Saturday, August 19, 2006

War between Agents and Schools creates Shrinking Revenue

War between Agents and Schools creates Shrinking Revenue

Once upon a time there was a happy balance between the agents and the language schools. The agents provided admission services and translations and the schools taught the students. The average commission of 10 percent was paid to the agents. Almost all of the students stayed at the university residences. Everyone was happy.

Some schools viewed the benefits of the longer term exchange programs and said "we should offer homestay - live with a Canadian family for the two or three months and enjoy your trip to Canada even more". The schools thought their stealing the exchange program housing was so brilliant that they decided to keep all of the commission. Now the agents had to work twice as hard selling the school and homestay and only got commission on half of the revenue.

The agents decided that they should charge fees for this extra work so created service fees that the students had to pay in advance for forms processing, airline ticket reservations and homestay applications.

The schools realized that the agents were making more money from service fees than commissions so they created direct registration internet forms and hired their own staff of foreign speaking sales reps to compete with the foreign located agents.

The foreign agents then decided that since the schools were competing against them as agents then they should set up their own language schools and compete with the schools.

As the marketing wars heated up between agent-schools and school-agents they drove up the cost of trade fairs, coop advertising, brochures, media advertising and sales commissions and they created some "noise".

There were many observers of this "noise" that decided they should join into the marketplace. There are now ex-agents, ex-students and ex-school reps located locally offering tuition discounts, no service fees, free baseball tickets and other incentives to students.

The foreign agent-schools then decided that they had to increase sales and advertising spending and demanded higher commissions. They then reduced the cost of teachers, books and educational materials to better compete with the local schools and local agents.

The local schools went in two directions some cuts costs and became babysitting schools with no standards no qualifications and no educational value and some attempted to set professional standards and operate with ethics.

The local discount agents unable to distinguish between good or bad schools started to just quote prices stating that all the schools were the same.

The schools decided to fight the local discounters with summer specials and "special walk-in pricing" offered if you buy first time in the school.

The foreign located agencies are fighting the local agents by claiming they will only represent schools if they have exclusive ethnic contracts. The foreign agents are trying to use exclusivity and monopoly contracts to prevent certain ethnic groups from exercising their freedoms and rights while in countries such as Australia, the USA and Canada.

The local agents are now organizing small private schools and language classes disguised as special conversation clubs. To keep costs low they are offering a combination salary and sales commission to the salesman disguised as a teacher.

Wait for our next report to see what happens.

This war between agents and schools is over money. Just like all the other wars that humans engage in. The Agent & School War victims are the students who think they have purchased professional language lessons but instead attend stripped down, gutted useless babysitting sessions with idiots.

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