30 TIPS FOR MANAGING TUTORING COMPANIES - PART 1
If you are looking for information on how much to pay tutors, check out Part 3 of Managing A Tutoring Company.
If you are a parent wondering about tutoring prices, the average rate for 1on1 tutoring is approximately $40-80/hour. $50/hour is quite common. The variability is dependent upon location, subject and tutor expertise.
You can oftentimes lower the hourly rate if you purchase a package of tutoring hours or take advantage of group tutoring sessions.
- Tip 1: Face-To-Face Relationships With Parents
- Tip 2: How To Acquire Clients (parents)
- Tip 3: Get Good At Sales
- Tip 4: Schedule Frequent Visits With Parents To Communicate Progress
If you want to properly manage your tutoring company, you must cultivate a relationship with the parents. This means building rapport by listening to them, getting to know their child, and understanding their unique requirements and demands. Children seeking tutoring, regardless of age and grade level, have their own specific requirements. Do not assume to know what the parents and children need, and offer services that are not tailored for them.
If parents think you put money before the needs of their child, they will complain often, become problematic and cancel your services prematurely.
Consider doing the following:
- asks questions about the child's strengths and weaknesses and write down the responses.
- iterate the information back to the parents and incorporate it into assessment reporting
- provide this information to the tutors and have them address these points back to the parents. Tutors should also be involved in assessment reporting that draws attention to the parents concerns
- make it apparent you are incorporating their concerns into the child's tutoring program. Parents need to know they are affecting their child's learning. After all, you are working for them and that makes them your boss!
- there are a lot of ways to implement the previous points, but I would recommend formulating a quantitative mechanism for tracking progress over time. Humans respond to numbers far better than qualitative feedback or anecdotal records. Whenever possible, track progress in areas such as; organizing, planning, implementation and reflection. Use a sliding scale of 1 to 10. After several sessions, go back to the reports and aggregate the results. Use this data to show the child's progress and develop plans for moving forward. Make sure you go over these results with the parents, in person
Being a parent of a child with special needs, I can see this point from the parents perspective. All too often I've hired therapists to assist my son, and quite quickly noticed their focus was on the hours they worked and the money they made. It's very frustrating dealing with a person that doesn't appear to come from a place of caring.
I understand we live in a world where making money is essential. I don't expect others to sacrifice their time for my child for nothing in return, but at the very least, I want to see tangible proof that they care for the wellbeing of my child. By incorporating the points listed above, you can affirm your good intentions.
This point is first for a reason. If you are unable to form a good relationship with the parents your tutoring company will fail. You can do a stellar job managing other aspects of your tutoring company, but it won't matter because you don't have a viable company if you aren't introducing parents to your services and keeping them happy.
If you are managing a multi-regional tutoring company, meeting all the parents in your business will be impossible. If you are not equipped to deal with this challenge, your average revenue per parent will decline substantially. If you are able to add a lot of parents to your business, you may not be too negatively impacted but it means you are running a tutoring company with a lower level of service. Decisions you make going forward must reflect your business strategy. One way to overcome the issue of distance is to create a position above a tutor. Other tutoring companies have done this to great effect.
Having a tutor supervisor position will allow you to manage a multi-regional tutoring company that has the potential to form relationships with parents. The supervisor would be responsible for managing several tutors, strengthen reporting, and forming bonds with parents. This also has the benefit of maintaining quality of service.
Of course, an extra person in the process will increase the margin cost of service delivery, but that offset might be worth it if it means the average profit per parent is also increased. In the end, you will have to run the numbers for yourself to determine the best method for proceeding.
A tutor supervisor does necessitate a larger operating cost and requires another layer of indoctrination into company policies, methods, and training. I'd recommend a tutor supervisor for multi-regional tutoring companies but only of the budget is there to maintain it. If your operation is smaller, you may want to reconsider running a multi-regional company until your profits are sufficient.
There are 2 ways to acquire clients or parents, they are: online methods (Google Ads, website rankings, e-mail marketing, social media and online directories), and traditional methods (TV, radio, print, in-person). In subsequent points we will address the online methods in greater detail. I wanted to spend some time to talk about traditional methods because far too often they are being ignored.
