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You’ve probably all heard the maxim by Ben Franklin, “In this world nothing can be said to be certain, except death and taxes.” I’d like to add another certainty to the mix, “A learning subscription isn’t going to renew itself.” TSIA’s recent Education Services Consumption and Learning Subscription Survey proves this to be true.
Regardless of what’s included in your learning subscription offer and whether it’s enterprise or individual, at the end of the day, what matters most are two things: preserving the revenue stream via renewal and growing the business via selling more subscriptions. This blog focuses on the former.
Survey data shows that currently, 28% of customer training revenue is derived from learning subscription offers. This percentage has steadily increased over the years, as depicted below in the Learning Subscription Revenue graph. The exception is 2017, which is a bit of an anomaly, but otherwise, subscription growth has been steady. TSIA has every expectation that the percentage of education services revenue from subscriptions will continue to increase over the foreseeable future.
For purposes of definition, based on the 2018 Education Services Pricing Survey, a “standard” learning subscription is composed of three things, as illustrated in the left-hand column of the table below. I say “standard” in quotes, because the reality is if you talk to 20 customer training organizations and ask them what is included in their learning subscription, you’re going to get 20 different answers. The right-hand column shows the percentage of survey participants that said they include the offer type listed.
If 50% or more of survey respondents adhere to a practice, TSIA considers it to be a common, or in other words, a “standard” practice. Education organizations sell a standard subscription offer to an individual, an enterprise, or both.
Good News: The percentage of revenue from learning subscriptions continues to increase.
Bad News: Maintenance and growth of the existing subscription revenue stream is dependent on renewal.
Clearly, any increase in revenue is good news for any type of business. However, the inherent bad news with a subscription offer is that it needs to be renewed. At 54%, individual learning subscription renewal rates for education organizations are abysmal, and although 77% for enterprise learning subscription offers is better, it still falls short of what TSIA sees for XaaS-based product subscription renewal rates.
By way of comparison, data from TSIA’s Services Revenue Generation research practice shows that the industry average renewal rate for XaaS-based product subscriptions is 85%. So, what can a customer training organization do to move its subscription renewal dial?
TSIA’s Consumption and Learning Subscription Renewal Survey shows two major shortcomings for education organizations as it relates to renewals—very few organizations have any type of consumption strategy and fewer still have a learning subscription renewal strategy.
The biggest fallacy in customer training today is that if the training is free it will drive consumption. Well, no it won’t. In the last couple of weeks, I’ve had the same conversation with two different TSIA Education Services members, and in both cases, the member was puzzled as to why the uptake of their free training was 20% in one case and 15% in the other. My question to each of them was, “What is your consumption strategy?” I pretty much heard crickets at the other end of the phone line.
When asked in the Consumption and Learning Subscription Survey, “What mechanisms do you use to prompt learners to consume training content?” 43% of survey participants said that they do not use any mechanisms to prompt learners to consume content.
It’s ludicrous to think that just because your training organization produces content, whether free or fee-based, that anyone is going to be motivated to consume it. There’s a reason why Madison Avenue has come to represent all things advertising—it works.
The graphic below shows some key considerations for formulating a consumption strategy. While this is not a comprehensive list of considerations, it can serve as a guide for getting started on the development of a consumption strategy for your customer training organization.
It’s not surprising that learning subscription renewals are subpar, when 72% of education organizations have no documented renewal strategy. It would be akin to playing a football game with no plan and expecting to win. It’s simply not realistic, hence the reason that I say, “A subscription is not going to renew itself.” It requires planning and a lot of hard work.
The graphic below lists some key considerations in the development of a subscription renewal strategy. As with the consumption strategy list, this is not a comprehensive list, but serves as a foundation to help education organizations develop a learning subscription renewal strategy.
For full details regarding subscription renewal practices, be sure to attend my session, “Learning Subscription Renewals: There Are No Silver Bullets” at our upcoming Technology & Services World conference, October 21-23, in Las Vegas. Alternatively, please refer to the research report Consumption and Learning Subscription Renewal Survey Findings, available to TSIA members upon its publication to the TSIA website, in early August.
Selling a learning subscription offer is the first step in building a subscription business. To sustain the business however, education organizations must drive renewal. Two ways to do that are to create consumption and subscription renewal strategies.
It follows that if a learner is not consuming content, it reduces the likelihood that a subscription will be renewed, and if there is no renewal strategy, it is unlikely that the education organization will know that an individual learner and/or an enterprise is under-consuming. Data is sufficient for TSIA to be certain that a subscription is not going to renew itself. So, education services organizations, what are you going to do to help your learning subscription business grow?
As mentioned, I’ll be presenting at our upcoming Technology & Services World conference this October, and I encourage you to attend if you’re looking to find solutions to your biggest business challenges. TSW is ideal for technology and services leaders responsible for customer engagement strategy, learning-as-a-service (LaaS) offers, and driving product usage and adoption through customer training.
As part of our Education Services track, you can look forward to informative sessions like these and more, presented by industry experts and thought leaders representing the most successful technology organizations:
Be sure to take advantage of our early registration discount, and I hope to see you in Vegas!
Post Date: July 23, 2019
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Maria Manning-Chapman, is vice president of research, Education Services, for TSIA. She has more than 25 years of education experience in the high-technology industry. Maria is well versed in the dynamics of running an education services business and has held leadership positions in operations, virtual learning, business development, curriculum development, delivery, and partner management over the course of her career.
The Technology & Services Industry Association (TSIA) is dedicated to helping technology and services organizations large and small grow and advance in the technology industry. Find out how you can achieve success, too. Call us at (858) 674-5491 or we can call you.