My recent interview (in English) on El Punt Avui TV. Talking about how I started out in the language teaching business, some of what’s happened over the past 40 years and what may happen in the future.
How much should a language course cost? Needless to say the answer will depend on all sorts of variables: how long the course lasts; whether it is face-to-face, online, or a mixture of the two; where it takes place (country, region, town/city, location); whether the teacher is professionally qualified; how many students are in the class; whether the course is a standard ‘general’ language course or something more specialised; whether materials are included in the course fee; and so on.
For the sake of argument, let’s assume we’re talking about a general, ten-week semi-intensive course which consists of 100 hours’ face-to-face tuition, given by a professional language teacher in a private language school located in the centre of a mid-size town in the south of Europe, with a maximum of 10 students in the class. How much might a course of this description cost?
An easy response would be to say: ‘as much as a typical student is prepared to pay’. But what’s a typical student? Someone who is paying for her own course or having it paid for her by her company or parents? Someone who desperately needs to take a course to pass an exam? Or someone who is studying for no obvious reason?
Again for the sake of argument, let’s assume our typical student is a young adult who wants to improve her career prospects and her ability to communicate on her travels, but doesn’t have any urgent need to demonstrate her skills and is paying for her own course. How much could she be asked to pay for the course outlined above?
Is there any way of calculating a ‘Goldilocks price’ that is not too cheap (so the school ends up losing income unnecessarily) or too expensive (so that the student is frightened away)? This ‘just right’ price should help the school generate the sort of margin it needs to provide its services now and in the future, while giving the student the sensation that she’s getting good value for money. So what? More than 500 but less than 1,500 euros? That still leaves quite a wide range of possibilities to choose from.
There are dozens of pricing strategies designed to help companies determine the price of their goods or services (see for example http://bit.ly/2owp5Wz). A couple of the most familiar are cost-plus pricing and value-based pricing.
Cost-plus pricing is relatively straightforward: first work out your direct costs (the cost of the teacher, primarily, but also such items such as photocopies for students, course-specific advertising campaigns, etc.) and divide this by the average number of students per group. Let’s assume these direct costs come to 25 euros per hour and the average number of students per group is 5. Direct costs per student hour are therefore 5 euros. Next calculate your overheads or indirect costs (which means everything that isn’t a direct cost, such as your rent, lighting, administrative staff costs, etc.) and divide this by the total number of student hours you have over a given period (could be a month, a term, or a year). Let’s assume this adds another 3 euros to the cost per student hour, making 8 euros in total. Adding a gross margin of 25% will put 2 euros onto the total cost, giving a selling price of 10 euros per hour, or 1,000 euros for the 100-hour course. Sound reasonable?
The answer to this question will most probably be: that depends how much other schools in the same location are charging for a similar course. If a local competitor has lower salary costs and/or lower overheads and/or is happy to work with a lower margin, they could be offering a very similar service for as little as 600 euros. That’s a whopping 40% less.
So should we base our prices on what our competitors are charging? Well, we should certainly know what the going market rate is. But the danger of basing our pricing on what the guys down the road are doing is that it can easily lead to a price war, or a race to the bottom, leaving margins wafer thin or non-existent, and staff feeling underpaid, unappreciated and unhappy.
An alternative to a cost-plus pricing strategy is value-based pricing. This is based on the idea that the client (student) will pay in relation to the value she obtains from the service (course) she is receiving. In the case of a 100-hour language course, the primary value will most commonly be defined in terms of how much progress she has made developing her language learning skills. That can be measured in broad terms by progress tests and/or continuous assessment, but it will probably also involve ensuring our student feels that she’s made significant progress.
Other factors that contribute value will be less obvious but may be just as important: Is she enjoying the course and enjoying interacting with her teacher and the other students? Is the learning environment clean and comfortable? Does the timetable fit easily into her other commitments? Are the reception staff efficient and welcoming? Is the school easy to get to, and/or easy to park near? Does the school offer extra-curricular services and activities such as social events or access to digital study materials outside classroom times?
The value of all these additional factors can also be measured to an extent, but in many instances it could boil down to individual attitudes or preferences. So objectifying all these values can be tricky, never mind attaching a price to them.
As we all know, perceived value can also be heavily influenced by brand recognition and advertising. Car A may be objectively better (more fuel-efficient, more reliable, more spacious, faster …) than car B, but if car B is branded Mercedes or Range Rover (for example) it is likely to command a premium price.
Building brand value is easier said than done. It requires both delivering services that are perceived to be better than average (in some significant way) and communicating these differentiating values clearly and effectively. What’s more both delivery and communication usually need to happen over a prolonged period of time. But if we’re successful at enhancing the perceived value of our brand, the price of our sample course could be closer to 1,500 than to 500 euros. And no-one will complain.
