When sales at Hees Ham’s company started to fall during the 2008-09 financial crisis, his initial instinct was not to overreact. But as the decline continued month after month, says Ham, a partner at ExitCertified in Ottawa, “we realized it was a make or break moment.”
The company had thrived since launching in 2001 by delivering traditional classroom-based IT training to corporate employees. But now clients were trimming training budgets and slashing travel budgets that funded sending employees to ExitCertified’s nine training centres across North America. Shrinking average class sizes wiped out the firm’s margins. And insufficient enrolment forced ExitCertified to cancel more classes, frustrating clients who had registered employees in these classes.
The company considered tucking its tail between its legs and closing some of its training centres. But in the end it opted to go for growth. ExitCertified set out to become a leader in its sector by linking its training centres via videoconference so an instructor in one centre could teach students across several centres. This would generate the critical mass of enrolees per class needed to revive the firm’s bottom line.
But this idea would fly only if the virtual training were as good as the in-classroom sort—and, admits Ham, “we weren’t sure we could provide a similar experience.”
ExitCertified decided to gamble that it would find a way. Doing so required answering the two key questions facing any firm that responds to tough times by developing more cost-effective ways to deliver its product: How can you ensure the new method will yield comparable customer satisfaction? And how can you get clients to give it a try?
ExitCertified answered these questions so well that it not only staved off bankruptcy but triggered sustained export-driven growth. Foreign sales have surged from 33% of revenue in 2008 to 59% today. And once ExitCertified had mastered leveraging technology to deliver its product in a new way, it took this idea even further, expanding beyond North America to attract students from almost 25 countries.
ExitCertified’s strategy grew out of the analysis it did before launching a new delivery method. First, it examined what’s so wonderful about classes in classrooms, and concluded that the essential element is the intense interaction (at least in good classes) among instructor and students. Then it considered how to use technology to facilitate interaction among students not under the same roof, and concluded that the essential element is high-definition video.
Building its system around video gave ExitCertified an edge over rival IT training firms that opted for audio-based systems limiting students to viewing slides on their computer and interacting via phone and chat. “VIdeo is crucial to having strong engagement,” says Ham. “It’s very difficult for students to stay engaged through 30 or 40 hours of a course with just audio.”
ExitCertified began phase one of its reinvention in 2009. It installed twin 52-inch flat-screen TVs and HD videocams in each classroom so students in various training centres could talk easily with the instructor and each other. “A student didn’t have to type a question into a chat window,” says Ham. “He could simply put up his hand and the instructor would see him on the screen.”
Still, it wasn’t enough to come up with a new method; ExitCertified also needed client buy-in. Ham says the firm intensively trained its sales reps in the new system so they could take customers through demos showing the power of HD video. Reps also won over clients by explaining that linking classrooms by video would make the annoyance of cancelled classes far less common. And it reassured customers by getting Oracle, IBM, SAP and other vendors of the products that ExitCertified provides training on to give their blessing to its linked-classrooms courses.
Yet what about clients who demanded proof that virtual training isn’t inferior? “The truth was we did think there would be a very nominal degradation in quality,” says Ham. “Yet when we tracked course evaluations, the quality scores were exactly the same for whatever way the students took the classes, which is amazing.”
ExitCertified launched phase two of its reinvention in early 2013, couriering kits with headsets and webcams to students anywhere in the world so they could log in to a class from work or home. Overseas business has grown to 2% of revenue. That doesn’t sound like much, but it’s still very early days. Ham says the firm was amazed by how quickly its overseas business has grown—so fast that ExitCertified doesn’t even have a strategy to spur further growth in this market.
But two things are already clear. One is that overseas business contributes disproportionately to profits, because with low variable costs you make a good margin by enrolling a few more students in a class. The other is that central to ExitCertified’s overseas strategy will be the same commitment it made in North America: that the quality of instruction in its virtual environment will equal that in its traditional classrooms.
“We’re going to invest more in customer service for remote students,” says Ham. “We want to make sure that those folks we never get to see physically will have as good an experience as those who come in to our training centres.”