With the advent of the internet, and the following explosion of social media, many business owners are focused on online methods for lead generation. The media further glorifies the wonders of online marketing due to their coverage of start-ups that have amazing growth and makes millionaires out of poppers.
Online methods for lead generation are an important part of any tutoring companies strategy but they won't lead to the type of growth and success you are looking for, not unless you have a tonne of money.
Let's look at the following traditional methods for acquiring clients:
TV and radio are expensive and are best suited for very large tutoring companies that are managed by a multi-regional model. I'm not going to talk about these traditional methods because I am more concerned with small to medium sized businesses (SMB's). Furthermore, this guide is less about spending lots of money and more about the lessons I learned while managing a tutoring company. Moreover, I want this guide to be useful to all tutoring owners.
Print refers to any of the following:
- newspaper ads
- flyers (brochures in mail, newspapers, hung on cars, mailboxes, house doors, community centers, coffee shops, kids stores)
- fridge magnets
- business cards
- bus stop ads, bus ads, billboards
Each of the above bullet points have varying levels of success. You need to consider the following: the more you are removed from the sales process the lower your chance of successfully converting the parent into a client.
Print material has the capacity to go places you will never be invited into. They can get themselves into homes, on dinner tables, stuck on fridges, you get the picture. They can also wind up in garbage bins and most frequently do. Therefore, how you use print sources will have a big effect on their effectiveness.
At this point it is about crunching the numbers. Although the chance of success is small for this type of advertising, what's the overall cost of conversion? If you can convert a parent into a paying client at a cost that allows for minimum economic profit (cost and wages are achieved and you pay for your time), then the print ad is worth pursuing.
How do you determine viability?
Determining viability depends on your business strategy and its location. But as a general rule, do the following:
- determine the cost of the print ad
- determine the cost for distributing the print ad
- factor in any other costs like your time
- determine how many potential clients can be reached
- as a rule of thumb, 0.5% to 1% is a conservative conversion rate
- calculate the marginal cost for conversion
Here's an example:
Let's say we are paying our local post office to insert a brochure into the residents mail. One drawback of this is that you are not going to target households with children. You can choose to leave your brochure in zip codes that are known to be larger family dwellings and therefore may contain children of suitable grades. However, this means your conversion rate is likely to be lower.
The following infographic depicts a typical brochure campaign. Results may vary for you.
From my own experience, $100 to acquire a new client is good and is only slightly higher than using Google Ads. However, depending on your sales process and operating strategy, $100 per client may be too high. It all depends on how you choose to manage your tutoring company.
The best way to increase the amount of revenue per client is to provide a lot of value added and build a relationship with the parents. If you follow my first point to the letter, $100 is more than worth it. If you are providing a low quality service you may only make $100 per client and therefore this lead generation won't be worth it.
If you do not choose to use these types of lead generators you are leaving money on the table. Money on the table means clients spending money on your competition. If you have the budget to use traditional methods and online methods for lead generation you would be remiss to ignore them. However, an unlimited budget is a rarity. You need to choose the most successful lead generators for you based on your budget, and unique skill set.
Before moving to the next point, let's consider in-person strategies.
Here are some examples of in-person, lead generation strategies:
- education events (education conventions parents attend)
- extracurricular events involving children (hockey, football, soccer)
- school supply stores
- libraries and community centers
Obviously you can't just show up to these events and expect to sell your services to potential parents. No one is advocating for that. You have to be strategic.
On a side note, if you are a male, you need to be extra careful in your approach. Unfortunately, parents are far more trusting of females based on societal gender roles and stereotypes. If you are a man, be extra vigilant to project a disarming attitude and if at all possible partner with a female colleague.
If you find yourself at one of these events or locations, consider the following:
- have a booth
- display your business name prominently
- display your services
- provide print media for clients to take home with them
- USE PRIZES!
You MUST give parents are reason to stop and listen to you. If you expect them to give you part of their time, you must give them sufficient incentive to do so. Everyone likes to win free stuff!
The goal of the booth is to introduce the public to your company, the services you offer, and the potential clients contact information.
You get all of the things above by offering them a chance to win something they want. A good prize at the time of writing this article would be an Apple IPad. Here is how it all goes down...
