then contact you to discuss technology issues and to assess the possibility of connecting every instructor and student at your school to Rukuku free of charge. Obviously, we can only help if your instructors and students can access the internet.

Our software products and services effectively enable live and asynchronous instructor-led and self-paced training programs, which eliminate the need for students and teachers to meet in a classroom. We are certain that Rukuku technology products can help schools and training centers in unsafe or war torn regions deal with some of the safety issues by enabling more distance programs.

3 Graphs About Udemy Revenue

I admire Udemy for their unique approach to managing growth, and I regularly collect and analyze all and any data about them that I can get. The company is a peculiar business case in the growing edtech world because:

  • They are one of the fastest growing virtual training companies in the world
  • Their business model works
  • They can be profitable

My recent annual analysis of Udemy data has yielded interesting results. In short, Udemy is deliberately diversifying its content portfolio and breaking dependencies on particular course providers.

1. Udemy is no longer overly dependent on just one course provider. In January 2014 close to 50% of their cumulative revenues came from a single company in Canada: Infinite Skills. Our November 2014 data shows that Udemy saw that risk very clearly, and worked hard to diversify its course portfolio. This effort seems to have born fruit: 50% of the company’s cumulative revenues now comes from 27 providers. As this diversification took place in the past twelve months, it seems that Udemy’s content managers and the marketing team are making a deliberate effort to break away from dependence on Infinite Skills.

In November 2014, 27 course providers were responsible for 50% of Udemy's revenues.

In November 2014, 27 course providers were responsible for 50% of Udemy’s revenues.

2. Udemy is no longer an Excel training company it used to be twelve months ago. Back in January this year, seven out of ten top courses by enrollment and revenue on Udemy were about Excel. Although Microsoft Excel courses are still VERY important in Udemy’s portfolio, the company has made a successful shift into Software development and Business categories. The new course providers that Udemy has managed to bring in generate quite a bit of revenue in areas of marketing and mobile app development.

Software development and business dominate Udemy's portfolio in terms of revenue.

Software development and business dominate Udemy’s portfolio in terms of revenue.

3. 10% of enrollments drive 50% of cumulative revenues. Udemy remains in a tough spot in terms of pricing and market positioning, although this seems to be changing, albeit slowly. In the online education and training world, I place Udemy in “basic office skills and basic technology skills” content category where brand of course provider does not matter as much as the quality of content they produce. Based on our data, in 90% of cases Udemy’s value proposition is “commoditized knowledge at bargain prices”. 50% of cumulative revenue to date comes from 90% of all enrollments within the “$1-$100” price range. What’s amazing is that the other half of revenues to date has come from just 10% of all paid course enrollments that come from all other price segments ranging from $101 to $5000 per enrollment. Obviously, this is a completely different market segment and it is a least just as important for Udemy as its most popular price segment.

Udemy's difficulty next year would be in managing its polarized user base.

Udemy’s difficulty next year would be in managing its polarized user base.

If you need access to our database, please sign up to my live seminar: I will be doing a live review of Udemy data on January 15, 2015 at 12:00PM PST on Rukuku. During the event, I will present my findings and analysis of online trainig trends that can be glimplsed from comparing 2013 and 2014 data.

When you sign up, you will have access to the full raw database that contains most up-to-date information on Udemy’s courses, user and revenue growth, pricing strategies, etc. After the live event, you will also have access to Udemy January 2013 data as well as my analysis of changes that took place.

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Its not lack of opportunity, its lack of imagination – Innovative thinking and free will

A couple of years ago I went on a pilgrimage to Wittenburg – the birthplace of the Reformation. The impact of those events 497 years ago are still being felt today – including a lot of the best things about America.

Martin Luther set the ball rolling on the idea that the result is in our own hands. Too many cultures around the word encourage people to think that their destiny is determined from the day they are born based on who their parents are, where they were educated, who they know and what is expected of them. And this becomes a self-fulfilling prophecy because they give up before they have even tried.

Never Stop Learning.

Never Stop Learning.

In America the opposite is true – the only thing that limits us is the strength of our own will and the power of our imagination. Be persistent, be optimistic, be self-critical and look to sharpen your skills and those around you every day.

You need to instil the same culture of free will and self-confidence in your team. Exogenous events are to be dealt with and used to your advantage. Everybody should look to constantly improve their performance through training and acquiring new skills rather than just staying in the deterministic comfort zone of what they know they are good at.