Byju’s is one of the most valued EdTech companies globally, with an almost 22 Billion USD valuation. Byju’s was growing so much faster that back in FY19, it had only incurred a loss of 88.2 million Indian Rupees.

For any startup whose revenue turnover is billions of Rupees yearly (13 billion Rupees in FY19), this was negligible, and Buyju’s was almost deemed a profitable EdTech company. 

But as the company grew massively, in FY21, it saw a humongous loss of 45.88 billion Indian Rupees. What caused such a massive downfall? Exploring deeper might bring some lessons for other companies.

Forced sales technique 

Byju’s offers courses that cost between 50,000 and 1,50,000 Rupees. Most courses focus on k-12 (Kindergarten to 12) and admission preparation. Now, the customers in this K-12 segment are diversified. Students have different kinds of needs while learning from an after-school solution. The primary customers in this segment are mostly parents who make the ultimate buying decision. As the course fee is so high, Byju’s adapted a hybrid sales funnel to acquire these customers -both online and offline.

Due to making a purchase whose price is high, the offline sales team has to operate within an immensely ambitious sales target. You may understand the pressure when one missed sale target amounts to 50,000 Rupees.

Byju’s salespeople (BDA – Business Development Associates, as they call them) overpromised and oversold the product to many customers to achieve a sales target. In the K-12 sector, it’s already tough to cater to the varied needs of different customers. Overpromising and overselling caused negative word of mouth among the guardians.

Byju’s sales pressure was so high that many customers who couldn’t afford the courses purchased them with a loan because of the FOMO created by the salesmen. It generated a massive customer financial crisis, resulting in a low revenue stream and losing the product’s credibility.

Before COVID came, the EdTech market was not as crowded as it is now in India. COVID set highly ambitious revenue targets for any EdTechs. Byju’s also fell into this trap. After COVID, parents and students both were bored with online education. But, to meet the existing high sales target, the sales technique became toxic and backfired.

Marketing expenditure

Byju’s major GTM (Go to Market) strategy was celebrity endorsement and worldwide top event sponsorship. Byju’s targeted the biggest names and means of entertainment to solidify the brand name among customers. Shah Rukh Khan, the biggest name in Bollywood, has served as the brand ambassador of Byju’s for years. 

Byju’s also sponsored the Indian cricket team for years, with an average of 4 billion Rupees annually. They targeted the Indian Premiere League (IPL) also, spending around 3 billion Rupees on a single season’s co-sponsorship. The FIFA World Cup followed the IPL spending. Byju’s spent around 3-4 billion Rupees to become the tournament’s co-host.

Branding in the big events helps the companies attract customers, increase brand equity,, and help raise more investments. But let’s analyze the customer’s perspective in this case. Most of the K-12 customers are mostly parents of students. Unlike other digital products/services, they care less about which celebrity is with the brand and which sponsorship they have managed. Their brand trust solely relies on the basic offerings of the product.

For example, if a parent wants to enroll their children in a coaching centre, they will care less about the office facilities, location, and utilities as long as they get proper tuition quality. This happened with Byju’s as well. Extravagant spending on marketing often amounted to nothing for the customers of K-12. 

Well, Byju’s has other concerns apart from K-12. They teach Coding to the students by White Hat Jr. They have also expanded to several countries in the Middle East. But the other concerns aren’t also performing that much in these countries. Even White Hat Jr. is now incurring a loss.

Faulty target market

In India, the demographics are divided into three parts: Tier-1, Tier-2, and Tier-3. Each city in India falls under these categories. The after-school solution that Byju’s wanted to provide didn’t cope with Tier-1 city members. The Tier-1 market is the wealthy class, whose school and after-school solution needs differ greatly from the other social classes.

Byju’s thus targeted the Tier-2 demography of aspirant middle-class and lower-middle-class families. The three most important factors about them are they are highly aspirant, highly competitive, and highly insecure regarding their children’s education. And Byju’s targeted the insecurities in many cases to sell their courses. Here’s an example:

At first – a Byju’s salesman will pitch the product to the customer (Parent). Then, they will offer a 15-day free trial of the app. In these 15 days, the analytics team will track down every student’s test, quiz, and activity. After 15 days, the salesman will pitch the customer again, but this time – with all the detailed weaknesses the student has shown in all the free trials. This report is pitched so dramatically that the customer becomes insecure and anxious about the child’s education. They become willing to partake in the course no matter how much it costs.

This is what causes the problem later. As the customer didn’t purchase consciously, the product soon withdrew all the hype from their expectations. As it was also sold at a high margin – the expectation vs satisfaction were inconsistent. 

Sometimes, the salesman sold the product even to the Tier-3 demographic to meet the sales target. As we already know, these customers are not as highly conscious about the purchase as Tier-1 and are insecure and competitive. So, the product’s performance often failed in their eyes.

The Bangladeshi EdTech Industry is also in an emerging stage right now. This domestic landscape is divided into ‘Skills’ and ‘K-12’. Skills sectors are focused on language and IT soft skill-based courses. The K-12 sector is still challenging to penetrate as offline coaching centers and home tutors are well-accepted after-school learning choices among parents and students. 

But, some specific verticals here are emerging online, such as university admission coaching and 11th and 12th-grade academic preparation. These tuition solutions range from famous local teachers to full-fledged EdTech companies like 10 Minute School, Shikho, Bohubrihi, Ghoori Learning, etc. One thing that differs here from the Byju’s is that the course prices are much cheaper. Around Tk 5000 should be more than enough to purchase skills and k-12 verticals courses. 

Also, as the K-12 market is still limited and growing, offline sales channel establishment and massive branding campaigns are not yet required. As the course prices are low, Digital marketing, Social media marketing, and, at most, telesales services are adopted by all the players. These things will keep the domestic EdTech industry safe from adopting desperate strategies like the Byju’s for at least a few more years.  

Shafkat is a Senior Executive at 10 Minute School.

shafkatimon@gmail.com