At IATEFL 2016 Silvana Richardson gave an impassioned presentation which generated a great deal of discussion and support, both at the conference and on social media. She repeated her plenary at the ELT conference organised by IH Barcelona earlier this year and once again she had the audience on its feet.
Her argument, in summary, is that it is time to stop treating English teachers who are non-native speakers of the language as second class citizens. English language teaching institutions shouldn’t discriminate between native and non-native speakers of English when they hire teachers; rather they should simply hire people on their ability to teach the language effectively.
Silvana uses a number of arguments to support her case. One of these is that bilingual or multilingual non-native speakers of English are often more effective classroom teachers than monolingual native English speakers as, having gone through the process of learning English themselves, they are often better able to anticipate the many pitfalls that students are likely to find themselves stuck in. No-one in the profession would take issue with that.
Silvana also claims that a familiar argument, that it is the market that demands native English speakers, is false. She attempts to explode this myth (as she sees it) by providing data from a number of studies conducted in different parts of the world. Two of these studies were taken from SE Asia where, according to the data referenced, a majority of students actively prefer non-native speakers (understood to be speakers of the students’ own language) as teachers. Anyone familiar with this part of the world won’t be entirely surprised by this finding. Grammar translation is still a common teaching method in many classrooms in the region and that requires a thorough knowledge of the students’ mother tongue – something most native English speakers lack. The fear of losing face is also a cultural constant in this part of the world and this fear is often compounded in the presence of foreigners.
But does the argument hold elsewhere? The only data Silvana uses from Spain to reinforce her thesis (that the market doesn’t care) is taken from a study conducted at a university in the Basque region where around 50% of the 70 students surveyed stated they didn’t especially value native English speakers. But university students don’t get to choose their teachers in any case. Could this lack of choice have influenced the result?
The ‘alternative fact’ (to coin a current phrase) is that a large proportion of students studying at private language schools in Spain (i.e. those people who do have a choice where to study) indicate a very clear preference for having native English speakers as teachers. A recent survey conducted with past and present students at IH Barcelona bears this out.
The survey asked students to evaluate 10 qualities an English language teacher might have on a scale of 0 to 10. Some of the qualities students were asked to evaluate were:
- A friendly and caring nature
- Knowledge of the students’ language
The survey was completed online by 408 students.
The teacher quality that scored the highest percentage of responses (57,7%) with the maximum score of 10 was ‘Gives interesting classes’. ‘Native speaker’ was the quality that scored the third highest number of maximums, with 52,25% of respondents awarding this quality a top score of 10. But if we add the number of respondents scoring ‘Native speaker’ with an 8, 9, or 10 on the scale, it comes to a massive 83,4% (see graph). This out-performs nearly all the other qualities listed in the survey including even ‘Experience’ (76,1%).
So, whether we like it or not, ‘native speaker’ is evidently a quality that students in this particular market value highly. I think we can safely say that it is therefore very likely to be one of the factors that influences these students when they are evaluating their options and deciding where to study.
Having provided data that suggests the market doesn’t really care, Silvana seems prepared to admit that some people might care after all, as she then goes on to an ask a very pertinent question: Is the customer always right? In other words, should we as school owners and directors, go along with our students’ preferences for native speakers or “challenge them, rather than pander to them”?
Let’s state the obvious: in a highly competitive market, the providers of any service would be crazy to ignore the strongly felt preferences of their potential clients. Such an approach would be tantamount to commercial suicide.
This is precisely the situation that the owners and directors of private language schools in Spain find themselves in. Whether we agree with our clients’ perceptions or not, a large majority of those people prepared to pay to improve their English language skills (or their children’s language skills) evidently value teachers who are native English speakers very highly. Does this mean that we can’t or won’t employ non-native speakers as teachers? No, we can, we do and we will. But it does mean that there is a clear and obvious risk in doing so; a risk that is ignored by Silvana’s claims that
a) the market is essentially agnostic and
b) those students that do prefer native speakers should have their views challenged.
‘Discrimination’ is an ugly term that no-one wants to be associated with. A majority of the private language schools in Spain (including all the schools that I’m involved with personally) pride themselves on being companies that will not discriminate on gender, race, sexual preferences, age, weight, height, or anything else. But we are working in the world as is, not as we’d like it, and it will take time to wean our students away from the idea that ‘native speaker’ somehow equals ‘better value teacher’. The risks inherent in challenging this widely held view too quickly or too openly – especially in the current market conditions – are simply too great.
One final thought: this debate, which is a very lively one, seems to centre almost exclusively on native or non-native teachers of English. Presumably this reflects the global demand for English and the huge numbers of English teachers, both native and non-native speakers, needed to address it. The debate feels rather different if we think about teachers of other languages. Imagine a student coming to Spain to take an intensive Spanish course, for example. Would such a student be surprised and possibly even disappointed if her teacher turned out not to be a native speaker of Spanish? I think perhaps she would.
