In recent years, online education companies have continuously emerged and competition has become increasingly fierce. In order to expand market share, customer acquisition costs have also continued to rise.
Recently, VIPKID's founder and CEO Mi Wenjuan stated that the cost of a single customer acquisition of 8,000 yuan to 10,000 yuan is a short-term and individual phenomenon, due to increased investment in some test channels and marketing propaganda. At present, VIPKID's single customer acquisition cost is 4,000 yuan on average.
In fact, the high cost of customer acquisition for education companies is not new in the industry. According to industry sources, the closer the winter and summer vacations, the online education companies will start the marketing war.
"The high cost of customer acquisition is mainly because many investors, institutions and entrepreneurs have blindly entered the online education industry, especially online English. This track is more fiercely competitive and the cost of investment is higher." Internet industry analyst Ding Dao The teacher told the "Securities Daily" reporter that it is a normal situation for the entire industry to obtain a customer price of more than 1,000 yuan, but the VIPKID 4000 yuan customer acquisition price is currently a relatively high data, customer acquisition cost is so High, it will definitely drag the entire operating system.
High customer acquisition costs
The high cost of customer acquisition has caused some well-known online training institutions to charge high class fees, which has been criticized by the industry. A number of parents who are choosing online English education institutions have told the Securities Daily reporter that they are also teaching courses abroad, and in the end they choose a less well-known but much cheaper institution.
A parent revealed to the Securities Daily reporter that at present, the cost of each lesson between some large educational training institutions and small educational training institutions is too large. "One English class is also a foreign professor's class, and the price may be nearly three times the difference."
An industry insider revealed to reporters that marketing costs are one of the important reasons for the large gap between the two.
As an online English training institution with a high market share, VIPKID has a relatively large number of advertisements. Not only did he invite well-known actor Liu Tao to endorse, he also frequently appeared in popular variety shows.
Mi Wenjuan said that in the stage of large-scale growth, enterprises need to increase investment in brand marketing, technology research and development, and course content copyright cooperation.
In fact, the marketing battles of major educational institutions in the summer vacation have been the market's attention.
According to the statistics of Yiou.com, nearly ten online education companies have invested a total of 4 billion to 5 billion in marketing during the summer vacation, of which Xueersi School has put about 1 billion in the market, and the ape tutoring and homework help is about 4 100 million to 500 million yuan.
According to the fluency in English in the third quarter of 2019, the company's third-quarter net income was 262 million yuan, an increase of 45.2% year-on-year, and the net loss in the third quarter was approximately 200 million yuan, an increase from the loss in the same period last year. It is understood that the company's sales and marketing expenses were 289.2 million yuan (approximately $ 40.5 million), an increase of 41.9% year-on-year, and sales and marketing expenses accounted for 110.3% of net revenue.
"We did increase investment in traffic acquisition from this summer's holiday, but this must be a clear investment in the premise of accounting for economic models and ensuring capacity. Acquiring customers is only a part of product operation. In the winter vacation, the success of enrollment still depends on the quality of products and services. "Luo Yuan, vice president of NetEase Youdao and head of Youdao Quality Class, told the Securities Daily reporter.
Sean, founder of Watermelon Makers, told the Securities Daily that for the education and training industry, the core of reducing the cost of acquiring customers is through word of mouth.
Regulate regulation or end brutal competition
In the Internet era, it seems that burning money to acquire customers has become a stage that many industries must go through. It is undeniable that the sooner this barbaric competition ends, the better it will be for the development of this industry.
"The main reason for the high cost of customer acquisition for educational and training institutions is that the current educational and training institutions basically have a strong homogeneity, whether it is subject training or non-disciplinary quality training." Dean Xiong Bingqi told the Securities Daily reporter that under this situation, many training institutions do not attach importance to the quality of training, and often put more energy and cost on marketing.
Due to the increasing number of online institutions, various irregularities have also emerged. In 2019, many departments issued documents emphasizing the supervision of online education.
Minsheng Securities analyst Qiang Chaoting said that the 2019 K12 extra-curricular training industry supervision policy continues to tighten in 2018, and online and offline normative policies are working together. In this way, the industry threshold will be raised, and some non-compliant small and micro institutions will be eliminated, which is expected to increase industry concentration and benefit leading companies. He believes that the supervision of online and offline K12 education is standardized, regular and stricter, which will end the brutal competition in the education industry.
Regarding the industry phenomenon, Ding Tao told the reporter of the Securities Daily that compared with last year and the summer advertising war, it has been much better now, mainly because the money has not been burned. After the entire industry has experienced disorderly development, it will inevitably return to a compliance and healthy track. (Reporter Li Chunlian Zhang Min)
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