Testing markets in Latin America with €500: 3 lessons we learned
In Spring 2022, EdTech startup Kodland eyed Latin America for its further expansion. F1V as an investor helped it select the best markets for the roll-out there and ran an initial marketing test, having a budget of only €500.
Here are three main lessons we've learned from this experience.
#1. Analyze as many markets as you can before running ads
The Kodland online school teaches programming to kids and teens around the globe. It has students in Spain and has a call center serviced in Spanish from Argentina. Most of Latin America, however, don’t know about the school and it seemed like a good market to expand to.
There are 18 Spanish-speaking countries in Latin America. In each, we analyzed:
Their population, urbanization, GDP per capita and purchasing power.
The internet penetration rate, online shopping statistics, desktop vs mobile internet usage and video streaming statistics.
Cultural and linguistic features: closeness to standard Spanish and cultural influences on family-school communication.
The countries that seemed the most promising for the first product testing were Chile, Peru, Colombia, and Mexico. The language in the last three countries is closer to the standard Spanish; these countries have high internet penetration rates; their population predominantly uses desktops and is more apt to studying online.
Peru, in particular, has been one of the fastest-growing economies in the region in recent years. Nudging children to pursue better education is essential to family culture in this country.
#2. Do soft launch to gather more data, first leads
F1V led the soft launch in Peru, Mexico and Colombia, while Kodland tested Chile. Our funnel started with Facebook ads with quizzes and led to a free trial lesson.
On Facebook, we tested targeting by interests, user behavior and geolocation (we targeted the largest and most developed cities). Broader targeting doesn't always mean that we can get cheaper leads, and Peru proved this. Its capital Lima brought us better and cheaper leads than the whole country.
The targeted audience was led to a quiz that served two functions: to win these users over and collect their contacts. The quiz also helped eliminate those who wouldn’t buy the courses.
In the quiz, we asked about the speed of Wi-Fi and availability of a PC. Those who didn't have the necessary resources were eliminated, and we didn't spend call center resources on calling them.
Together with Kodland, we would check the marketing performance of ads running in each country on a weekly basis. The kye factors of our success—as we saw it—were led quality, cost per lead and conversion. After the first results, the sales department would further qualify leads and sales.
#3. Support all popular payment methods
Our team additionally researched payment methods in selected countries. In Latin America, apart from bank cards with international payment systems like Visa and MasterCard, people use local payment systems and vouchers and pay in cash.
Our team realized that the best option would be to either work with a local payment system or with an international one that cooperates with the local ones and supports the most common payment methods in the region.
People in Latin America are also used to buying goods and services through installment payments. Considering this option for clients and connecting it when fully entering this market would be helpful.
Results and plans
Our marketing team has worked with Kodland for almost three months. We researched the market in April and were running ad campaigns from May to June.
In two weeks and with a budget of 500 euros, we were able to prove the potential of Peru and Colombia for rolling out the Kodland online school. The cost of a trial lesson was $2-3. Chile also showed promising results for the Kodland team.
Judging by key metrics, Mexico didn't advance further at that point. As a result, at the moment the Kodland team is working to ensure that leads reach a trial lesson and start paying for services in three new countries: Chile, Peru and Colombia.