This weekend Michael Schutzler did an experiment with Livemocha’s new Active Courses. He put them on the hottest ecommerce platform at the moment which is of course Groupon.
People in the Seattle area got 50% off the regular subscription price, hence $75 USD instead of $149.95 for a one year subscription. And apparently the courses sold like sliced bread, closing at 534 courses.
Groupon usually takes a 50% cut on the sold items and therefore Livemocha probably generated a revenue of $20.025 USD in 24 hours. Not bad for an experiment.
Of course, the deal was promoted over the internet so there will have been people from other cities or even other countries who bought one or more coupons but Livemocha stated clearly that everyone is invited to profit from the 50% savings, no matter if you are a new or old Livemocha user. You could buy coupons for different courses or your friends, you just are not allowed to use multiple coupons on one course.
The general idea of Groupon is to reach new customers via a deal that is so compelling people have no choice but trying your service out. The savings are usually between 50% to 75%, sometimes even more. This new way of advertisement is very popular amongst restaurants and last week, after I had returned from Luxembourg I used one of my Groupons to try out a Sushi place in Rennes, for example.
What is in for Livemocha? The cost of the product is very low, now that it is finished and available on the service. There are no huge extra costs involved in delivering the experience. Restaurants have to calculate the price of the ingredients, Livemocha only has to calculate some server / traffic costs and the cut they have to hand out to their partner Collins, I suppose.
I think, the idea behind this promotion is to get people into one language and, if they like the experience, get them to buy the next language course at full price. The future will show if this will work out but the experiment itself went really well from my perspective.
The minimum number was 30 orders for this deal to get valid and, as I said above, 534 were sold at the end of the day. Another nice thing is that even if people don’t use their Groupon code, Livemocha still has made the money.
Balancing those promotions out without implementing this price of $75 as a new de facto price of the Active Courses will be the most tricky part. As Livemocha is an internet service I can basically wait for a deal in any city (as I don’t think this will be the last deal) and buy the next language course for the reduced price. Quite the same thing that happened to the Myngle Boost which has developed into an ever ongoing promotion and concluded in the mindset of students “Why buy now for the full price, there will be another promotion next month.” I feel like society meanwhile got conditioned to these regular price drops, especially popular in times of economic downturn and I ask myself whether actually people’s mindsets are changing towards the feeling of having somewhat a right for price cuts.
But in the end it is really great to see that people are willing to spend money on online language courses.