9 challenges edtech businesses face and how to overcome them

Edtech has grown rapidly over the past decade. With global lockdowns disrupting traditional face-to-face ways of teaching and learning, it’s no surprise 2020 saw the industry boom . 

It has helped to modernize and liven up what was an incredibly traditional and reserved industry. There’s no shortage of opportunity in this space, but building and growing an edtech business comes with its challenges.

Here are just 9 of them (and how to overcome each):

1) Standing out in a highly competitive market

To stand out, you need a unique value proposition. If you’re at the start of your company’s journey, one option is to focus on a particular niche to narrow down your target audience. This could be a focus on a certain format of teaching – e.g. videos vs games – or a specific subject area, like a maths learning platform or driving theory test software. 

If you’re not at the start of the journey, you’re still likely to need to develop and adapt your value proposition to keep it unique over time. This might mean adding new features into tiers to cover a wider range of target audiences and their specific goals. 

2) Partnering up with a relatively traditional industry 

A good place to start is to focus on how you demonstrate your product’s impact on learning (and teaching). Get the numbers out and shout about the measurable results you’ve achieved - or are set to achieve. Arm yourself with testimonials and case studies that validate your claims. 

3) Keeping up with the ever-changing tech industry

You can do this by following news updates from the likes of Education Technology or check out some of the top edtech influencers in 2021 . Find them on social media or get your Google Alerts on for news straight to your inbox.

4) Building a killer go-to-market strategy

• Defining your target market
• Making your product fit for your market
• Setting up the right pricing 
• Reaching and keeping customers.

For the lowdown on everything you need to know about creating and implementing a killer go-to-market strategy, including a great template to complete your strategy, head to our complete guide for SaaS businesses.

5) Choosing the right revenue model 

Choosing the right revenue model is actually part of your GTM strategy, but this one is particularly important for those in the edtech industry due to the common challenge of slow monetization. Your chosen revenue model directly impacts your acquisition, conversion and retention rates so it plays a big part in the growth and success of your company. 

Many edtech companies offer up their product or services with a freemium model, where growth may be easy but converting those customers and making money? Not so much. It can be a long sales cycle, whichever revenue model you go for.

To choose the right model for your edtech company, you need to assess the customers you serve, where they’re based, the product or service you’re selling, your business stage, and your growth plans. This is not a one-time exercise; you’ll see stronger growth by revisiting your model as you scale and become established. Check out the most popular revenue models for edtech, right here.

6) Bridging the communication gap

But the thing is, whilst a SaaS founder might know how to make a great product, a lack of knowledge about the product’s target audience will get it nowhere. You need to differentiate between these various audiences, and listen to what they have to say to truly optimize your product and team’s ability to acquire and retain customers.

Bridge that gap and get direct feedback and stories from users and buyers alike to make a real impact in your target market.

7) Improving user activation and usage

To improve user activation and usage you can do a number of things. From daily challenges and celebrating daily practice streaks (Duolingo got the memo), to regular product updates and great customer comms, you can spark your users’ interest, remind them of your product’s value, and ultimately boost their engagement. You also want to make sure that getting started is super straightforward and accessible for users, so nothing gets in the way of them actually experiencing the product in action.

8) Managing retention rates

Does it meet customer needs and expectations? Does it offer different levels to cover beginning, intermediate and advanced ground? Can users customize their learning path? Do you provide top-notch customer service and support for any questions or queries? 

There’s also the question of how involuntary churn is affecting retention. This kind of churn happens when your subscribers’ payments fail to be processed and their account is automatically cancelled. Often this is because the credit card associated with the account has expired, or has reached a spending cap. 

All the above have an impact on your retention rate, so take each question into consideration when developing your product.

9) Handling worries about data collection and security

By overcoming these 9 common challenges, you will see your edtech business soar in the competitive market of e-learning, but also in the market of SaaS in general. But remember, we’re not talking about a singular move here. Each of these nine points should be considered time and time again, from before your product hits the market and as it grows, expands, and develops over time.