How to create a success in a crowded market with Belen Caeiro (Babbel)

From product-led growth to no free trial, find out how Babbel Live differentiated itself from its competitors to succeed in the crowded online tutoring market. This is the 2nd Episode of Subscription League, a podcast brought to you by Purchasely.

Over 10 million app downloads, 18+ months of average user lifespan, and one of the highest-grossing apps in the world - these records prove that Babbel has positioned itself as an industry leader with its unique value proposition and business model.

In our Subscription League podcast episode: How to create and launch a success in a crowded market with Belen Caeiro, we sit down with the VP of Product Management of Babbel Live to talk about the brand's secret to success, plans, and perspective on the winning subscription business approach.

Babbel Live, a virtual classroom launched in 2021

In February 2021, Babbel, a market-leading language learning app, pulled the pendulum of its own industry back to something more old school: face-to-face learning. The official name of this bold move was Babbel Live - a virtual classroom offering live online tutoring classes to small groups. 

Launching a new business branch that challenges the crowded market's status quo was a big bet even for the giant. But the latest addition quickly scaled up, meeting all of its initial expectations with the record of a 300% increase in subscriptions and a 400% increase in revenue from H1. Babbel Live is currently supporting tens of thousands of learners from all corners of the world who are taking part in up to 15,000 classes per month.

No Short cuts 

What is the one pearl of wisdom on success? There are no shortcuts. The untold bona fide success story of Babbel Live rather involves two trial-and-error attempts, then finally inventing the dream product on the 3rd attempt. 

The 1st attempt - development errors

The project team tried to build everything themselves, including a video call feature, a teacher interface, and the integration of a recommendation system throughout the learner's journey. The attempt ended up being a massive undertaking that prevented them from iterating effectively and getting to the first MVP quickly enough.

The 2nd attempt - a challenging product proposition

For the second time around, the team took in a much leaner product development approach involving third-party integration for everything possible to focus on their expertise in the content catalog and the learning journey. But ultimately, the product proposition they chose - private one-on-one tutoring - promised a much smaller market, making it challenging to create a critical mass of users that could help them move into the next step.

The 3rd attempt - the perseverance finally pays off

Babbel pivoted the product proposition to group classes, which are cheaper for the consumers and have better unit economics for the brand. They were also much prepared for integrating out-of-the-shelf solutions for the video, scheduling, and the management of freelancers. With this solid system in place, the brand could focus on offering an outstanding classroom experience, which brought Babbel to where they are today.

What's Their Secret?

At the beginning of the unknown journey, Babbel didn't have a map to get them safely with a guarantee to achieving something so concrete, new, and competitive all at the same time. 

Instead, they had the most straightforward compass pointing them towards one idea: face-to-face learning. 

Even though Babbel has always championed digital language learning since 2007,

• their entire success was based on the self-study concept;

• the digital language tutoring market was already a crowded turf;

• they needed to develop a new revenue generation strategy;

• and ultimately deliver an effective and gratifying platform with one thing they were not used to - a human touch.

Finding difference and opportunity within similarity

From Babbel's point of view, having established competitors was like jumping off the springboard that could actually help them overcome those challenges. It hinted that the market is already hungry for such a solution, suggested the right baseline for pricing, and allowed them to compare different marketing narratives. 

Then, they knew that they just needed to differentiate themselves from the rest.

Here’s what they did to achieve exactly that:

The “startup attitude”

At a fundamental level, the team already had something that differentiated them from its competitors: the "do whatever it takes to get things done" attitude. As a team, they kept a frank dialogue with engineers, designers, and product managers in the sense of not promising that there was no time limit but that they had a nine-month mission to prove or disprove that they could make it happen. This spirit allowed everyone to navigate and strive outside of their roles. 

Teachers, not machines

Compared to other apps, Babbel isn’t as playful: It doesn’t have the game aspect that might make other apps more entertaining. But the brand invests in teachers. Babbel makes sure that their multilingual language experts are consistently trained and have the right resources to handmake quality courses.

