How BridgeU created new value, found the right price and the right customer — a case study
BridgeU raised more than $10m in VC funding before being acquired by Kaplan, one of the world’s largest and most diverse education and assessment providers, in 2020. In this month’s case study, their founder Lucy Stonehill shares how understanding value and being comfortable with talking about price helped them win K-12 and then find new revenue opportunities.
By the end of this article you will understand more about:
- The benefits of selling direct to customers
- How to tell an evolving story about value
- How to create a safe space to understand value and validate pricing
- How to build long term value that can be monetised in different ways
“There are lots of ways you can monetise if you build an audience big enough and users or customers that feel you’re solving an important pain point,” smiles Lucy. “The common thread with successful EdTech is having a superior experience for students or learning institutions.”
Lucy is describing the journey that she and the BridgeU team have been on since they started their mission to create more equal global access to higher education in 2015. The story is one of understanding the value of what they offer.
Building new value and winning K12
“I knew that if we won in K12, we would have the potential to monetise in different ways,” says Lucy, thinking back to the early days of BridgeU and why they started by selling to schools.
“K12 is challenging because of smaller budgets,” says Lucy. “However, there is the opportunity to have a significant impact: a single contract can give you the opportunity to both access and impact 500–1000 students. Because K12 is hard, you don’t get many high quality providers. So if you can develop an advantage early on and sufficiently differentiate your offering, you can build a compelling market position.”
BridgeU quickly became the dominant provider for university guidance working with international schools. Today, BridgeU serves over 1,000 K12 institutions globally. They went directly to schools. “The most successful K12 providers have never used a sales partner, they’ve built their own sales team,” she says. “I’m a huge believer in that.”
Pitching to schools, first on her own and then later by building a team, enabled Lucy to quickly learn about what her customers valued — and how much they would pay for it. Something that would not have been possible through a third party.
This approach was critical because BridgeU were building a product in a new category. “These days people have a budget line item against ‘guidance’ but at the time, this was new,” remembers Lucy. “When you’re creating a product or service in a new category, what you’re competing against is the cost of doing nothing.”
Lucy quickly refined her pitch: “For students, the cost of inadequate university and careers guidance can be very significant . They end up not going to university or they end up at the wrong university, or on the wrong course. They get knocked off track and potentially lose out on career pathways and meaningful earning potential,” she pauses. “What happens to the school if it’s perceived not to be doing its duty of care in this regard? You have a whole bunch of very angry parents and a poor track record of post-secondary placement, both of which can be very damaging to a high school’s reputation.”
She and the team found that leaning into this ‘fear and doubt’ helped them successfully unlock money that wasn’t yet in the budget.
To start with it was about converting the early adopters and then using their stories to amplify their own. “You kind of just play the two stories against one another and then you start to grow.”
Things to apply:
- Consider what channels are likely to be the most effective way to start building an audience of students/learners
- Understand the value of going direct to the buyer early on in helping you learn about what they value and how to price
- If you’re building a new category, highlight the cost of doing nothing
Telling an evolving story
“In my experience, what matters less is the product. What matters a lot more is the value-creation story you’re able to tell based on a deep and rich understanding of what is wrong with the current way of doing things, who it is hurting and what might be the unacceptable consequences of not evolving. And we spent years telling and refining that story,” says Lucy.
She says that the story evolves based on the stage you’re at. First it’s about those early adopters.
“We found it started landing with particularly visionary heads of schools,” says Lucy. “Those that were forward thinking, maybe more tech savvy. And guidance professionals who were excited about being early, and having a big impact on our product roadmap.”
They created lots of materials and collateral for these ‘visionaries’ as they weren’t necessarily the budget holders. “Understandably, sometimes they don’t want to put a salesperson in front of a boss. Building a toolkit of supporting resources your champion can leverage to tell your story themselves is very powerful.”
Next came the ‘early majority’. They were early in the buying cycle but had different needs from the visionaries. “They want reporting and they want more robust user permissions. It’s not just enough to believe in the vision that you have put forward. They won’t put up with clunky experiences.”
And then come the even more conservative late majority: “They don’t just want reports, that you can cut and slice. They also want 12 case studies. And they want a discount!”
