With student discounts from major tech companies all the rage–back-to-school offers are active until September from the likes of Microsoft (free Xbox!) and Apple ($100 back!)–we spoke with Atle Skalleberg, CEO of student discounts site StudentUniverse. StudentUniverse recently expanded the deals it offers from travel into other sectors; buying a MacBook through the site will save you–if you’re a student–an extra 3% over Apple’s student rate. Skalleberg tells Fast Company why students are among the most misunderstood, and most important, potential customers for your business.
FAST COMPANY: What’s your pitch on StudentUniverse?
ATLE SKALLEBERG: Students have different needs than the general population. There’s a really solid need for price differentiation. Our goal is to be advocates for student discounts and better terms.
Why are movie theaters the only ones that seem to get this?
I think there are several brands that have done a good job at student discounting. Apple’s done a very good job. They figured out early that educational discounts are a way to get early adopters, tech-savvy users, to use their products. These are future business leaders who are more likely to become loyal customers.
When I go to a café in New York, just about every young person has a MacBook or iPhone. To what extent is that success a result of student discounting?
Apple’s success has multiple factors, everything from product design to hardware and software integration, and so on. As far as student discounting goes, it’s probably close to the best in its class. A few years ago, Dell was outselling Apple in every classroom. Now more than half of all students plan for their next computer to be a Mac.
At the same time I can see a business arguing that it shouldn’t offer different prices for the same services or products. Do you pitch partners by telling them this is a “loss leader” of sorts–take a slimmer margin now, reap the profits later?
We don’t necessarily use the term loss leader. It’s all about segmentation: you shouldn’t talk the same way you do to a 60-year-old in Florida as you do to a 25-year-old in Boston. One thing that’s unique to the student segment is that it’s socially acceptable to price differently. If you’re sitting next to a student on a plane and the student says he’s going to Paris to study abroad and paid $80 less, that’s fine. It’s a longstanding marketing tactic that most people are familiar and comfortable with.
I find it so interesting that Netflix charges the same amount for someone who watches two movies a month as someone who watches two a day. Do you think there should be more differentiation in pricing, generally?
Absolutely, for some brands. Airlines have floors of people running pricing. You can argue that’s good or bad, that they’ve created an opaque and weird situation, that people don’t really know what to expect. But with e-commerce booming, there’s more information, and with that data comes the opportunity to run smarter pricing departments. A lot of things shouldn’t cost the same for everyone: they should be based on time of usage, when you use it, your status within that service, and so forth.
How do you market to students?
Seventy-five percent or more of our marketing happens online. The usual suspects: SEO, paid search. We have quite a few search partners. For instance Kayak gets 100 million travel queries per month, and we have an API that allows us to integrate our exclusive student discounts into the system, but only when someone browses from a university IP address.
And how do you make money?
Commissions and advertising. Also, on our website, there’s an ability to compare our search results to other sites, and other sites pay us to be a part of that service.
Other sites pay you to display how your prices are lower than theirs?
We just want the students to see what else is out there. They search an average of 4.3 sites before making a purchase decision.
The more you describe student behavior, they sound like a terrifying segment: smart, picky, and broke, but likely to be hugely important in the future.
These guys have extremely well developed bullshit filters. They don’t click on traditional banner ads. They don’t fall for cheap marketing language. They grew up with the web like no other generation. They’ll open four tabs and search for different services and products. And it’s scary unless you know them. Whether you like it or not, these are your future high-end customers. These are your trend-setters. You have to have a solid footprint in that segment.
This interview has been condensed and edited.