Strategies for acquiring and managing students

From: alexhormozi

The test prep and tutoring business model presents a significant opportunity for high earning potential with minimal overhead, particularly for students or individuals seeking flexible work hours [00:00:08]. This business was nearly launched by the speaker before starting a gym [00:00:20]. It can be started with no capital, rental space, or build-out costs [00:04:15], and can be operated from free libraries [00:02:15].

Core Business Model: Selling Outcomes, Not Just Tutoring

The key to success in test prep is to avoid selling tutoring directly. Instead, focus on selling the outcome of tutoring [00:00:28]. This outcome typically involves gaining entry into a higher-paying job or passing a standardized test [00:00:32]. Standardized tests are particularly valuable as better scores can lead to admission into better schools (college or business school), which materially impacts networking opportunities, recruiting companies, and average salary/earning capacity [00:00:41]. The promise of making an extra $100,000 per year from attending a better school can justify the pricing of sessions [00:02:33].

The most profitable service model is “semi-private” or “one-to-many” tutoring, rather than one-on-one [00:01:04].

• Pricing Structure: Charge two-thirds of the one-on-one rate, but serve eight times as many people [00:01:15].
• Example: Charging $35perhourforagroupofeightstudentsversus$60 for one-on-one [00:01:27]. This means making $280perhourwiththegroup,comparedto$60 for one-on-one [00:01:54].
• Benefits of Group Tutoring:
  • Still provides a small group setting with personalized attention [00:01:20].
  • Students can take turns solving problems, rather than the tutor constantly teaching one person [00:01:24].
  • Allows for earning $1,100perdayforfourhoursofwork,comparedto$240 in a one-on-one model [00:01:34]. This represents 4.5 times more money per unit of time [00:01:41].

Strategies for Acquiring Students

Marketing and customer acquisition strategies are crucial for building a student base.

Initial Outreach and Leveraging Networks

• Personal Network: Begin by contacting your existing network – friends, family, and acquaintances [00:04:17].
• Direct Messaging (DMs): Reach out to people in your high school or their parents [00:04:22].
  • Pitch: Share your own success story, e.g., how you improved your score from X to Y, and explain that you’re guiding others to achieve similar results, which helped you get into a better college [00:04:27]. Emphasize the method used and the outcome of the improvement [00:04:38].
  • Overcoming Shame: Be prepared to ask many people, as getting rid of shame is vital for entrepreneurial success [00:04:43].

Converting Prospects with Free Sessions

• Free Session Offer: Offer a free session to demonstrate your method [00:04:49].
  • Format: This session should be a half-assessment integrated with a sales pitch [00:04:54].
  • Demonstrate Quick Wins: Show them one easy win to help them see an improvement early on [00:04:57].
  • Transition: After the demonstration, ask if they like your teaching style [00:05:01].
• Initial Free Service: Provide the first five to ten sessions for free [00:05:04].

Driving Accountability and Referrals

• Homework Accountability: Implement a billing system for missed homework assignments to give students “skin in the game” and motivate them [00:05:07]. This helps them achieve better test scores [00:05:14].
• Post-Service Requests: After providing free work, ask for three things:
  1. Feedback on improvements [00:05:18].
  2. Testimonials [00:05:20].
  3. Referrals [00:05:21].

Leveraging Testimonials and Expanding Reach

• Publish Testimonials: Once you have testimonials, post them online and invite interested individuals to DM you [00:05:29].
• Special Offers: For the next set of students, consider offering a discount (e.g., half off) to attract new sign-ups [00:05:37]. These offers act as “call to actions” driving DMs [00:05:44].
• Beyond Network: After leveraging your personal network, reach out to people you don’t know and, eventually, run ads [00:05:48].
• Targeting Sports Teams: Approach coaches or team members who may need academic support for scholarships or eligibility [00:05:56]. This can lead to rapid word-of-mouth spread within the team [00:06:07].

Student Management and Curriculum

Focus on Problem Solving

Test scores, particularly for standardized tests like SATs and GMATs, are directly proportional to the number of problems solved before the test [00:03:27]. This provides a clear input-output relationship [00:03:35].

• Selling Proposition: Integrate this statistic into your sales pitch (e.g., “every thousand problems statistically gives you an extra 20 points”) [00:02:52].
• Goal-Oriented Selling: Sell the desired score increase, rather than just hours of tutoring [00:03:03].

Curriculum Structure

• Structured Sessions: Implement a three-day curriculum, with separate classes (Class A and Class B) and a makeup day for those who miss a session [00:03:07]. Students still pay the same rate for makeup sessions [00:03:14].
• Pre-Payment: Encourage students to prepay for sessions to avoid transactional one-off engagements [00:02:37].

Scaling the Business: The “Super Saiyan” Version

To achieve significant growth and higher earnings, transition from solely doing the work yourself to leveraging others [00:06:39]. This involves developing a high-performing team.

Delegation and Templatization

• Hire Teachers: Recruit other teachers to conduct the sessions [00:06:40].
• Templatize Process: Develop a standardized process for getting students to solve more problems, as this is the most predictable way to increase scores [00:06:45].
• Profit Margin: Pay teachers a competitive rate (e.g., $50perhour)whilemaintainingasignificantprofitmargin(e.g.,$280 earned per hour in a group session) [00:06:51]. Aim for service-based margins of 80% or higher [00:07:01].
• Teacher Satisfaction: Teachers can earn more than in a traditional job and are often happy to work for the proposed rate [00:07:10].

Building Pipelines for Growth

• Focus on Promotion: By delegating teaching, you free up time to focus on promoting, marketing, and selling to acquire more students [00:07:21].
• Teacher Referrals: Ask current teachers for referrals to other qualified teachers who would be interested in higher pay for part-time work [00:07:30].
• Scalability: With pipelines for both students and teachers, you can scale significantly. For instance, with four teachers, working four hours a day, you can generate $4,400daily,netting$3,600 profit after paying teachers [00:07:54]. This level of income ($3,300/day) equates to over a million dollars per year, placing you above the top one percent of earners [00:08:05]. This demonstrates a potent strategy for business growth and improvement.