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 

When it comes to achieving success, there's no shortcut to the top. And this is precisely the lesson that Babbel Live, the online language-learning platform, learned through their journey to success. Their story is one of perseverance, trial-and-error, and ultimately, finding the right product-market fit.

The 1st attempt - development errors

The first attempt by Babbel Live's project team involved building everything from scratch - video call feature, teacher interface, and a recommendation system. However, the project turned out to be an enormous undertaking, hindering the team's ability to iterate effectively and get to their minimum viable product (MVP) quickly.

The 2nd attempt - a challenging product proposition

For the second attempt, the team adopted a leaner product development approach, relying on third-party integration for everything possible. But the product proposition they chose - private one-on-one tutoring - turned out to be too niche, making it difficult for them to create a critical mass of users necessary to move to the next step.

The 3rd attempt - the perseverance finally pays off

The team persevered, pivoting their product proposition to group classes, which turned out to be more cost-effective for consumers and had better unit economics for the brand. They also integrated out-of-the-shelf solutions for video, scheduling, and management of freelancers, which allowed them to focus on providing an exceptional classroom experience. And this is what ultimately brought Babbel Live 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 indicated that the market was hungry for such a solution, provided a baseline for pricing, and allowed them to compare different marketing strategies.

So, they decided to differentiate themselves from the competition by implementing the following strategies:

Embrace the “startup attitude”

Babbel's team had a "do whatever it takes" attitude that separated them from their competitors. They communicated openly with engineers, designers, and product managers, acknowledging the time limit but committing to a nine-month mission to prove their capability. This approach allowed everyone to work together outside of their roles.

Teachers, not machines

Babbel stands out from other language learning apps as they invest in teachers. They ensure that their multilingual language experts receive continuous training and have access to the necessary resources to create high-quality courses.

Unlimited access 

Unlike other language learning apps, Babbel does not restrict content based on subscription options. All learners with short or long-term commitments have access to the entire Babbel ecosystem, including lessons, podcasts, games, and materials on their preferred device, even when offline.

Keep data handy 

From the beginning, Babbel Live had a product analyst and a UX researcher working to answer fundamental questions such as whether the product could be built, whether people wanted it, and whether they were willing to pay for it. Babbel believes in keeping track of data to understand product performance and retention.

Simplifying the proposition

After speaking with people who had gone through the entire acquisition process, Babbel realized that learners were overwhelmed when they reached the price page. To make the decision-making process more accessible, Babbel simplified the choice by offering unlimited access to the product and classes, and users were only asked to choose a duration.

No Free Trial

Babbel's strategy is "No Free Trial." While free trials work well for short-term subscriptions, they can dilute the conversion for premium products. Language learners need time to experience the product fully and realize the value of paying for a longer commitment. Therefore, Babbel does not offer a free trial, as it could motivate users to cancel their subscription before understanding the product's true 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

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