The insight here was that although they were talking to people doing the same role, they were talking to humans with different profiles, priorities and personalities. This meant that the way they told the story of value needed to evolve, along with their pricing strategy.
“Over time the price was prohibitive, so we dropped it,” says Lucy. “In fact, we more than halved our price point over time as we reacted to the different needs, sensitivities and the competition that entered the market after us.”
Things to apply:
- Evolve and tailor your value story based on the profile of your audience and stage
- Build a toolkit to let your internal champions tell your story for you
- Consider if your pricing needs to change as you grow and the profile of your audience changes
Validating price
Which brings us on to the notorious topic of pricing. How did she go about that?
“I know a lot more now about pricing strategies than I did as a 25-year old, rocking up to my first three meetings with schools,” laughs Lucy.
“But the fascinating thing was that visiting an expert who was head of an international school in Beijing and a guidance counsellor in Kent, having conversations with them using some screenshots on an iPad, and telling them I was visiting them because I wanted to learn, lent itself very well to a conversation about price.” This insight has informed her approach ever since.
She recalls the unscientific nature of pricing. She had conversations where some said they wouldn’t pay more than £500 for what she was showing them. Others said that they’d pay $27,000. “You’re just talking about an insane range!” she remembers thinking.
But these conversations provided the understanding that enabled them to cluster on a price per student model that would work for both big and small schools based on similar insights about what they valued. This she says is the value of the early, visionary, warm prospects: “You can create a safe space to learn with them and if you’re lucky, you can even co-create your first pricing structures and models.”
Testing pricing through informal conversations is something she continues to coach her team on.
“I think people are afraid of pricing. It’s always a hurdle that people have to get over but you have to be comfortable talking about price,” she says. “It’s not a dirty conversation, it’s actually a conversation about customer value.”
Things to apply:
- Have informal conversations with early, visionary warm customers first to understand their perception of value
- Don’t be afraid to to talk about price to understand the value
- Identify what the common themes are about value to identify the right pricing model
Building the confidence to pivot to free
By 2019, BridgeU had amassed a market leading position in the international K12 segment and a significant base of customers in over 100 countries. They started to explore alternate revenue streams to subsidise their continued growth in K12.
“We realised that there was another key stakeholder group that had a significant vested interest in supporting high school students in making better and more informed post-secondary decisions, namely higher education institutions. So we started to explore ways in which universities could become integrated into the BridgeU ecosystem and add value to the process we were supporting students and their advisors with”
So in order to explore these opportunities, the team built some tooling that would give universities insights into where in the world there were students who were interested in going to their institution.
“We had an engaged pool of students who were graduating in two years. We could tell a university where in the world students interested in their courses were and what high schools they went to. These turned out to be rich insights that universities previously didn’t have access to. And furthermore, the potential to connect the right universities with the right high schools proved to land extremely well with the otherwise time-poor advisors who are typically charged with this responsibility.”
They signed up five innovation university partners in 2019 to test the concept further. “And then 2020 happened and every single recruitment and admissions officer was grounded and suddenly scrambling for digital tooling to reach out to students and high schools across the globe,” remembers Lucy. “Because I didn’t have the time to build a team, I personally led the sales effort in 2020 and signed up our first 30–40 universities in nine months. It was a strong boost and I learned a lot.”
This was the new business model that would enable BridgeU to make their core schools product free to K12 organisations with increasingly cash-strapped budgets.
Two years later, BridgeU works with just shy of 100 higher education institutions and has its sights set on partnering with 500+ institutions by 2026.
Things to apply:
- Recognise the value you have built up over time and consider who might be able to pay most for it — is it your current customers?
- Consider who might value your product enough to pay for it at an early stage and in future — does this change anything about your short term strategy?
Summary
To conclude we reflect on the key takeaways from BridgeU’s journey.
- Make sales conversations about value — not the product — and highlight the consequences of doing nothing if you’re building in a new category
- Use informal conversations with warm and early prospects as the opportunity to test your assumptions about price and value
- Create a toolkit to help your internal champions tell your story about value to people who hold the budget
- Recognise the value of the audience you have built and explore other opportunities to monetise it that supports your mission
“Pricing is not a science,” says Lucy, “It’s creative storytelling about value.”
