11 July 2013

Learn Dutch co. – Pikant & Naumof Case Study on Optimizing Offers

Learn Dutch co. is a small education company which provides Dutch language courses for foreigners living in The Netherlands. The courses are structured on a proficiency base, ranging from beginners basics to working proficiency. Naturally most students start from the very beginning level, namely the 10 weeks long introductory course.

Learn Dutch co. faces the following issue: out of the students who took the introductory course (10 lessons, introductory level) very few - e.g. 20% - enroll in the second module of the course (10 weeks basic level).

This is a considerable issue since most of the people who enroll in the more advanced courses are individuals who took the basics courses at the same institute – Learn Dutch co. Thus increasing the enrollment rate for the second module of the beginners course (basics) will lead to higher income now and it will create the premises for having more students for the more advanced courses too. 

The Current Situation

At this moment, Learn Dutch co. has the following approach to encouraging people who took the introductory course to enroll in the second one: at the end of the last (tenth) lesson from the introductory course, students are informed that they can enroll in the second module (basics) by filling in a form. They can also choose from five options when they want to start the second module (e.g. July, September etc.). Moreover, people who took the first course and enroll in the second module get a 10% discount on the fee for the second course.

The Pikant & Naumof Analysis from a Behavioral Perspective

Before commencing the analysis one issue should be taken into account, namely the high variety of clients that Learn Dutch co. has. The motivations people have to take Dutch lessons are highly relevant. Some clients of Learn Dutch co. are expat housewives (husbands) who want to learn Dutch so that they can better understand what is sold in supermarkets or to chat with their neighbors. Others are foreign students who want to integrate a bit better and to figure out what is going on around them. Others are expats who usually work in English speaking environments, but want to learn the local language to not be completely isolated only in the expat community.

Considering this wide array of motivations for taking Dutch language courses and the background of different categories (e.g. expats working in multinationals work long hours and travel quite frequently, students have a considerable workload and not that much money etc.) we should be prudent in our expectations on improving the enrollment rates. This is not to say that nothing can be done, but rather to be realistic in what optimization of offerings can do in the given situation. So don’t expect miracles.

With regard to the decision process of enrolling or not in the second module (beginners basic) of the Dutch language course, we have to acknowledge that many students who approach the end of the first module (beginners introductory) face some considerable ambiguity. After 8-9 lessons, one is barely acquainted with the Dutch language (which by the way is not easy to learn) and continuing with another 10 lessons is perceived as an uncertain endeavor. It is obvious for everyone that ten more lessons of Dutch will only improve one’s ability of speaking Dutch. However, many students feel that they have not made the best out of the first course, that spending another X00 Euros on the second module is not necessarily the best thing they could do with the money, that Dutch is a difficult language and the progress achieved after ten more lessons will not be satisfactory and that anyhow, one can “get away” without learning the local language since every Dutch person speaks very good English and the Dutch are in general “foreigners friendly”.

At the same time, after about nine lessons students start to understand a bit what is going on around them; they start understanding what the signs on the streets say, understand some of what is written on labels; they can have a very brief conversation with the florist or barkeeper etc. They would want to learn more, but are uncertain.

The decision to continue or not with the second module is a difficult one.

This uncertainty and ambiguity leads many students to not making a decision and going with the status quo, namely not continue with the second module.

Most interestingly, this ambiguity and uncertainty were nowhere in sight when students enrolled in the first module. Before starting the course, most students are (over) optimistic and feel / think that they will learn Dutch very fast, that they will have enough time to do their homework properly and to study on their own. This is pure optimism about the future and focalism (discarding other contextual factors that will occur in the future).

The Pikant & Naumof Behavioral Optimization of Offer

Considering the fact that most students are (overly) optimistic when they enroll for the first course and are uncertain and in doubt at the end of the first course when they have to decide whether they are going to enroll in the second course, Pikant & Naumof recommends the following:

First, eliminate from the Learn Dutch co. offer the “beginners introductory” course as an independent product.

Second, Offer the “Beginners introductory” and “Beginners basics” courses (total of 20 lessons) as one flexible product. This “combo” product should have the following characteristics.

When signing up for the beginners course, students are “by default” enrolled to continue with the second module after the first ten lessons are finished.

At the moment of enrollment students will pay only the fee for the first module (ten lessons). The payment for the second module will be done only at the end of the first module (in ten weeks from the beginning of the course).

After the first ten lessons (module one), students who are not happy with the course, or with their progress or are too busy can drop out of the second module and not pay the fee for the second module.

This Optimization should Work Because…

First, when signing up for a beginner course in Dutch (or any language) many people don’t have a clear idea of what they want to learn, more specifically they don’t have a clear picture of up to which level they should go. ... 

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