Unlimited access 

Babbel doesn't block content based on subscription options. All Babbel learners with short or long commitments have access to the entire Babbel ecosystem: lessons, podcasts, games, and all sorts of materials on a preferred device - even offline.

Keeping data handy 

The project Babbel Live started a team with a product analyst and a UX researcher from the get-go to be able to answer: Can the team build the product? Do people even want the product? Are they willing to pay for it? Babbel believes in keeping track of the data on these questions to understand the product’s performance and retention.

Simplifying the proposition

After interviewing people going through the entire acquisition flow, the team learned that learners face massive cognitive overload when they get to the price page. They had to decide the intensity and duration of commitment to this new product that is actually pricier than they are used to. So they simplified the choice, offering unlimited access to the product and classes and asking them just to choose a duration.

Free trial doesn’t always work

While there are many free trial fans out there, one of Babbel’s strategies is “No free trial.” Free trial can work very well for short-term length subscriptions but dilute the conversion for premium products. For language learners to get to the point where they realize the value of paying for the longer commitment, they need to actually experience the product over a more extended period than the usual free trial period. Otherwise, they can be motivated to cancel their subscription at the end of a free trial before understanding the product's actual value. 

These are some of the exclusive stories and practical advice shared by Belen Caeiro, VP of Product Management of Babbel Live. Belen is also our special guest on the Subscription League podcast episode: How to create and launch a success in a crowded market with Belen Caeiro.

A sneak peek at the episode

On product-led growth

“ I think it's where everyone's going in terms of making sure that you create a healthier, more product-led growth, a growth that can compound on the free assets that you have, which is a critical mass of users, the value of a product, and so on…We're going to be looking at much more organic and product-led growth to make sure that we are balancing how expensive paid marketing channels are getting…I think the companies who are succeeding the most right now are those who are investing in diversifying their acquisition approach and investing in product-led growth…”

On simplifying the acquisition flow

“Here was a huge cognitive overload when they(users) were getting to the price page…They had to decide the intensity and duration of commitment to this new product for something that is actually not 10 euros, a bit more expensive. when we understood that blocker, we came back to design a pricing positioning that would simplify the choice.”

On subscription

 “Subscriptions work very well for short-term length subscriptions, one month or so, and also for this very recurrent, like implementing my life type of products…For premium products, it actually often dilutes your conversion. It gives the user two moments to actually turn out of what they're doing. And the reason for this is not that we're trying to lock you into payment and have you not leave, but it's simply that you cannot experience the full value of the service in just seven days or in just a free trial.”

On data

“We took this approach to attach a metric and a threshold to each and one of those questions and make sure from the beginning that we could measure those things. So data for us was very relevant at the start, even if we didn't have a lot of function. We started a team with a product analyst and a UX researcher from the get-go, even when there wasn't a product manager and a designer just yet.”

On positioning

More about Belen Caeiro

Prior to Babbel, Belen Caeiro led the international roll-out of SoundCloud’s monetization options and was involved in the early-stage development of other online companies in the entertainment and ticketing industries.

Now based in Berlin, Belen is originally from Argentina and lived in Spain, Singapore, the Philippines, the United States, and the Netherlands. She’s a firm believer that learning new languages helps us understand each other and integrate new perspectives into our way of thinking.

Episode Topics at a Glance

• Three attempts, one success
• Product marketing
• Babbel’s unique selling proposition
• Start-up approach 
• Why free-trial doesn’t work for every app
• Simplifying the acquisition flow

How to listen to Subscription League

Go to Subscriptionleague.com or subscribe to our podcast on Apple Podcasts, Google Podcasts, Spotify, Podcast Addict, Amazon Music, or wherever you listen to your podcasts.

Previous episodes:

#1: Phiture - All about Retention with Andy Carvell

HAPPY LISTENING!