Businessmodel of Babbel

Customer Segments

The Babbel platform is designed to provide general consumers with an accessible, affordable and flexible means through which they can learn a new language.

In 2016 the platform’s premium customer base reached 1 million subscribers, making Babbel a market leader for online language learning. Babbel recently conducted a survey with its users, which found that the platform’s users principally comprise people that wish to learn a new language for the following reasons:

• To communicate better when travelling;
• For general self-improvement;
• To improve or maintain mental fitness;
• Out of cultural interest;
• To refresh existing language skills;
• To further their careers;
• To prepare for living abroad; or
• To communicate better with a partner or family member. Babbel is available to customers worldwide. The top five countries that generate traffic for the Babbel platform are Germany, Brazil, the UK, France and the US.

Value Propositions

Babbel provides value to its customers in the following ways:

• The flexibility and accessibility of its platform, with users able to learn autonomously, at their own pace, and from anywhere through the platform’s mobile and desktop applications;
• The affordability of its platform, with its premium memberships priced competitively for the sector and its provision of free trials for new users;
• Its technology and teaching style, with the platform using an innovative teaching method developed by a professional team of linguists and language experts that is constantly being refined;
• Its range of language courses, with the platform now offering courses in 14 languages, including French, Portuguese, Indonesian and Russian; and
• Its community features, with users able to interact with and support other learners. ### Channels

Babbel operates a website at www.babbel.com, which provides details on the platform’s courses and services. Its homepage also doubles as the login page to its online learning platform, which is available through desktop and mobile browsers. Babbel also offers several mobile applications for Android and iOS, including for iPad and iPod Touch.

Babbel’s website and mobile apps operate as its principal sales channels, with users able to subscribe to the platform’s content directly. The Company uses a variety of marketing channels to attract business, including a range of digital and social media marketing techniques. It also operates its own online magazine, which, as well as providing interesting content regarding language learning more broadly, serves as its own content marketing channel.

Additionally, Babbel operates an affiliate marketing program, with affiliate partners earning commissions on sales made through the Babbel website.

Customer Relationships

Access to the Babbel platform is available on a self-service basis, with customers able to register a user account, make subscription payments and utilise the platform’s learning resources autonomously with no interference from members of the Babbel team.

Babbel provides a range of support services to its customers, including a number of online resources such as FAQs and user guides. It also allows its customers to contact members of its support staff by email so as they are able to receive a personalised response to their queries or concerns.

Babbel also interacts with its customers through various media channels. It publishes press releases and media coverage on its website, and hosts two blogs, one of which is dedicated to technology developments, keeping its customers updated with the Company’s activities. It also operates social media accounts with Facebook, YouTube, Twitter, and Google+, through which customers are able to interact with Babbel directly.

Key Activities

Lesson Nine GmbH, operating under the business name Babbel, is engaged in the development and implementation of an online language learning platform.

It offers online, self-paced courses that enable its users to learn 14 different languages – Spanish, English, German, Italian, French, Portuguese, Swedish, Turkish, Dutch, Polish, Indonesian, Norwegian, Danish, and Russian – through various educational methods, primarily a range of interactive lessons.

In addition to its desktop and mobile websites, Babbel’s platform is available on iOS and Android systems, allowing users to learn on the go. Babbel also compiles and publishes an online magazine and is engaged in a variety of digital and content marketing activities.

Key Partners

Babbel partners with a number of companies in the development and operation of its online language learning platform. This includes technology and software development partners that assist the Company in the creation and operation of its platform, marketing and advertising partners that extend the Company’s marketing reach, and language partners which contribute to the Company’s educational content.

Babbel continues to depends to a large degree on funds provided by its financial and investment partners. The Company completed its most recent round of formal funding in 2015, raising $22 million from investors including Scottish Equity Partners, Nokia Growth Partners, VC Fonds Technologie Berlin and IBB Beteiligungsgesellschaft.

Key Resources

Babbel’s key resources are its technology and its software platform, its IT infrastructure, its online learning content, its partnerships and its personnel – notably those working in content and software development.

Searches of records published by the US Patent and Trademark Office and the German Patent and Trademark Office identified no patent applications filed in the name of Babbel or Lesson Nine.

Cost Structure

Babbel incurs costs in relation to the development of its online platform and its online learning courses, the maintenance of its IT infrastructure – including a network of servers and data centres, the management of its partnerships, and the retention of its personnel.

The Company accrues substantial personnel costs, paying the salaries and benefits for its workforce of around 400 permanent and freelance employees. Babbel must also pay fees relating to the operation of its offices, including rent and utilities, and recently incurred set-up costs for its new office in New York.

Revenue Streams

Babbel derives its revenue from subscription fees paid by customers for its premium language-learning content. The Company offers four payment plans for its online subscriptions. Users are able to pay $12.99 per month paid on a monthly basis, $8.95 per month paid every three months, $7.45 per month paid every six months, or $6.95 per month paid annually for full access to the Babbel platform and its content.

Babbel remains a privately-owned company and as such does not publish its financial performance figures. The Company is reported to have around 1 million paying customers, conservatively putting Babbel’s annual revenue in the tens of millions of dollars. Reports in 2013 stated that Babbel is growing its annual revenue by around 200% each year.