Are Test Prep Companies Doomed?

In the test prep market today, we are seeing more and more smaller local companies coming into the market and compete with those big-name companies that have been around for a long time.  At the same time, the more established international companies like Kaplan and Princeton Review are facing financial troubles.  I have worked for Kaplan HK for more than 15 years and have also worked for Princeton Review HK for a short period.  So, I understand their operations and business model very well.  These are global companies with local franchises, but do they offer anything different or superior?  Will they be able to survive a market, that is now very saturated and very competitive?  Some clues to this question have come about recently: the local franchises of Princeton Review and Kaplan are shutting down their operations because of lack of profit.  The reasons are that these companies have failed to adapt to the changed market conditions.

<1> Propriety Knowledge and Expertise. Some people think these big-name companies possess proprietary knowledge about the tests that others don’t have.  This may be true some years ago, but today it is no longer true.  In the old days (1970’s and 1980’s), the College Board (designer of the SAT test) did not disclose any information or questions about their tests to the public.  Therefore, what Kaplan did was to send many people to take the SAT tests and find out what they are testing.  As a result, they are able to publish books and design courses that are as close to the SAT test as possible.  Therefore, at that time, they have a competitive edge that others don’t have and brought about the rise of Kaplan as the authority in these tests.  But times have changed.  Starting about 15 years ago, the College Board started to disclose their test questions and published its own Official Guides to the tests.  And the power dynamics have shifted dramatically and the playing field has been levelled.  Anyone with an official guide knows as much about the test as any Kaplan or Princeton Review.  Therefore, cracking the test becomes everybody’s skill to develop; it no longer relies proprietary information.  After this, we saw many smaller local companies sprouting up in the test prep market.  But do these companies have any proprietary information that others don’t have?  The answer is again NO.  They are just as good or as bad as everybody else.

<2> Highly Trained Tutors.  This again is another myth.  Many test prep companies advertise that their trainers are qualified, certified, and have undergone some internal rigorous training before they are assigned to teach students.  As a person who has been teaching in these organizations for more than 15 years, this could not be further from the truth.  When I first joined Kaplan many years ago, I was given zero training.  Yes, you read it correctly: zero.  It was just a sink-or-swim situation.  You are given the Kaplan books and there you go.  I think a hair-dresser at QB House has undergone more training than I have at Kaplan.  As far as certification is concerned, I know of no independent third parties that certify test prep trainers. Furthermore, most companies see the test prep business as a cash cow, i.e. they extract as much cash from it as possible without putting in much investment of their own.  Therefore, they cut corners by hiring fresh graduates with very little working experience.  The tutors in turn, see the job, which is mostly freelance, as an income to sustain them until they find a better permanent position.  Therefore, the turnover rate for these tutors is very high.  They never get enough experience to fully develop a deep understanding of the test, much less how to crack the test.  They give out advice that are commonly known or repeated in the most common books.  Advice that I would say do not work unless you are very desperate.  Just last week, I got into an SAT webinar from one of the local test prep companies.  The tutors parrot the techniques that Kaplan published twenty years ago and cannot tell the difference between strategy and tactic (technique).

<3> Trust and Guarantees. Many of these companies are well-established and they project an image of trust.  Just like Kaplan, they have been in the test prep business for more than 80 years.  What can go wrong with that?  Well, the Kaplan test prep business in Hong Kong has just been closed down.  And before they close down, they never inform their on-going students.  That’s what can go wrong: misplaced trust.  As far as guarantees are concerned, they can come up with marketing gimmicks like score guarantee of 1450, or some other kind of satisfaction guaranteed.  But if you look at the fine print, the score guarantee of 1450 only applies to students who come in and already achieved a score of 1350.  And the satisfaction guarantee is that if you are not satisfied at the end of the course, it is not your money back.  It’s that you can retake their whole course AGAIN.  Imagine if you would like to sit through the whole SAT course again, going the same materials that you have gone through previously.  This is probably worse than no guarantee at all.

As you can see, the test prep market is in a sorry state, but that is the truth.  They are not serving their customers and deserved to be closed down.  The business model has changed and they have not changed with the times.  Now that the power has shifted towards all of us, we need to come up with a better business model such that we, freelancers, can go forward to provide quality service and excellent results for our customers.

AI (Copilot) Summary:

The test preparation market is undergoing significant transformations, marked by the emergence of smaller local companies and the financial struggles of established entities such as Kaplan and Princeton Review. This shift is largely due to the inability of these larger companies to adapt to a competitive environment and evolving market conditions.

• Decline in Proprietary Knowledge: The competitive advantage once held by major companies has diminished as the College Board began disclosing test materials, enabling smaller companies to offer comparable services without unique insights.

• Quality of Tutors: Many test preparation companies assert that they employ highly trained tutors; however, the training provided is often inadequate, resulting in high turnover and a lack of deep understanding of test strategies. Consequently, tutors frequently offer outdated or ineffective advice.

• Trust and Guarantees: Established companies like Kaplan project an image of trust due to their long-standing presence in the market. However, this trust can be misplaced, as evidenced by the sudden closure of Kaplan's test prep business in Hong Kong without prior notice to ongoing students. Additionally, the guarantees offered by these companies, such as score guarantees or satisfaction guarantees, often come with fine print that limits their effectiveness. For example, a score guarantee may only apply to students who have already achieved a certain score, and a satisfaction guarantee may only allow students to retake the course rather than receive a refund.