Childs Pass pivoted from a ‘ClassPass for kid activities’ model to help SMEs in the sector manage their bookings

- August 3, 2016 4 MIN READ

Ensuring children are doing enough extracurriculars to help them grow and develop – after first choosing and figuring out which activities they actually enjoy – can be a difficult task. What’s more, it’s expensive, which is why Australian startup Childs Pass originally started with a vision to make it cheaper by launching the ClassPass for children’s activities, helping parents easily find and pay for things for their kids to do.

The idea came to cofounders Matt Dibb and Simon Heikkila from simply spending time with their families, with both having several nieces and nephews.

“What we couldn’t comprehend however was the amount of time kids spend on iPads and TVs even on the weekend; this is a very different scenario to when we were kids. In light of this we tracked down the route of the problems which was actually in the parents’ ability to located fun and engaging things for their kids to do,” Dibb explained. “We saw the opportunity, so we took it.”

The pair first decided to replicate the ClassPass model for kid activities, though soon figured out it wasn’t the right move; after developing an iOS app prototype and signing up businesses in Brisbane and Sydney, they received pushback on the commercial terms. Many businesses were confused with the model, and couldn’t understand the benefits of a subscription-based product for consumers.

Among the challenges, Dibb explained, was the fact that the businesses in the sector all run on different margins and models, making a one size fits all approach difficult when it comes to revenue splits – a dance class where no equipment is needed incurs different costs to an art class which requires a significant amount of supplies, for example. Also problematic, Dibb said, was the fact that many businesses Childs Pass was dealing with were run by mums and dads rather than corporations or franchises.

Interestingly, Class Pass has also faced problems of the sort: subscribers who didn’t use the platform all that much were offsetting the use of frequent users, which was fine until subscribers kept upping their use. To create a more sustainable model Class Pass has created a tiered pricing structure, with unlimited membership upped to $180 in some cities.

For Childs Pass, the pivot came in the startup’s fourth week of launch in public beta, after it realised a few things about the consumer side of the market, too.

“People don’t value subscription models unless they are truly unlimited. There is no way that we were able to offer unlimited access through a childs pass without running ourselves into a hole. In light of this, utilizing a ‘x amount of classes for $x’ approach was the only way. Unfortunately, this isn’t as marketable,” Dibb explained.

What’s more, retention of customers was low due to the fact that families move around, and kids often change their mind about what they like and what they want to do.

“As soon as a parent would identify a great class through our platform, they would stick to it and bypass our service to sign up for a long term course without paying commission. We saw this as a huge problem,” Dibb said.

The startup’s research – “which we should have spent more time on originally,” Dibb said – found a straight booking system was the solution both parties wanted, no subscriptions, contracts, or obligations.

Childs Pass is now targeting franchise businesses and SMEs, after finding 80 percent of kids recreation businesses have no ability for consumers to book their classes or events online, while 60 percent of these businesses have no way to manage the schedule of their day to day operations.

As such, Childs Pass is now a SaaS product, now provides businesses with software to manage their day to day operations and provide their own white label online bookings, and advertise their business through the Childs Pass network.

There are now 3,000 class locations on the service across Australia, Singapore, Dubai, New York, and LA, while the main demographic of parents using the service are mothers between the age of 25 and 38.

“The amount of bookings received greatly depends on where we are actively marketing. There is no doubt that we entered too many cities too quickly due to the massive demand and referrals we were getting from international organisations,” Dibb said.

“In light of this, we are currently concentrating marketing efforts on New York, LA, and Dubai to find a perfect balance of consumer penetration.”

The booking management platform is free for businesses to use, though Childs Pass charges a 20 percent fee for all referrals that come through the app and website.

Childs Pass was funded by Incipient IT, an incubator founded by Dibb working across Australia, Vietnam, and the UAE, as well as a number of seed investors. Now Dibb said the startup is in talks with a number of companies for funding to ramp up its operations.

“In the USA, a listed company called Mind Body trades close to $600m on the NASDAQ and provides old, dated, legacy software for SME’s to control their bookings and process payments. Our plan is to take them on in the B2B space,” Dibb said.

“In conjunction with our efforts to bring in more business through retail consumers, we want to empower SMEs to take control of their day to day operations with a SaaS platform catered specifically for them. The kids recreation industry has had almost no innovation. We will be the only player in the market to offer a solution for these businesses.”

Image: Matt Dibb. Source: Supplied.