The Online Tutoring Landscape

In a previous post I noted that there are 2 kinds of online tutoring: Prescriptive tutoring and Drop-In tutoring. SMARTHINKING focuses on the Drop-In model. Within the drop-in market, there are 2 established companies -- SMARTHINKING and Tutor.com -- and at least one well-funded new company who may offer drop-in tutoring (TutorVista). Tutor.com has built its business by selling to public libraries who target middle school students. SMARTHINKING has built its business by selling to colleges, some high schools, and bundling with textbook providers. SMARTHINKING has tried selling to public libraries with limited success. Tutor.com has tried selling to colleges with limited success. Each company has tailored its service and pricing to fit its market.

Though SMARTHINKING has little or no competition in the higher education market, I have always thought that some company would emerge to compete with us. However, 2 dynamics have emerged over the past six months that will make it very difficult for new entrants to compete successfully in the college market.

The first dynamic is the growth of our partnerships with publishers. Starting in June, 4 of the 6 largest college textbook publishers representing over 70% of the college textbook market will bundle SMARTHINKING's services with selected products. These publisher partnerships will allow the 300+ schools who contract directly with SMARTHINKING to offer more tutoring services without incurring extra costs. For publishers, the addition of SMARTHINKING helps sell more books because schools want to extend their existing SMARTHINKING services. Schools have an incentive to contract with SMARTHINKING because publisers offer ways to defray costs. SMARTHINKING can now offer a school a complete solution on a single platform that can integrate SMARTHINKING tutoring, a school's own tutors, and tutoring provided by publishers. In addition to all of this, the branding that results from the marketing efforts of these publishers cannot be underestimated.

The second dynamic is the dramatic service level improvements that come with scale. Running a drop-in tutoring service is like running a call center without the call and without the center. The biggest difference is that session lengths -- the time spent on a call -- in most call centers is short. For online tutoring, the session lengths are long. This means that, to achieve consistently low wait times without signficant overstaffing, a drop-in tutoring center must have a lot of users. Our models indicate that a center needs about 35 sessions per hour to achieve average wait times under 4 minutes with an efficient staffing model. In the past year, SMARTHINKING has grown such that we meet these service levels across almost all of our available hours. Competitively, this means that any new entrant will need to signficantly over-staff prior to achieving student volume if the new entrant plans to compete on service levels. For SMARTHINKING, we will begin to integrate service levels as a marketing message to our current and future clients.

These 2 dynamics -- the interdependence of our schools and publishers and the predictability of service levels -- makes me increasingly confident in SMARTHINKING's ability to grow within and defend the college market from new competitors. These dynamics, plus the college focused service elements that we already offer such as 24/7 drop-in math tutoring and the world's largest online writing lab, make us the only choice in the college market.