Wyzant, Inc: A brilliant way to keep everyone on board
Win-win-win situations do exist!
Wyzant, Inc. is a fast-growing online service company that links a network of students seeking academic tutoring to a network of tutors offering independent tutoring services in exchange for a percentage of the payment exchanged between each student and tutor. Its brilliance comes from its ability to keep everyone in their value chain on board…or else no one will get paid. In other words, the success of their business model relies on the customers’ ability to continuously support the operating model.
Wyzant’s operating model is based on four core values, narrowed down from a list of hundreds at the inception of the company. Each value, while seemingly vague to the general public, is actually fully integrated into the business model for the company and built into the way they create and capture value for their customers and collaborators. The company needs employees who want to learn from customers, customers who want to learn from tutors, and tutors who want to teach and learn to grow their own potential as well. Incentives are designed accordingly. The table below summarizes the company values, their link to its operating model, and the ways in which value is captured through revenue and service.
Of course, there is nothing stopping tutors from detaching from the website and forming their own tutoring relationships, provided that these relationships were not obtained through Wyzant based on the terms and agreements of the company. However, in doing so, tutors would quickly find that they are unable to source the same quantity and scale of students, and upon returning to Wyzant, would discover that their payment percentage has dropped due to inactivity. As a result, they only make this ‘mistake’ once. Tutors have to remain engaged.Like many other companies, Wyzant incentivizes employees based on company performance. Company performance is driven by revenue generated by volume and frequency of students and tutoring sessions. Students are incentivized based on their own knowledge, and shown the value of Wyzant through improved test scores and school grades. Tutors are incentivized based on the percentage of their tutoring fees they earn; if they tutor frequently and receive good reviews, they can make up to 95% of what they charge, while if they tutor infrequently and receive few or poor reviews, they drop down as low as 60% and have difficulty obtaining business.
Similarly, students could source their own tutors through friends, family, and educational systems. However, with these methods, there is little to no information on the direct impact that the tutor can have on student performance, so a lengthy and often unsuccessful tutor vetting process occurs. Once they have seen the value, students remain engaged too.
For Wyzant, business performance is not a separate task from customer satisfaction, value generation, or any other components of their operating model. Business performance is driven by revenue, and revenue is only generated when both students and tutors are happy, engaged, and active. As a result, employee focus on retaining users and continuously developing new opportunities for the users directly affects revenue and performance of the company. Revenue of the tutors due to knowledge of the students also directly affects revenue of the company. The ecosystem, mapped out in the figure below is currently in perfectly aligned balance to support the business model. It will be exciting to see what Wyzant does next!
Sources:
- Company Webpage: www.wyzant.com
- Linkedin Post: 6 Steps to Adopting Core Values that Stick (https://www.linkedin.com/pulse/6-steps-adopting-core-values-stick-andrew-geant)
- News articles on Wyzant success:
- http://www.chicagobusiness.com/article/20130511/ISSUE01/305119974/the-fable-of-wyzant-and-the-grasshopper
- http://techcrunch.com/2013/12/16/wyzant-lands-21-5m-from-accel-to-take-its-tutoring-marketplace-global-and-mobile/
- http://upstart.bizjournals.com/companies/innovation/2013/07/17/wyzant-looks-to-disrupt-tutor.html?page=all
- Glassdoor reviews from current and former employees: https://www.glassdoor.com/Reviews/Employee-Review-WyzAnt-RVW5748055.htm
It’s so hard for models like this to keep the players in the marketplace and not circumventing it. In this case, they’ve designed the model with strategies in place to more or less require tutors to remain on the system.
Neha,
What an interesting company. As someone who has done a bit in the drop-out recovery education space, I find this model quite fascinating as you are right, it does present a win-win-win scenario. My only concerns in this, stemming from past experience, are the attrition rate, up-sell / cross-sell potential, and quantifying some of the objectives. For attrition, I would imagine that even if students have a good experience, at some point, they will become proficient enough that they no longer need a tutor. In a sense, achieving the goal of the program leads to the Company needing to find more students. I’ve found in the past that it has been hard to keep on getting new students from greenfield opportunities and thus, a lot of the recurring revenue stems from the ability to up-sell and cross-sell. It would be interesting to see if this is already part of Wyzant’s model, as I imagine scaling while having a certain amount of attrition due to its success is difficult. Also, do you know if the objectives that align the Company’s business and operating model are quantifiable? While improvement is the key, I often found in the past that when we were setting targets without a definitive benchmark (or sliding scale benchmark per segment of student) it was hard to achieve overall growth and satisfaction.
Jessica