The K-12 Edtech Market Is At an Inflection. But Where Is It Going?
The K-12 education technology market is at an inflection point. State and local educational agencies are reinventing themselves around remote learning, and tightening school budgets are magnifying the importance of cost effectiveness in spending decisions. Among parents, there’s a growing appetite for tools that engage and educate their children.
But where is the inflection going? The lessons from the spring chaos, along with recent edtech investment trends, suggest that there’s not only an opportunity to intertwine parent and institutional business strategies, but also to improve the health of the K-12 edtech market by making it more attractive to investors and transparent for school officials.
Lessons of the Spring Distance Learning Scramble
The spring scramble to homeschooling and remote learning shows that parents want and will pay for a better digital learning experience.
Speaking from personal experience and as education technology “experts,” this year’s digital learning experience failed to impress. Our four children range from 3 to 9. (We each have separate spouses and families). They would begrudgingly sit before their online assignments and find any excuse to switch to an application they actually enjoyed. For them it was—and still is—ABC Mouse, Adventure Academy and Roblox (and YouTube when they figure out how to reinstall it). Returning to their school programs felt like a step backwards.
To keep them engaged, we are now paying for applications that both educate and entertain our little ones while we do things like write this article. There is some solace in knowing we are not the only parents throwing cash at these programs. In normal times, parents spend just over $1,000 per year on supplemental education opportunities. These days? If stories about parents forking out $2,000 a month for learning pods are any indication, that figure is certain to go way up.
The spring scramble also showed that K-12 sales can benefit from extending their reach to parents. As EdSurge reporter Rebecca Koenig points out, some companies have satisfied the demands of parents and their school clients. They were able to provide a good (or good enough) experience for students and parents that followed the school’s curriculum sequence, which led to expanded contracts with existing customers. It even generated some new sales.
This largely involuntary coupling of parent and institutional sales gives credence to the growing sentiment that parents are poised to wield some new influence with their schools when it comes to edtech purchasing. At the very least, we (and other parents) will push back on the use of programs that deliver insipid digital learning experiences.
As education technology eats a much larger share of a parent’s out-of-pocket expenses, this will also have all sorts of implications for educational equity in the coming year.
These spring lessons suggest that there is a legitimate market opportunity for organizations that can better connect the parent and the institutional sale strategies. There are also other important tangential benefits for the broader K-12 edtech market. At least four stand out.
1. Attracting More Investment Dollars
Given the tight school budget forecast in the coming years, a tighter parent-institutional connection could attract more investment dollars toward the K-12 sector.
According to EdSurge data, edtech investments over the past couple years largely favored companies with enterprise or direct-to-consumer sales strategies over those selling directly to K-12 institutions. In 2019, a record year for education investments, the top deals went to companies offering educational and job skill training to individuals, employers and employees. A few companies serving the K-12 market got in on the action, like Newsela and ClassDojo, but they were the exceptions.
So far in 2020, direct-to-consumer edutainment platforms like Roblox, MasterClass and Udemy top the list of biggest investments while institutional K-12 sales models continue to lag. The exception is PresenceLearning, which is filling something of a tragically empty space in the K-12 teletherapy health market as it bridges the divide between homes and schools for such vital services.
2. Transparent Pricing Models
A direct-to-consumer model would require transparent pricing which has been sorely missing in the K-12 market, to the chagrin of public officials. In 2014, a report from Johns Hopkins on inefficiencies in the edtech market found that the process of making informed purchasing decisions was complicated by the difficulty of sorting through a large number of tools, tracking down pricing information, and getting visibility into product efficacy.
The following year, a different study from the Center on Reinventing Public Education arrived at a similar conclusion. School officials “don’t have enough sophistication and knowledge to make wise purchasing decisions,” the authors wrote, because of the growing number of options, opaque pricing, and unclear efficacy data.”
Opaque pricing wouldn’t sit well when selling to parents. And while single-student license costs for a parent may not translate directly to institutional pricing, it would help to demystify basic questions about the sticker price.
3. Weaning Companies From Addiction to Large Sales Forces
Historically, K-12 companies with the largest sales force tend to have the upper hand. This makes sense when sales are contingent on personal relationships, and knowing the right people allows access to the right school officials—which leads to procurement conversations and opportunities.
But what if the research and vetting of well regarded edtech services also came from the diligence of motivated parents? Many parents, motivated to do the best for their kids, are now doing that and seeking out edtech programs that offer the best mix of academic benefit and user experience for their kids. That’s likely to bring new levels of awareness to the sector that could reduce the need for companies to rely on large sales teams with personal connections.
4. Opportunities for Pay-Forward, Give-Back Models
Tapping parents to pay for educational services could well exacerbate inequities. But they can help address them, too. As they research tools to buy for their own children, why not capture some of that energy and investment to see if they are willing to support other families that may not have the time or means to do the same?
The model could be something like TOMS shoes’ “one-for-one” business model, which works like this: for every pair of shoes that a consumer buys, TOMS gives another pair to an non-governmental organization that sends it to individuals who cannot afford them. The individual who purchased the shoes can feel good about the donation, and TOMs benefits from the viral marketing among its target consumers.
In the case of an K-12 edtech business, a parent buying a license could mean giving an additional license (or something of equivalent value) to the school district, which would then distribute it to a less advantaged family.
Such a model is speculative at the moment, of course. But there is no question that the recent changes in purchasing patterns creates a window of opportunity to do something new that will not only invigorate the K12 edtech market, but also put it in a better position than it was prior to the pandemic.