Friday, June 27, 2008

Earn and Learn Again Vs Churn and Burn

There have been an increasing number of calls and emails from schools seeking training for their admissions’ departments the past six months. As a consulting group, we are pleased to help out. But I am amazed when we tell the schools they can save money and increase profits by focusing on retention.

“Retention! No, we can solve all our problems if we enroll more students”.

But they can’t enroll more students. That’s why they call us. But then they don’t listen. They still focus on a churn and burn approach. Enroll them. Bring them in. Greet them at the front door and wave bye to them and your revenue as they flee out the back. As a result, schools continue to have problems meeting revenue and mission goals.

Let’s look at the realities. If an admissions department enrolls 50 students on Monday but only 25 show for the first day of classes, how many students were enrolled? 25. Yet you paid to have all 50 recruited and processed at an average cost of $5,640 each. That means an immediate loss of $141,000. This loss is partially from inappropriate sales technique but mainly from not focusing on retention from day one.

The fuller loss can be easily calculated by multiplying the 25 students times your annualized tuition as discussed in my new book Customer Service Factors and the Cost of Attrition. If the school’s annualized tuition is $12,000, that means an additional $300,000 lost. Just for one start. If there are six starts, total attrition losses could be $2.646,000. For most schools recapturing some on that $2M-plus would be good. That is why we are so busy helping schools on retention.

When I was the Chancellor of a proprietary career college the truth was that we seldom hit our admission goals. Competition was increasing. The available market was starting to shrink due to competition and costs. Tuition went up every year and we were about to hit a price point at which the ROI would be questioned more and more by potential students and their families/buying committees. We would soon hit that point at which we were pricing ourselves beyond our target market. Yet admission goals were raised by corporate for every single start. The goals were raised even though the school did not hit its earlier goals. A guaranteed way to assure failure financial if we focused on new enrollment alone. But we didn’t.

I realized the most important number was not new students but total population. Money was made if we kept population. So we began to focus on retention.

Sure we kept working at improving our admission approaches and tried to change the sales methods to adapt to the actual mindset of potential students rather than that of the admissions rep. For example, they seemed to think they should keep talking and dumping more and more information on the potential student’s head as if they were an educational landfill. Sooner or later, the student would agree to fill out an application just to shut them up I think. Applications could be up but real enrollments, those who showed for classes and paid tuition, not so much.

We brought in the top sales coach in the world, Stephan Schiffman and used his excellent books that lead to sales success. We also tried re-aligning staff to focus on strengths such as setting appointments and closing sales. But a hallmark of churn and burn is the comfort in failing; to keep doing the same thing that isn’t working. So the admission’s team went back to its losing ways each and every time with the blessings of regional admission’s directors who only cared about admissions of course.

But I hate failing so we hired a student retention group. But to illustrate the inability of churn and burn-oriented groups to change to succeed, I was told by I could not use the title “Vice President for Retention Services”. That would take away from admissions and make a negative statement. So I hired a VP of Student Services who focused on retention. We also hired intervention counselors whose job was to contact every student at least every other week and any student at risk at least twice a week to see what we could do that was legal, ethical and in the students’ best interests to help out. We did all we could to meet their needs and especially their return on investment concerns and goals.

We also put in place a Rapid Response Retention approach that sought out problems that caused students problems each day and then solved them ASAP so the solution could be implemented the next day. The only rule was to determine if the solution was legal, within rules and regulations; ethical and to the benefit of students.

Bottom line – The college did not hit admission numbers but did return a quite solid profit every year based on a retaining students so they could graduate (Oh, for not-for profit schools just slip the term surplus or the phrase fund balance in here. They are the same as profit within a fund accounting system not-for-profit college or university). Students hit there goals and we hit ours. Would anyone refuse that?

By the way, since we offered two and four year degrees, we increased our ability to upsell associate degree students into the BA programs since they were also happier with the school. Again, a win-win for everyone.

So the message here? Admissions is good and necessary but retention really makes the revenue grow.

Move away from failing churn and burn approaches that assure fiscal failure. Focus much more on retention and embrace what we call Learn and Earn that we teach schools and is discussed in the upcoming book The Power of Retention: More Cutomer Service in Higher Education. Simply put, there are ways to keep students learning so they graduate and get to their goals while you keep earning.

We are quickly filling up our dates for school opening convocations and workshops in August and September as well as customer service week (Oct6-10). We would like to be able to help you too so please contact us ASAP for a date.

AcademicMAPS has been providing customer service, retention and research training and solutions to colleges, universities and career colleges in the US, Canada, and Europe as well as to businesses that seek to work with them since 1999. Clients range from small rural schools to major urban universities and corporations. Its services range from campus customer service audits, workshops, training, presentations, institutional studies and surveys to research on customer service and retention. AcademicMAPS prides itself on its record of success for its clients and students who are aided through the firm’s 413.219.6939

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