Parents or their child see a sign, "Win an Apple IPad!!!" They are intrigued. They come to your booth and ask about the rules for the contest. You introduce yourself and your company. You explain to them they can win the IPad if they enter your raffle. All they need to do is leave their name, city where they live, and e-mail address. No mess no fuss.
You collect their raffle ticket and they move on, but not before you get a chance to "size them up." If you get the impression they might be good candidates for your business, you build rapport with them for a minute or two and offer them your best brochures. Fridge magnets should be reserved for the juiciest leads.
The best events are those that last 2-3 days and give you the opportunity to meets hundreds of parents. The number of leads will determine the type of prizes you offer. If you can get a minimum of 200 prospects, an Apple IPad is well worth it.
Let's do some number crunching again...
- booth costs $300 for 2 days
- print media and other materials cost $200
- your time costs $300
- IPad costs $600
- you collect 250 names and e-mails
- 5% become clients (much more successful way to acquire clients)
- overtime, you realise +2% in clients due to brand awareness and referrals
You acquire 17 new clients. The cost to acquire each new client is approximately $82.35.
As stated prior, your business strategy will determine if this is worth pursuing. A low quality of service tutoring company is likely to bring in $100 - $150 profit per client. At the low end of this range, a low quality service company may not want to pursue this lead generator, but if you are able to raise your revenue per client through higher quality of service or increased pricing, this lead generation example can be quite profitable. It is not beyond the scope of reasoning that a high quality tutoring company can bring in between $300 - $500 profit per client.
It's worth noting that the difference between low quality and high quality services can be the addition of a free consultation and monthly visits by the business owner or an education supervisor.
No dah! Right?
There are reasons why sales jobs are the hardest to fill. Most people don't like sales because they don't like to pressure others to do something they wouldn't do on their own. The thing is, if they did want to do whatever it is you do, they wouldn't need you and you wouldn't have a viable business.
Let that soak in for a moment.
You are offering the parent a service they need. If they've contacted you, or invited you into their home, there's a real need there. It is your job to present yourself as their best option and entice them to commit.
If they don't commit to your service after the initial conversation; phone call or free consultation, your likelihood of securing their business in the future is greatly diminished!
How diminished you ask?
1 day after the conversation your odds of turning them into a paid customer is 50%. 2 days after the percentage declines to 25%. 3 days later 10%. After 3 days I recommend buying a lottery ticket if you manage to convert them into a client because the stars have aligned with you.
All joking aside, these numbers are from my own experience. You may notice a similar outcome, or a dissimilar outcome. The point I'm making is your best odds of converting them into a paid client is to sign them up for your services as soon as possible.
Stop thinking of sales as bad!
In the case of tutoring, we aren't contemplating luxury items. Parents are looking for a tutor to help their child. There is a need there and you should think of yourself as a hero for helping parents help their children.
So psychologically speaking, you need to come to the realisation that you are an advocate for the child. Furthermore, if you want to be very successful, you need to believe you are an advocate for the child. This type of self confidence and altruism will have a positive effect on the impression you make. If you are enthusiastic about your services the parents will be enthusiastic as well.
Okay, that's the non-tangible mental advice, let's get to the practical advice.
Use a professional portfolio for consultations. If you don't do consultations, consider them, but if you are totally against them, have a slick electronic brochure you can e-mail to potential clients.
The portfolio must have the following:
- explains your services
- highlights your unique offerings
- introduces your tutors and their credentials
- strengthens your credibility (academic achievements etc)
- displays past client testimonials
- incorporates the needs for their child (you take notes!)
- concludes with a sales hook that signs them up
You need to have something about your service that is unique. It's not enough to do what every other tutoring company does. Give them a reason to sign with you instead of the other dude.
I provided a couple unique offerings, they were:
- our tutors were Certified Teachers. Believe it or not, before I started my tutoring company other tutoring companies weren't advertising Certified Teachers as tutors. Today, most tutoring companies have the word 'certified' or 'teacher' in the literature when explaining the quality of tutors. Unfortunately, within 6 months of operation my competitors caught wind and began advertising the same perk, even if they couldn't make good on the promise. Oh well. That's one of the drawbacks of the internet. It's hard to capitalize on a good idea for long.
