Concept Understanding: Lead Funnel, Sales Pipeline, Client Acquisition Cost

*Original Post is from 2017 and highlights the use of Free Events as a Client Acquisition Strategy

Kaplan Test Prep seems to be on to something by offering free web based tutoring during their "prep-a-thon" series. In February 2016, over 10,000 students participated in Kaplan's first ever SAT prep-a-thon. The event connected Kaplan Tutors to prospective students via live-online conferencing.

To round things out, in October of 2016 Kaplan offered free PSAT prep during the first 17 days of October. The Official PSAT, also held in October, is largely viewed as the starting line for college admissions. This weekend, Kaplan will be holding its first ACT prep-a-thon.

Because all US colleges and universities accept either the SAT or the ACT, and because the PSAT is the first opportunity to compete for merit money (in the form of the National Merit Scholarship), the prep-a-thon is laudable.

But one can do well by doing good and, in this case Kaplan is doing well by reducing their client acquisition costs. Colleges call it "yield" and test prep companies call it "conversion." In any event, a win-win situation is created: students get free prep and the company gets free student interest in the form of a prospect or lead.

Which brings us to the impact of all of this on boutique tutoring & admissions firms. Smaller companies may soon come to realize that the meet & greet portion of their client life-cycle is under duress. Those relationship starters have in the past been bolstered by things like Free Mock Testing & Free Student Consultations. A wane in student interest for those free-services may be an early indication of stress at the top of the lead funnel. If this happens, interest in one's mock tests (and perhaps even bootcamps) may start to diminish. While a particular market may be insulated for now, the long term prospects are not good. After all, "why not free?" Right?

Yet, even if the top of the lead-funnel becomes stressed, the news remains positive for boutique tutoring and admissions firms with the capacity to adapt:

• Wealthy communities will still seek out and pay for white glove services.
• ESSA's treatment of the SAT & ACT as a viable state graduation test should add predictability and perhaps growth to the overall number of students testing ( and therefore preparing for tests & admission).
• The competition to get into a good college is at an extreme level.

So overall demand will likely persist but access to prospective clients may become obstructed. If you buy into the logic, it makes sense to take a look at the top of the lead funnel in comparison to past year results. The way forward depends largely on the business model but becoming less dependent on "Free Testing" is probably a wise long term plan.