Smaller and niche RTOs make up a large proportion of the RTO market, but how can they stand out from the competition and grow into the future? Here are 7 suggestions from VETtrak’s team.
Running a small, niche RTO is far from easy. With strong competition for the local student market’s education spend, as well as the need to run a profitable business and provide quality training at the same time, achieving sustainable growth over time can sometimes feel like an uphill battle.
The reality is a large proportion of RTOs are in just this position. ReadyTech’s RTO Industry Australia 2018 Report found almost 50 percent of RTOs had less than 300 annual student enrolments. In addition, 60 percent had a turnover of less than $2million – technically putting them in the small business basket.
How can these businesses ensure they are able to thrive – and become a little bigger than small?
Know your niche market
The first thing to note is that being niche can be a good strategy. While larger, diversified RTOs can offer more course options and target more revenue, the value proposition offered by niche providers is they can be real experts in their specialist industry disciplines. Being a big fish – albeit in a small pond – actually means not trying to be everything to everybody. It means narrowing your focus to only what you do well and standing out as a provider that provides true value in your sector.
This means knowing your target market more intimately than competitors. You should understand your distinct niche buyer’s journey and capitalise on that knowledge to nurture and convert more leads into paying students. The key to this is the construction of detailed buyer personas. What age are your students? What are their hopes and ambitions? What are their concerns and pain points, and how can you alleviate them? What types of interaction will they expect along the way?
- Did you know? A recent analysis of the Department of Jobs and Small Business’ Employment Projects Report until 2023 found the number one job growth occupation for VET was for aged and disability carers, with approximately 40% growth in jobs required over five years. Other top opportunities for providers included child carers, waiters, and education aids.
Be different, not the same
The temptation for smaller RTOs is to copy larger providers. While this can be a fine where you are building on the successful strategies of those who have gone before you, one of the keys to niche market growth in the future will be the opposite: to shun being generic in favour of building a modern brand that stands out from the crowd in your niche market. Your students need to be able to clearly identify you and what you offer, rather than being unsure or confused by your offering. This can put niche providers at a certain advantage, in that their message is easier to distill and define.
This means identifying how you’re intrinsically different from competitors. Are you on top of the trends in your industry more than anyone else? Will students have a FOMO (fear of missing out) on your student experience? Is the quality of your teaching staff second-to-none, or do you have an innovative approach to pedagogy? Do you care more than others about student outcomes? Do you have better industry links that could land your students experience and real employment? Clarifying how you’re different can help you follow differences towards a brand identity that resonates.
- Did you know? Reaching out to stakeholders or influencers in your sector can help your brand find your target market. According to statistics from content software firm Hubspot more than 50 percent of internet users now follow an influencer account on social media. The problem is 60 percent of small businesses are unable to track their ROI from social media activities.
Charge based on value
Being a niche provider means you are in a good position to charge based on the value you provide rather than engaging in a race to the bottom. By creating a learning product students come to trust and associate with true expertise and outcomes in your industry sector, niche RTOs can better align their fees with the value and employment opportunities students are actually receiving.
Interestingly, fees and margins on training courses were seen as the least likely source of progress for RTOs in VETtrak’s Voice of VET survey. Only 31 percent of those who saw decreases in revenue in the previous 12 months planned to look to price and margins as a source of profitability growth.
With the average course fee across RTOs at $1,772 (or $2,071 for the private RTO sector) according to responses received in the survey, those providers who are able to differentiate their offering through true strength in their niche may be able to build the brand capital necessary to raise fees in line with value. Reinvesting better margins back into growth can make for a more sustainable future.
- Did you know? The Productivity Commission has singled out a number of reasons for providers charging different fees, even for the same courses. These include ‘training factors’ like class sizes, contact hours and salaries paid to teachers, ‘jurisdictional factors’ like student types and the scale of delivery, as well as ‘policy factors’ – what governments actually allow providers to charge.
Gather the right people
The success of a niche RTO business depends heavily on the quality of teaching and training staff. While branding and marketing can go a long way towards telling the story of your RTO for prospective students, it is the ongoing interactions students have with your staff that establishes an RTO’s reputation over the long-term as a genuine provider of quality niche training.
