New UniversityTutor Business Model Not Working

In: Marketing| Updates By: Brian Armstrong

2 May 2009

This entry is part 14 of 18 in the series UniversityTutor.com

Remember the new billing/invoice system I designed and launched for UniversityTutor.com?

Things aren’t looking very promising so far. They started off well and in the first week or two about a dozen invoices got processed through the site.

I figured it would slowly trend upwards from there as people started adopting it, but in the past week not a single new invoice has come through the site.

On average about 40 tutors per day get contacted through the site for jobs. If (conservatively) just 20% of these ended up meeting with the student, then I should be getting 8 invoices per day. But that is of course if they only met with the student once. Some tutors end up meeting with the same student twice a week for a year, and others just once. But the average would certainly be at least 2 or 3 times (again, conservatively) meaning the number of invoices being processed per day should probably be at least 20. But it’s no where near this. Tutors simply aren’t using the new system.

I’ve been in contact with the tutors and students who HAVE used it to get feedback. There were a few minor problems (a bug with Amex cards not going through – now resolved) and some tutors were concerned with the 3-4 business takes it took for the direct deposit to show up in their account, but otherwise they were happy and it’s functioning as designed so the lack of adoption is somewhat puzzling.

One thought that occurred to me today: I sent out an email and blog post announcing the new system when it came out, but there may be some tutors who simply didn’t read the email or have forgotten about the new change.

Lot’s of email doesn’t get read and when it does people often skim it. An average open rate for a mass email is about 30%.

If they were to login to their account they would notice immediately that something was new. But I realized today that many tutors probably have no need to login to their account. Their profile is already created and they simply receive emails from people looking to hire them and reply to the emails. They may vaguely remember seeing an email from me a few weeks back about a new feature, but since they still have no need to login they will probably just go through business as usual (accepting cash/check afterwards) and not think twice about it.

I did have one idea to resolve this: Those 40 contacts per day are another chance to reinforce the benefits of the new system:

Getting positive reviews from clients
Hours of experience increasing

So I’ve just added a new line in the emails that go out when tutors get contacted by students. Hopefully this will help remind them RIGHT before they start working with a new client:

A new student has contacted you from your profile on UniversityTutor.com! Please get in touch with them as soon as you can.

After working with a student, make sure to send them an invoice and get paid online. This will ensure the student can leave you a positive review and your hours of experience will be updated.

…

The second line is the new part. Hopefully this helps. I’ll have to see.

If ultimately the benefits of this new billing/invoice system are not convincing enough to get tutors to pay online, then I may have to think about going back to the old system (charging tutors $10/month). This old business model was certainly working, it just wasn’t growing as fast as I’d like. The percentage based business model has a lot of advantages, but what remains to be seen is if tutors will actually use it.

Until next time, keep breaking free!
Brian Armstrong

P.S. I’m in St. Augustine, Florida right now for a wedding. Departing to Buenos Aires May 4th, can’t wait!!

This post is part of a series on: UniversityTutor.com

12 Responses

Samuel

May 2nd, 2009 at 12:10 pm

If I understand the system correctly, it still doesn’t seem like a big enough incentive for tutors to use the online billing system and get a reduction in pay. I’d say money is more important to most people than reputation unfortunately and if they are getting enough clients as it is, there’s no reason for them to change!
I would look into ways of making the online payment system compulsory (although not necessarily a subscription model) if you want to optimise your profits the most. :)
Good luck with the new testing.
Sam

Brian Armstrong

May 9th, 2009 at 2:00 pm

Agreed Sam. Thanks for the response.

Only one I’ve thought of is maybe requiring people to book the tutor up front before being able to contact them. But this doesn’t sit well with me. Lots of people wouldn’t want to enter their credit card I don’t think before they actually communicated or met with a tutor.

Any ideas?

CollegeTownMenus (CTM)

May 3rd, 2009 at 3:56 pm

Interesting dilemma Brian, sorry to hear its not working at the level you want. I’m kind of having the same issue – not really having enough incentives for people (or restaurants) to join. Although I am getting a few new subscriptions each day which helps, not many people are rating any restaurants. I’m thinking about two things:
1) Integrate CTM with Facebook Connect so more people can easily rate
2) Use a point system which encourages ratings and activity. The more points, the better coupons, gift certificates, and prizes people can earn.

It’s good that your familiar with the metrics though, keep an eye on those and the small tweaks to the site, and you’ll get it eventually!

Brian Armstrong

May 9th, 2009 at 2:01 pm

Thanks! Yep, adding the line to the email has helped so far and # of invoices are going back up slowly. We’ll see.

In your case, yeah my first impression is that the point system would work there, but making it a facebook app could work. Thanks for the encouragement we’ll keep workin!

Chuck C

May 5th, 2009 at 9:41 am

Brian,

Don’t know if you read “A VC”, but the VC principal there just wrote a good article about the problems with AmEx recently.

http://www.avc.com/a_vc/2009/05/im-feeling-the-costs-of-credit-card-fraud-and-defaults.html

Good luck ramping up the business.

Best,

Chuck

Brian Armstrong

May 9th, 2009 at 2:04 pm

Hi Chuck,

Interesting, I haven’t experienced that yet myself, but will def watch out for it.

Adding the line to the outgoing emails seemed to have helped. Will def keep working on it!
B

Marshall | bondChristian

May 5th, 2009 at 5:22 pm

I probably misunderstood the business model. However, if the problem might be that new clients aren’t contacting your tutors, could it just be because we’re between semesters?

I’m not sure how the rest of the world functions on this, but I just finished a semester on Monday. Students probably aren’t looking for a tutor in the off-season.

Since you’re in the tutor business, I’m sure you’ve considered this. Thought I’d mention it, though, since it came across my mind.

Marshall Jones Jr.

Brian Armstrong

May 9th, 2009 at 2:06 pm

Hi Marshall,

Great point because I knew this but hadn’t really thought about it. There has been a slight decline in the number of contacts, but not enough to account for what’s happening (still about 40 contacts per day).

In my experience over the last 4 years or so watching this, tutoring in the summer still occurs quite a bit but it’s around maybe 50%.

Thanks for reminding me!

Aaron

May 5th, 2009 at 10:50 pm

Brian – sorry to hear it hasn’t taken off like you had hoped, but don’t get discouraged. I think it’s still a good model, just may take time to develop. As you mentioned, it will take time for tutors to become accustomed to it, but hopefully all new tutors you attract will be bought in from day 1. I think it’s still too early to count it out.

Good point by Marshall as well, with the semester winding down it will likely slow down. The good news is that that gives you the summer to work through any feedback you’ve received, and make sure it’s ready for the rush as students head back to school.

Looking forward to hearing about Buenos Aires – living internationally is a dream of mine as well, hopefully soon!
– Aaron

Brian Armstrong

May 9th, 2009 at 2:07 pm

Thanks Aaron! You’re right, my expectations are sometimes too high and I’m impatient :)

Adding the line to the email has definitely helped. I’m still watching/tweaking it.

Mike

May 7th, 2009 at 2:30 pm

I’m sorry to hear you aren’t getting the results you were expecting. I think you’ve got a good model. But as others have already mentioned, due to the timing with the winding down of the semester it’s probably too early to really tell. Tutoring is a seasonal business and summer is definiely the slow season. Use the time to respond to feedback and tweak the system in preparation for the fall.

Brian Armstrong

May 9th, 2009 at 2:07 pm

You’re right, thanks Mike I appreciate it and will keep everyone updated on here!

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New UniversityTutor Business Model Not Working

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