- I developed an assessment procedure called the O.P.I.R Framework. The framework incorporated phases for learning and understanding and had a learner-centric ideology. Moreover, the framework strengthens lines of communication between the tutor and the student while providing a document for parents to review and become a participant in the tutoring process.
I want to address the conclusion and sales hook. The other parts of the portfolio are simple enough to understand without further explanation. If you do want clarification on any area I haven't covered, please leave a comment at the end of the article. I will answer all questions within the comments.
The conclusion of the portfolio must direct the parents to agreeing to take the next step. It should break down the cost for your service in a way that appears least expensive, and concludes with them providing their credit card information and commitment to a set number of hours.
Here's an overview of the conclusion:
- given your child's needs I recommend X hours of tutoring
- here are the phases of learning (based on child's needs and reiterate the concerns of the parents. Each phase is expected to take approximately Y hours for a total time of X hours.)
- by the way, that cost can be broken down to Z dollars per day. Less than the cost of A (A could equal a cup of coffee or their favorite latte. The point is to bring the cost to a low number and compare it to a trivial item they purchase on a regular basis. Always use information you gathered while building rapport.)
- For just A dollars a day, can you think of a reason why you wouldn't get help for [INSERT CHILD NAME HERE]? After saying this line, grab your pen and act as if you are about to write down their concerns. This point is crucial. If you don't appear to be asking a serious question, they will conclude the question was intended to be cheeky. Some parents may not like this tactic, but you need to ask the question to ensure you have addressed all of their 'hang-ups' before you move to the next step. After each point, ask if there is anything else. When they say, "no," then go about addressing their concerns. The better you are at solving their concerns, the more clients you will sign up. Once you've got this far, and they appear sufficiently placated, move on to the next point.
- Let's get the process started for [INSERT CHILD NAME HERE], okay? And wait for a response while smiling and nodding ever so slightly. If they hesitate, you have more work to do and go back to the previous point. If they nod their head, smile, or say okay, move to the next point. If they don't say yes, and they don't give you reasons why, and you have asked repeatedly for an explanation, leave. You're not going to get everyone. Just make sure you did your best to address their concerns. Some people do take time to think about their decisions. Make sure to leave behind a brochure, your contact information, and follow up with them the next day! If you wait more than 3 days after the consultation, you're not likely to convert them into clients.
- Start discussing the timeline. It takes X days to locate a tutor. What's your availability? The tutor will contact you via e-mail or phone to introduce themselves. You will accompany the tutor on the first session. Our policies and procedures for cancelations are as follows. An initial payment of Y dollars will be made on your credit card. Discuss the payment schedule for your business. Tell them you will follow up in Z days time and do it! Get the credit card information, and have them sign a service agreement. A lot of tutoring companies advertise no contracts and the service can be cancelled at any time. You will have to compete against that nonsense! I call it nonsense because it subconsciously promotes failure. You must impress upon the client the value of your time and the professional status of your tutors. Clients will spend the money if they know they are getting a high quality service. Project quality and dismiss these other tutoring companies as low quality, cut-rate services. If you must, you can always add a condition that refunds the clients money if you are unable to fulfill your promises. That should be good enough for most clients.
- Smile. Shake their hands. Tell them you and your tutors look forward to working with them and their child. Leave.
As stated earlier, your service model will dictate how closely you will take this advice. Obviously, if you were to follow these recommendations to the letter, you'll want to offer a high quality service. Scale back the recommendations accordingly if you offer lower quality services.
The point you need to take away from this is: the more time you take building rapport with potential clients during the sales phase the more commitment you will acquire from them.
Therefore, high quality service offerings requires you to build rapport while low quality service offerings does not. High quality services promotes lower rates of attrition and greater marginal profits per client. Thus, while the initial sales process is more time consuming, you will keep clients longer and see more profits over time.
When deciding your business model; providing low or high quality services, you need to consider your skill set. If you are good at sales and you have the ability to meet with potential clients, offer high quality services. If, on the other hand, you hate sales and you don't have the ability to meet with potential clients, use a low quality service.
Keep in mind, for low quality services, you will spend a great deal of your time talking to potential clients on the phone, your conversion rates will be lower, you will spend more money of advertising and marketing and you will earn less profit per client over time. Furthermore, you are more likely to deal with higher rates of churn on tutors and experience clients and tutors cutting you out of the process.
