Thursday, February 08, 2007

Focus on Customer Service and Retention to End Deficits

Ohio University (not THE Ohio State as they say in Columbus) is projecting an $11 million deficit for 2008 due to what is incorrectly labeled as an enrollment problem.

It is a population problem that ended up losing 400-468 more students to attrition or non-transfer-in than was budgeted (using their figures extrapolated out). That means the actual entire attrition number is actually quite a bit higher. Somewhere close to +/-30% of population overall and the 464 is simply above budgeted projected losses.

Enrollment is okay. OU just missed its fall freshman recruitment target by 6 students. They are bringing them in but they are losing them as the year goes along – just like most every other school. They are losing population by not focusing enough on retention.

Let’s look at some figures. By the way, you can plug your schools numbers in as we go along because the OU issue is one we all can learn from. This is especially so because OU has actually diagnosed their own problem but has neither fully used the information nor fully learned from it.

The school is projecting a deficit of somewhere between $6 to $11 million for fiscal 2008 and is considering raising tuition by another 6%. A tuition increase may stave off some fiscal problems for 2008 but it is not the answer.

The answer lies in increasing retention. Let’s look at the numbers.

OU had little trouble attracting applications. In fact, they had almost 3 applicants for every one of the 4,100 freshman openings. The actual show was 4,094 on a budget of 4,100 which would indicates a fairly strong primary desire to attend considering that the show/yield rate was at 38%. But then, something occurs to have over +/-30% leave OU prior to graduation.

Using a 464 student budget shortfall as a base and not even touching the larger attrition number which looks to be in the range of 8,486 students from a total reported population of 28,287, we can quickly see a solution to the forecasted deficit.

Each of the lost students takes $8,727 out of the budget. So that means that the “excessive unbudgeted attrition” costs OU $4,049,328. Add to that the cost of recruiting and processing every student needed to replace that 464 and that equals another $2,442,496. Now, room and board is a revenue item in the budget so at a housing and food cost of $7,839 the lost revenue is perhaps $1,818,648 (working on a 50% housing rate of the 464). So the excess attrition (I’ll talk about this foolish concept of acceptable attrition in a minute) costs OU,

lost tuition $(4,049,328)

replacement costs (2,442,496)

lost housing revenue (1,818,648)

Hit on budget $(8,310,472)

Okay let’s agree that this is not necessarily exact since it could be that all dorm rooms remained full with replacement students and correlating budget figures to other reports from the University may not be exact. And don’t forget that these numbers have nothing to do with the other thousands of drops that were accepted in the budget. And with all that, we are still talking HUGE NUMBERS – DEFICIT ERASING NUMBERS! Not just at OU BUT AT MOST EVERY UNIVERSITY AND COLLEGE.

Imagine what OU and all schools could do with the revenues they could apply to the growth of the school, the freezing and reduction in tuition for students and families, the salaries and benefits of employees, the collections in the library, maintenance and cleanliness of facilities and on and on.

And OU already figured out what is wrong. A Follow-up Study of Involvement Intervention Efforts at Ohio University (Nov 2005) from its Institutional Research Office, found that an early intervention program with identified at-risk freshman cut attrition and increased returns of stepping-out students. Laudable results!

More of the students participating in the early intervention program said they would return (81%) followed by 56 percent of the students in the regular intervention program. Fifty-four percent of students identified in the extra-female minority intervention process said they would return (p.3) The intervention program works. Unfortunately it is only for freshman which we have already said is a sure guarantee for the sophomore retention bubble popping. Intervention and involvement should be in place for all students – even grad students.

Costs too much? Can it cost more than $8,310,472. I don’t think so.

And why do students leave OU, and all other schools? No surprise here. The issues I have been writing about, talking about, training on and trying to get schools to work with. Here is what the report cites as the first self-reported reasons.

Non-returners cited personal reasons for leaving Ohio University, for example having trouble adjusting personally to Ohio University and did not feel they fit in at Ohio University.

Cheers University is where they want to be. Good old CU! Customer Service Principle 1 (if you'd like a copy of the 15 Principles of Good Customer Service in College, click here)

Yes. That is it! Or at least a big part of it when it is success! Give them CU at OU or any U.

At-risk-for-dropping students who were personally contacted and were personally counseled by a person with a name who knew their name and showed he or she cared, tended to stay at higher numbers and return if they left. OU became CU when it showed students it would know them as an individual, a person with a name not just a tuition bill and number. And OU showed then were glad they came.

Other reasons were too far away from home; small town atmosphere. These students also did not feel the attachment to OU a student must have if they are to persevere. OU never became home or provided them a sense of security and comfort. They obviously wanted to get away from OU and go home where they felt welcome if they felt too far away. My guess is that these students never were given enough reason and care once on campus to unpack their emotional suitcases. And remember, these students had chosen OU which had about three applicants for every spot. They felt good about getting in but then wanted out.

Another reason students reported they left was they could not get the degree in their preferred field (poor sales service? Promising more than OU could deliver?) Still poor customer service here.

These are all customer service and retention issues. They can be solved or at least significantly mitigated. OU even has identified a part of the problem now they just need to figure out how to act on that information to create a customer service culture that retains more students and erases deficits

And the concept of acceptable attrition, same as collateral damage I fear. We can plan for it but that does not ever make either one acceptable.

Feel free to contact us at any time on how customer service and retention can help your bottom line. You can discuss this directly with our president, Neal Raisman, by clicking here and emailing or call at 413.219.6939.

No comments: