Building your share of the value chain...
We all want to get paid for what we are worth. In chapter one, we saw how the trainer Jenny had nearly maximized her wages because she was adding only limited value to the training. In fact, there is a cap on each step in the value chain. For example, you might do the very best needs assessment ever, but a customer will only pay so much for that step. You might also be the best materials writer in the world, but there is still a cap.
If we combine this with qualifications, it shows that they are subject to diminishing returns. In other words, a Master’s in Education will not change my income that much as a trainer because I may have already reached the limit of what customers are willing to pay for materials development (including activities) and training delivery.
So the key is to take over more elements of the value chain, not to continually develop and market one step. This means the trainer will have to do more work. But before we look at four ways to increase value added we need to examine a fact about the consulting/training business.
Customers always remember the first price you charged them.
- Joe Rei, Management Consultant
- Joe Rei, Management Consultant
Rates are sticky. It is extremely difficult to go to a customer and ask for higher rates. But we can never stop developing our product. Furthermore, a training product needs testing, review, and improvement before it can be sold. That leads to the first value building method.
1. Test something with customer A and sell it customer B
Jenny is running her weekly business course at the accountancy, but she is unhappy with the pay. She decides to use corpus tools to make her own materials about accounting and the needs she has identified. She goes out and learns how to use the software and collects the texts. It takes her many hours of work, but she eventually writes three vocabulary exercises and a role-play based on her data. She uses the materials in class and sees that there are a few problems. She corrects them and writes a few more. She is not being paid for any of this effort.
When the class ends, she gets great feedback and the school wants to use her for another course focusing on financial English. Jenny speaks with the director and says, “I can develop my own materials for the course. I’d be happy to show them to you prior to the training. But this takes considerable effort and I would need to be paid for it. I believe the customer would be willing to pay for materials if they knew that they were specific to their company. I think it would be fair to receive the materials budget for this course.”
2. Take on the responsibility... go freelance
Mike Hogan has talked about going freelance at conferences a few times and he is right on that it is more difficult, more rewarding, and can pay more than using the support of an institution. This is the path I chose and I love it, but it is not for all. I also had certain abilities in every step of the value chain before I started out on my own. I am not a success story yet, but I believe I am on the right track.
When it comes to assuming responsibility for marketing, sales, and product development, a freelancer must be patient and have a certain confidence that sales will come. I have been turned down for many more proposals and offers than have been accepted. I have been rejected by far more prospective customers than I have won. In general, I believe that it will be another 3 to 5 years before I am really able to maximize my value.
3. Take a share of value from others
This is the traditional money making model in ELT. Course book writers take a certain portion of the value for every student who uses their book. Elearning sites charge a fee for their material and delivery.
I know some trainers who have won a customer and then hire other trainers to perform some of the training. They keep a portion of the income for the sales work and admin side. They may even keep a larger portion if they conducted the needs assessment and designed the training program. Private language schools who hire freelance trainers generally follow this model.
This method is simply not for me, but that doesn’t mean it doesn’t work.
4. Use synergy gains to increase value
Synergy gains are a business concept for when two companies working together will produce greater value than the sum of working individually. In this case, I am talking about working with other trainers to ‘bundle’ services which has a higher price than individually. For example, I worked in the past with a human resources development consultant here in Germany. She was an expert in outplacement to help employees find a new job when they were laid off. Her services were typically paid by the company the employees were let go from. We worked together in special cases to combine her training and support with my English training. Together we were both able to charge higher rates.
At the end of the day, there is little we can do about the business model of Business English training. The barriers for entry will always be exceptionally low. And there will always be a place for under-qualified trainers in the marketplace. I believe the best qualification to differentiate a trainer is something beyond the ELT field (assuming they have at least the minimum teaching certificates). I also think writing materials is key to adding value to the training and makes a significant impact on clients. Finally, there are several ways to increase rates within the field, but these methods must follow business principles. I don't think following an academic career model attracts customer.