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Written by Leah Messenger SaaS Specialist
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04 Nov 2021  |  Growth

9 challenges edtech businesses face and how to overcome them

6 minute read

Edtech has helped to modernize what was a very traditional industry, but that’s not to say it’s an easy feat growing an edtech business. Here are 9 common challenges for edtech businesses, 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

Given its rapid growth and the ease with which new products can enter the market, edtech is a highly competitive industry. This is something you need to consider when conceiving the roadmap and positioning for your product. 

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 

The education industry is well known for being slow to evolve. You could say there’s a slight resistance to change. So, how does an edtech company looking to partner with schools and universities get past attitudinal barriers like laptops and iPads being considered distractions in the classroom?

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

On the other hand, the tech industry is a fast-paced and ever-changing industry. There are constantly new solutions popping up, as we’ve mentioned. That’s why it’s important to keep an eye on all the latest trends in e-learning, as well as any new products and major influencers in the space.

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

As one of the three pillars of growth, a solid GTM strategy (along with revenue delivery and product strategy) is important to businesses of all types, including edtech. There are four main components to a successful 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

When it comes to an e-learning app or platform, it’s important to think about all those involved with its purchase and use. In many cases, the decision maker will be different to the end user. A company’s IT department, for instance, will choose the cyber security learning platform that gets rolled out for all employees to use. 

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

Low usage is a common challenge that factors into the conversion and monetization of edtech companies. There are a lot of alternative providers of learning and entertainment that can grab your users’ attention away from your product. 

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

Linked to problems of low usage and engagement, retention is another challenge for edtech. Again, this is related to the amount of competition, but it’s largely to do with the quality and longevity of your product’s offering.

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

Most organizations worry about introducing new technologies into their day-to-day lives or processes, and of course, want to avoid any potential risk to the security of their data. To combat this hesitation of your users, invest in security, but also in raising awareness and educating them upfront about systems in place to protect their data. Keep this information clear and concise, there’s no need for any technical jargon here.

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.

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