Regardless of how you choose to manage your business, you will have to get good at sales if you want to be successful.
Before we move on to the next point, I think it necessary to leave you with some advice that is more opinion than fact. You can take this advice as you see fit.
While parents are very concerned with the well being of their children, some are of the point of view that you're out to take more of their money than is fair. Conversely, you will come across tutors that think in a similar way regarding your intentions. Not all parents and tutors are like this, but you will come across these individuals.
This is why, to some extent, you need to approach the sales side of your business seriously. You must project an air of superiority with respect to knowledge and authority. Don't feel guilty, and don't apologise for having an aggressive sales process. If you falter in your resolve, your business will be negatively impacted.
The more you communicate with parents in a meaningful way the better they will view the quality of your service.
Let me explain what I mean by this.
It's entirely possible to take two identical students, identical tutors, identical services, and identical outcomes but experience varying levels of perceived success. If left to their own devices, parents will error on the side of caution and diminish the success their child makes unless they are coached through the process and made to see clearly the progress made.
Believe it or not, having this "glass half empty" approach proposes to benefit the child. If one does not give others the benefit of the doubt, then one ensures, through rigors one creates, a better outcome reached.
This is simple human psychology. I'll prove it to you...
Would you hand over your money to a financial consultant and walk away for good? Would you accept the reports on how your money is doing with blind faith? Or would you ask for regular reports and explanations for the increases and decreases in your money?
You're not a financial consultant yourself. You know there is a lot to stocks and bonds you have no idea about. You know you aren't the expert. But, you still expect to know what is happening and why it's happening. The fact that you don't understand the intricacies of financial banking is irrelevant.
The simple act of communication places lingering doubts at ease. The more at ease you are about the handling of your money, the better you feel about the decisions you've made. Communication is the mechanism by which you are set at ease.
Similarly, the more communication you have with parents about their child's learning progress, the more at ease they become. Of course, in this case, communication must be partnered with positive information.
Communication in and of itself is not everything. However, communication also lets you get out in front of failures because they give you the opportunity to recognise the failure early, and propose a plan for overcoming the failure.
From my experience, communication with parents is absolutely essential for continued use of your services. The following table depicts some potential outcomes when communication is present and not present:
TABLE 1: Effects of Communication on Tutor Churn and Marginal Profit
|Regular Communication||% Required Replacement Tutor||Average Marginal Profit|
** communication consisted of e-mails and phone calls to parents
*** Not present occurred when parents were not available for regular communication
With frequent communication, the marginal profit per parent is approximately 2.5 times more than infrequent communication.
How would you like to make 2.5 times more money? Significant enough for you?
But what is the cost in time?
Communication can be any of the following:
- in person (Best)
- by phone (good)
- by e-mail (average)
Sending an e-mail after aggregating reports and speaking with tutors can take 1-2 hours of your time. Contacting parents by phone might take 1-2 hours of your time (talking can oftentimes be less time consuming than writing an e-mail). In person takes more of your time since you need to travel to and from the parents home or neutral location, but it also gives you the ability to build more rapport with them. Furthermore, in person gives you valuable knowledge like body language to interpret what isn't being said and alert you to issues you may not otherwise discover.
The time is takes to prepare for meetings with parents is an essential component of managing a successful tutoring company. Based on the numbers I found from my own business, you can't afford not to communicate with parents.
Lastly, look at the percentage requiring a new tutor. When you lack communication, parents are 4 times more likely to request a different tutor. This request means you have to relieve the current tutor from the position (which has negative consequences), and hire a new tutor (which takes time and therefore costs you money).
The difference in profits between these two outcomes is astounding. Take a look at the numbers in the following table:
TABLE 2: Communication and Non-communication Outcomes on Profit
|Communication Present||Gross Profit from TABLE 1|
If you can make more profit by throwing copious amount of clients into your business then communication may not be a priority for you. There's too much competition within the tutoring industry to allow an unfettered low quality of service model to be viable, unless your tutoring business is completely self serve and online.
Frequent communication with parents; discussing progress and future planning, can have a meaningful impact on your overall profit. Don't leave money on the table!
How useful do you think these tips are?