This requires providers to think carefully about who they are attracting and how. In terms of the ‘who’, RTOs should not only consider recruiting staff with a depth of knowledge and technical skill in their niche, but also those with strong networks that can be leveraged. There’s also the ‘how’. Even smaller niche RTOs should be able to attract top quality staff by combining competitive salaries with things like more flexible work practices, engaging staff in an entrepreneurial vision or purpose, or giving staff a better chance to ‘give back’ through genuine student mentoring. When thinking about possible career paths, incentives like bonuses or even equity for the right fit could propel a business forward.
- Did you know? Recruitment firm Hays has identified flexibility as a ‘Top 10’ employment trend to consider in 2019. With innovative firms trialing things like the four-day work week and the internet making hours and locations more flexible in a range of industries, Hays suggests employers who fail to consider flexible working in their offering to new and existing employees may face difficulties into the future attracting and retaining the good quality staff.
Market to X, Y and Z
It only takes a moment looking around on a train or bus to see how digitally connected we all are, and how important mobile technology, in particular, should be to any marketing strategy. Niche education providers looking to connect with a particular target market – often of the Gen Y or Z variety – should see this embrace of digital as a genuine opportunity to put themselves right into the hands of their students. This means not being stuck in the past. Those serious about growth into the future will need to consider factors like a well-built website, strong inbound website content, as well as consistent outbound digital marketing strategies that include social media engagement. With the hyper-connected nature of today’s students, giving them the ability to follow your brand and share stories about your niche offering will be a way to grow your market share in your niche.
- Did you know? 55% of marketers say blog content creation is their top inbound marketing priority according to statistics compiled by Hubspot, with Google now responsible for 94% of total organic search engine traffic online. Over 3 billion people have signed up to a form of social media around the globe, with Facebook used by 79% of all people who were online in 2016. 86% of consumers say they prefer an authentic and honest brand personality on social networks, and only 5% of internet-using adults say they have a lot of trust in the information they get from social media.
Make compliance simple
Compliance is sometimes considered a ‘necessary evil’ by niche providers looking to make headway in growing their businesses. While all but a few bad eggs in this sector have always sought to comply fully with regulation, compliance has at times placed a significant burden on smaller businesses, perhaps even more so than their larger competitors. In VETtrak’s Voice of VET report, 36% of RTO providers identified compliance as their number one administrative or business challenge last year, which made it nearly four times as great a challenge as staffing their business.
The answer is to ensure compliance is systematised and automated as much as possible so you can focus on growing your business and delivering value to students. Rather than getting bogged down in paperwork, box-ticking and red tape, outsourcing tasks like compliance to a student management system like VETtrak frees up time for educators. It also allows them to realise other value-adds of software designed for their market alone, so they can focus on growing into the future.
- Did you know? Compliance reporting (54%) and enrolment records management (52%) are the two top drivers of student management system choice among RTOs, according to VETtrak’s Voice of VET report. This is followed by Awards / Certificates / SOA record management (40%), security (33%), and management reporting (31%). Enrolment records management is the functionality that is most valued by RTOs (37%), followed by compliance reporting (29%). Access the Voice of VET report for more.
Look ahead, not behind
Students of today and tomorrow expect niche providers to be leading thinkers and guides in their chosen education niche. Rather than getting too caught up with working ‘in the business’ – the day-to-day business management, the compliance, the marketing and the teaching and training that is all very necessary to sustaining and growing an RTO – providers will increasingly need to work ‘on the business’ by getting on top and ahead of the expected trends in their industry over coming years, while guiding students themselves through these changes. By demonstrating an understanding of what’s on the horizon and a willingness to change, providers identify themselves to their students as places that will equip them with the necessary skills needed for tomorrow, not just today.
- Did you know? In NCVER’s Fourth Industrial Revolution report released in 2018 VET providers were warned that disruptive technologies were influencing the demand for both technical and soft skills in many occupations, and would lead to some skills being in decline and others in higher demand. While the impact of disruptive technologies on firms were predicted to differ depending on their size, stage of development and their capability and capacity to innovate, there was a consensus tertiary educators needed to adapt towards a labor force that prioritised innovation and creativity.