Friday, October 10, 2008

Colleges Lose Billions of Dollars But You Don't Have To.....

32.6% of college students will drop out of colleges, universities, community colleges and career colleges before the year ends and take $136 billion out of higher education at a time when academic budgets are already feeling the hard slap of the economy. This also means that the tax payers have lost most of their investment in future college graduates and a stronger economy since most of the first money in is from federal and state funding.

Your school may only lose a few 100,000, maybe a million or two, or three…. What will that translate to? Cuts, jobs lost, equipment canceled, salary freezes, benefit reductions, release time gone, larger classes, fewer sections, more deferred maintenance,,, general morale shot. But it does not have to be.
The exact amount that your school will lose can be easily calculated. Just use Customer Service Factor 1 which calculates dollars lost due to attrition. (The following is excerpted from my new book The Power of Retention: More Customer Service in Higher Education)
CSF1 = [(P X A= SL) X T]
In the formula, P represents the total school population; not just the starting fall freshman number. Most schools use the fall incoming freshmen number and that is an error. The assumption is that attrition occurs most in the first six weeks of the freshman year. That may have some validity for the freshman year but the reality is that students are leaving colleges and universities in any one of the average six-plus years of a four-year degree and in the four-plus average years of a two-year degree. Students leave a school throughout their experience at the college. In fact, some schools are beginning to realize this and worry about the sophomore bubble. But they really need to worry about the super soph sluff, the rising junior jilt, the junior jump, super junior split, the fourth year flee and so on. Every year, every semester, in fact every day is a chance for a student to drop out. Colleges need to be concerned with every student every day of their attendance, for it could be his or her last. So we look at the total population.

Annualized tuition is the number a school should use to figure its real attrition. Not the retention between the first and second semester or the freshman and sophomore years which are very popular ones. That leaves out all the students who already dropped out before the end of the second term or semester. That number fudges failure. For instance, if a college began a year with 100 new freshman and 99 left in week one but the remaining student stayed the whole year and returned for a sophomore year, the freshman to sophomore percentage would be 100%.

In CSF1, A equals attrition. Again not just from freshman but an annualized attrition rate. And this rate is to include ALL students who leave for any reason. It does not matter if the student says he or she will be back. They are not in the population bringing in revenue until they actually do return. If they pay a place holding fee, that does not count them as a student until they are actually back in classes.

Fudge with the numbers if you have a need for delusion or are insecure, unethical or want to keep the Board feeling better, but when you use the formulas, be fully honest. It will help you understand why the budget is not working or may suddenly implode. No one likes surprises, especially ones that have parentheses around them in the budget and lead to freezes, cuts and the like. Using the formulas honestly can help forecast a reality to avoid surprises and initiate work on retaining students to maintain fiscal and operating health.

SL stands for students lost annually from total population and revenue production. And T equals annual tuition at the school.
So here is what showed up when we analyzed CSF1 for Mammon University. You may know it. Its motto is Omnes Por Pecunia. Anything for a Buck.

Its total population was 500 students
Annualized attrition was at 39.6%

So SL (students lost annually) was 198.

Times an annual tuition of $13,000.

So, the formula becomes:
[(500 x 39.6% = 198) x $13,000] =
a revenue loss of ($2,574,000)

To carry this forward, we can plug in other numbers and see how an increase in retention could add to the bottom line and thus the ability to pay for full time faculty, staff, their benefits, increases for adjuncts, instructional equipment, tutors, research release, new curricula and programs, maintenance, and so on. All those pesky costs that make a college or university better.

If attrition dropped by 5% for this school, and we substitute 5% increased retention for attrition percentage in the formula.
CSF1 = [(500 x 5% = 25) x 13,000] = $325,000 more revenue.

Plug your school’s numbers in, and see how increasing retention affects your budget and instructional strength while attrition will sap the ability to meet budget and mission. from The Power of Retention: More Customer Service in Higher Education
Most of the billions of dollars, lost futures, economic growth and tax revenues can be avoided. All your college needs to do is engage is some real academic customer service. Yes, that’s right. ACADEMIC CUSTOMER SERVICE. Yup! Treating students as if they really do matter. Like they're your clients. That’s Academic customer service starting with as strong a focus and effort on retaining students as enrolling them in the first place. It costs your school at least $5,640 to recruit a student. Why lose them by not expending some inexpensive time and about $25-50 a student to keep them.

Hmmmm. A $25 investment against the loss of thousands, maybe millions. If only the Congress could have gotten that good a deal for the economy we’d be in much better shape.
72% of all students leave a school due to weak attention to their real needs as educational clients and customers. It’s not good grades they are really after. That’s an academic misapprehension as wrong-headed as the old “look to your left, look to your right” or “this’d be a great place to work if it weren’t for the students…”

Another delusion is that academic customer service is like the forced smile of an underpaid clerk in a store. College is not a retail store. Here the client can be wrong. Just look at test scores. But students want to feel as if they are valued and important. Students and their families want what the schools have promised but do not always deliver – fair return on significant investments of money, time, emotion and association.

Colleges sell themselves as Cheers U and the students really expect to feel as if they do know their name and really do care about them. They may be Cliff or Norm in real life but want to feel as if they have meaning and value. And it can start with some of the easy how-to’s of academic customer service from signs on campus, facilities through Capt. Kangaroo’s, Smiling like Bill Schaar, telephone protocols, give a name-get a name and other academic service techniques. But it needs to start now if your school wants to save its budget.

“We had hoped we’d improve our retention by 3% but with the help of Dr. Raisman, we increased it by 5%.” Rachel Albert, Provost, University of Maine-Farmington

“Neal led a retreat that initiated customer service and retention as a real focus for us and gave us a clear plan. Then he followed up with presentations and workshops that kicked us all into high gear. We recommend with no reservations; just success.” Susan Mesheau, Executive Director U First: Integrated Recruitment & Retention University of New Brunswick

“Thank you so much for the wonderful workshop at Lincoln Technical Institute. It served to re-center ideas in a great way. I perceived it to be a morale booster, breath of fresh air, and a burst of passion.” Shelly S, Lincoln Technical Institute

AcademicMAPS has been providing customer service, retention, enrollment 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 services.

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