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Customer Education Business Models: What You Need to Know

Posted by Rachel Martinez on Jun 13, 2018 5:30:00 AM

Rachel Martinez >

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If you’re creating a customer education program, the question of whether to charge for training will come up. When it does, do you know what your response will be?

Keep in mind, there’s not one right answer. Different teams utilize different strategies, depending on their business goals. If you’re not sure which one is the best fit for your organization, this blog post can help.

Read on to learn about two common customer education business models:

1. Training as a Cost Center

Some organizations opt to offer training for free, and accept it as a cost center. There are a few reasons this strategy may make sense for your business. Here at Skilljar, we often talk about the customer journey, but training can also be a key component of the buyer’s journey. In this case, training is part of your company's lead generation strategy, where potential buyers provide you with their contact information to gain access to educational materials. Another goal here may be to convert free trial users into paying customers, in which case it’s in your best interest to teach them how to be successful from the start.

SaaS models also provide customers the opportunity to seek out new solutions with every contract renewal, and today, they have choices like never before. As such, there's a lot more pressure to drive product adoption and help customers see value as quickly and efficiently as possible. Free training and onboarding pathways are one effective way to accomplish that goal, and reduce the barriers to entry introduced with price tags. Often, companies will recuperate the spend associated with these initiatives through reduced support tickets, and higher customer retention and expansion.

2. Training as a Profit Center 

Other organizations charge for training, and view it as a standalone profit and loss (P&L) center. With paid offerings in place, customer training can serve as a revenue-driver. Often, companies that want to monetize their program will add training subscriptions as an additional line item, so they can improve their average selling price (ASP) and customer lifetime value (LTV).

Another reason to offer paid training is to cover direct expenses (i.e. content development, classroom facilities, and instructors). In this case, training may not be a profit driver, but the team is required to break even. Some training professionals also argue that customers may be more personally invested in a service they have paid for, and thus more likely to complete training.

On a similar note, it’s worth mentioning that there is an inherent value to customer training - especially if you’re offering certifications as a leader in your industry. If customers who are certified in your product can advance their careers and receive a higher wage as a result, it may be worth charging for that benefit.

Want to learn more? Check out our eBook, “How to Price and Package Customer Training.”

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Topics: Training

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