A video recording of Silvana’s plenary at IATEFL can be found here: http://bit.ly/1XxfxDH
One of the best known mantras of business management theory is that in order to succeed, a company must have a competitive advantage over its rivals. In other words, it must have or do something that will persuade its potential clients to buy its good or services, rather than those of its competitors.
Michael Porter (aka Professor Strategy) argued that there are essentially two types of competitive advantage available: lower-cost or differentiation. He also argued that strategic management should be chiefly concerned with building and sustaining a company’s competitive advantage.
When I first came across this sort of thinking, back in the late 1980’s it seemed pretty obvious that we had this issue sewn up. Our companies – our International House language schools, teaching English in Spain – had a very clear competitive advantage which helped us differentiate ourselves from the vast majority of our competitors: we only employed native English speakers who had been specifically trained to teach English as a foreign language. Most of our competitors employed a mixture of non-native speakers and backpackers. They didn’t have a chance. The non-native speakers may have been perfectly competent teachers, but the market wanted native English speakers. As for the backpackers, they were often native English speakers, but put them in a classroom and they didn’t know what they were doing. Our competitors were often cheaper than us, but we had that essential ingredient –professional, native English teachers – and students literally queued out the door to pay for our services.
It was great while it lasted, but it didn’t last long. Thousands of professionally trained, native English teachers soon found their way out to Spain, or were trained in Spain (most often by International House) and before very long, almost all the self-respecting language schools in our part of the world were offering the same essential ingredient. We could still try to claim that we were different and better e.g. by only employing the very best candidates from our teacher training courses, and by making teacher training a continuous process – but the differentiation gap had narrowed significantly. We were no longer miles ahead, or miles more attractive.
I spent the next decade or so secretly worrying that we were living on our past success and that we no longer had a clear tick in the box marked: sustainable competitive advantage.
Then I came up with an idea that made me feel a whole lot better: while it may be true that we no longer had a single, clear, competitive advantage, we did have a number of smaller advantages that when added together, amounted to something significant. For example: we not only had trained, native teachers and continuous, in-service training; we also had a sound academic structure, led by a well-qualified Director of Studies; we used the best study materials available on the market; we had eye catching promotional materials; we had good, comfortable premises, in good locations, with easy access; we trained our front of house staff to deal with customers correctly; and so on. I even coined a name for this amalgam of small, competitive advantages: I called it our ‘composite advantage’.
If I’d been teaching at a top Business School rather than running a small group of companies, this term – composite advantage – may have become part of the established jargon. Or so I tell myself. In any case, it was enough to help me sleep at night and not worry too much about Professor Strategy.
Earlier this year I was introduced to another idea that also makes perfect sense (thanks Monica). The thinking here is that in this day and age, it’s almost impossible for most companies to develop a sustainable competitive advantage. The business world simply moves too fast. As soon as one company comes up with a significant advantage, many of its competitors simply go out and copy it and bang goes the advantage. (This is of course exactly what happened with our trained, native teacher advantage, albeit at a slower pace). So, rather than trying to create a competitive advantage that can be sustained over time, companies are now being advised to come up with something described as a transient advantage, something that will keep them ahead for a while, but will need to be replaced by another transient advantage before too long, as soon as the competition catches up.
A couple of examples of transient advantages from our own experience:
When we first started to offer intensive pre-service training courses for Spanish language teachers that included both theoretical and practical sessions (based on the model of our training courses for English teachers) we had a tremendous competitive advantage: we were the only organisation in Spain offering such courses. Nowadays there are dozens of similar courses available and we have had to find new ways to maintain our advantage e.g. by developing a blended version of the course and by obtaining university credits for trainees who successfully complete our courses. We don’t know how long these new transient advantages will last, but we do know they won’t last forever.
Similarly, around four years ago, a number of our schools decided to equip all their classrooms with data projectors and interactive whiteboards. This new hardware transformed our classrooms from something that would have been familiar to students from the Edwardian age, to something that was at the cutting edge of classroom technology. Most of our students were suitably impressed. However, nowadays almost every private language school has classrooms bristling with technology, so the competitive advantage we briefly enjoyed has evaporated. It lasted about two years.
According to Rita Gunther McGrath, a professor at Columbia Business schools and author of a book called The End of Competitive Advantage (Havard Business Review Press, June 2013) these days companies need to develop and manage a ‘pipeline of initiatives’ since many will be short-lived.
To stay ahead in our business I think we need a wide pipeline, producing a broad range of initiatives. So perhaps we should be talking about transient, composite advantages.