Are You Doing the Right Training to Win the K-12 Instructional Materials Race?

It’s early spring in Boston, which means it’s marathon time. The 128^th edition of the Boston Marathon is fast approaching for thousands of runners who have been training all winter in preparation for the mid-April race.

In a similar vein, the race to win K-12 districts’ instructional materials sales is upon us. As K-12 providers and their extended sales organizations shift from their winter “jog” to a more concerted spring “sprint”, many are undoubtedly doing so with trepidation. Absent a select set of market segments (e.g., K-5 literacy and core/basal programs in math and ELA), the last couple of years have felt like a steady uphill climb for many. New customer acquisition has gotten more difficult; this year could present similar challenges, particularly for those who have not conducted the right “training” in preparation.

Districts’ post-pandemic solution fatigue and the pending expiration of ESSER adversely impact administrators’ willingness to consider new instructional programs. When married with the staffing shortages gripping many school communities, the risks of adopting – and effectively implementing – a new program increase even further. However, these factors mask a more fundamental structural shift in the instructional materials market that has occurred over the past 10-15 years. Let’s take a quick look back to look forward.

Evolution of the K-12 “Big Four”

When I entered the education “industry” as an analyst in 1999, people talked about the “Big Four” – Harcourt, Houghton Mifflin, McGraw-Hill, and Pearson. This quartet formed the K-12 publishing oligopoly; they possessed a level of product scale and sales and distribution reach none could match. A handful of players tried to break in. For example, Cengage had a competitive high school product portfolio and a market-leading database business in Gale, while Scholastic was a leading literacy player across institutional and consumer channels with its own K-5 basal ELA program. However, the resources required to compete (and sell) stymied most, and $200-250 million in instructional materials revenue was generally the base of an insurmountable hill for those in the race.

Today, the Big Four is no more. Houghton-Mifflin and Harcourt merged – with the PMI effort led by my partner Gates Bryant – to form HMH. In February 2019 Pearson divested its K-12 textbook business for $25 million in cash and a $225 million vendor note. Pearson then became Savvas Learning. Only McGraw-Hill retained its name, but it too had found itself subject to a split back in 2013, when it was sold out of publicly traded McGraw-Hill Companies to a private equity firm.

Most importantly, however, HMH, Savvas, and McGraw-Hill’s increasingly found that they were no longer setting the pace at the front of the K-12 instructional materials race. A growing cohort of sponsor-backed firms, generally unencumbered by legacy basal programs, gave chase and show no signs of slowing down. Amplify, Cambium Learning, Curriculum Associates, Imagine Learning, and Renaissance are all selling K-12 curriculum programs – predominantly K-8 for all but Imagine – and related assessments and instructional resources and have achieved revenues in excess of $500 million annually. Carnegie Learning, Discovery Education, Edmentum, IXL, and Great Minds, are fast following and striving to push the leaders as well.

The Big Four is now a hard-charging pack of a dozen or more. They all possess the product catalogue, digital experience, and go-to-market muscle to compete effectively in most major subjects, across key grade levels, and in the largest state markets. This leads us back to the “training” instructional materials providers need to be doing to achieve success in this year’s sales (and growth) race.

How Organizations “Train” to Optimize Performance

Annual revenue (or bookings) growth is a function of three key factors – new customer acquisition, existing customer retention (including cross-sell and up-sell performance), and pricing strategy. Each requires its own approach; organizations develop (theoretically) a plan that accounts for each area and invest appropriate time and resources – i.e., the “training” – to accelerate performance.

Today, with more top providers involved in the race to win districts’ instructional materials business, competition is fierce. Winning new customers has become increasingly difficult, absent another competitor’s failure to perform or a newly launched adoption process. In this environment, instructional materials providers will inevitably continue to develop their new customer acquisition capabilities. However, these efforts won’t be sufficient to win the race.

The smart “runners” have already shifted their training regiments. They have embraced the need to strengthen their customer success muscles. With sizable product portfolios, they are building the routines and muscle memory to facilitate district cross-sell and up-sell efforts among their teams. Similarly, pricing strategies are getting sharpened, enabled by more refined customer segmentation analysis and persona development. A successful end result will be a strong sales and growth performance powered by a more balanced set of inputs and tactics than simply running fast – aka winning new customers.

How to win?

The 2024 instructional materials sales race is on. The annual race has changed significantly, marked by a more robust pack of leading runners. Absent some providers dropping out (highly unlikely), race tactics for most will need to evolve. If you haven’t changed your training program yet, get to it; at Tyton Partners, we’ve got the experience and know-how to coach you through it.