The success of a startup does not just depend on the business model it chooses in its early days. New adoptions, strategies, teams and more all come together at the right time to drive companies’ successes.
To achieve optimal success, Netflix had to move from being a content distributor to both a creator and distributor. Salesforce had to change from a pure subscription model and operate on a pay-as-you-go subscription-based business model. And so, for each of these companies, these decisions brought unprecedented success and completely changed how the world viewed them.
For Coursera, it was the move from a standard B2C company to a combined B2C and B2B model. Coursera’s initial mission was to give everyone access to top-quality educational content created by prestigious universities. In plain English, it was a B2C model.
But over the years, Coursera’s B2B model has given them a unique angle to sell their services, which has completely changed the face of Coursera.
This article shows you how embracing a B2B business model has helped Coursera grow. Let’s roll.
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Keeping the Balance Between B2C And B2B Model
MOOC (Massive Open Online Courses) companies generate revenue by selling add-ons (course certification, diploma, etc.) directly to learners.
It’s a B2C model or a “business to learner” model, if you will. However, this model has not prevented them from adopting a B2B model–in fact, they combine both.
Starting with the basic B2C business model
The mission of the two co-founders of Coursera, Andrew Ng and Daphne Koller, was to provide access to the highest-quality educational content from respected and prestigious universities to learners worldwide. The Coursera platform thus served as a direct way for learners to access courses.
The B2C business model has resulted in millions of learners and has proven to be very effective in this sense. However, under this model, users only took the free courses. And Coursera only made money through the verified certificate, also known as the Signature Track, and through the introduction of specialization courses.
When you look at Coursera’s revenues from the perspective of a company that shares 6-15% of its total revenues with universities and invests 20% of its gross profits in its courses, it is clear that the B2C model was not their path to profitability.
Coursera then had to figure out a new way to increase its revenue while preserving its existing business model, and avoid alienating all the free learners and universities it partnered with.
Transitioning to a B2B business model to drive growth
Don’t get it wrong, Coursera stays true to its B2C business model and continues to appeal to individual learners. This vertical generated over $193m in 2020.
But the move to a B2B business model with the introduction of Coursera for Business is undoubtedly one of the most thoughtful decisions Coursera has ever made.
How does this business model differ from the B2C model?
Coursera partners with companies that need training resources to improve their executives’ or staff members’ skills and provides them with the necessary courses.
Technically, it is a kind of university for companies that want to improve the skills of their employees in order to achieve strategic business goals by developing critical skills.
And there is definitely a market for this. More than 50% of companies reported facing a skills shortage globally, including the United States (69%), Italy (47%), and Mexico (52%).
Coursera has identified the global employee skills gap and is taking advantage of it to drive growth.
The B2B business model has proven to be a powerful source of revenue. Currently, Coursera for Business brings in about 1/3 of the company’s annual revenue. That’s about $136 million.
And believe it or not, this is not a random occurrence. Amazon, which also operates on a combined B2B and B2C model, generates 12% (over $12 billion) of its revenue from the B2B vertical.
Here’s what pricing looks like for a single Coursera for Business customer.
At least 2,300 companies use Coursera for Business, including the pharmaceutical company Novartis, which has enrolled all of its 108,000 employees in Coursera for Business. The Novartis deal alone, at a $400/year/user cost, represents annual revenue of up to $43,000,000.
Juicy, isn’t it?
By now, you might be thinking that Coursera is doing well with both business models, which is true. But if you look at it closely, the line between Coursera’s B2C and B2B business model is very thin, and an imbalance could be very costly to the brand.
So, how do they keep the balance between these two models?
Walking The Line Between B2C and B2B
Coursera has found a way to guarantee steady revenue by offering both B2C and B2B offerings. If you know a thing or two about marketing, you know that’s easier said than done.
Here’s an example. In a B2C context, the buying decision of the average consumer is influenced by many different choices. These types of consumers buy in the same way and through the same types of processes.
On the other hand, on the B2B side, buying experiences are very complex and are influenced by the industry, the type of product, the buying committee, and the size and operation of the company.
And unlike the B2C buyer, the B2B buyer is often not really the buyer, at least not in the traditional sense. He is often a procurement expert whose task is to execute a contract.
Here’s how they did it.
Contrary to what most marketers expect when adopting two different business models, Coursera has not significantly changed its positioning.
The company still defines itself as the global online learning platform that offers access to online courses to “anyone, anywhere.” And more importantly, it still uses one main landing page: Coursera.org.
But on closer inspection, it’s all there. Here’s how it’s structured.
Coursera uses a site structure a la Shopify. They actually use “coursera.org” as the main landing page, or mother landing page if you will, for the B2C side of the business, and “coursera.org/business,” a subdirectory, as the child landing page for the B2B side.
So, the main homepage showcases everything the company does, both from a B2C and B2B perspective, but gives the edge to the B2C side of the business.
Because, while the B2C vertical generates more revenue with a large number of users, the B2B vertical with only 3,000 users generate over 33 percent of Coursera’s annual revenue. It would therefore sound insane not to put both revenue streams upfront on the landing page.
Now, let’s have a look at the strategy Coursera uses to fuel its B2B model on a platform that is mainly aimed at individuals.
Leaning into B2B Learning
To say that Coursera for Business has a substantial role to play in the future of Coursera is a big understatement.
For example, for all of the fiscal year 2021, Coursera reported expectations for revenue of between $402 million and $410 million. And a third of that revenue, a whopping $136 million+, comes from the Coursera for Business branch.
For some context, Coursera for Business is aimed at companies that plan to train or upskill a small team within their organization or transform the entire business. Think of heavyweights such as Mastercard, Southwest Airlines, Adobe, Google, Facebook, and more.
In an interview, Coursera CEO Jeff Maggioncalda said that the company’s latest impressive results reflect “the growing adoption and impact” of the Coursera [for Business] platform
“Institutions are using Coursera to drive large-scale re-skilling efforts,” Maggioncalda added.
Four Assets Coursera Uses to Convert B2B Buyers
According to a Dun & Bradstreet study, 67% of buyers in the B2B space list “relevant communication” as a primary influence for choosing one solution provider over another.
Translation: if you speak to your B2B prospects the same way you speak to your B2C buyers, you will never close a deal.
As a matter of fact, Coursera understands this and has strategically put in place different assets whose objectives are to get coursera.org/business visitors into their optimized sales pipeline.
Here is a sneak peek inside some of these assets.
As you already know, brands typically market to their audiences and communicate with them accordingly.
In the case of Coursera for Business, the language used in the platform is all business.
Here, Coursera focuses on “course ROI” messaging for corporate customers and speaks directly to decision-makers.
This business language is totally different from what you find in the B2C landing page where the objective is to offer free courses.
Part of the messaging in the B2B landing page makes it clear that companies can easily track the evolution of employees in the course and inform their status from a skills-building standpoint.
Why is this great?
First of all, the ROI messaging resonates directly with the B2B buyer. If you have to pay millions a year for a product or service, don’t you want to know the ROI?
Secondly, the language positions the courses not as conventional courses but as courses “run by the best universities in the world” and “taken by the biggest companies in the world.” This is exactly what someone who works at IBM or Oracle would look for when buying a high-ticket service.
And as you can see, this messaging is business-centric while in the B2C side, messaging targets individuals ranging from students to life-long learners. In fact, the B2C messaging is more in line with the “democratizing education” philosophy of Coursera.
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