Tuesday, September 29, 2009

Retention Rates and Fulfilling Expectations

A reader from Point Loma Nazarene University sent me an email that started this piece on expectations, retention rates and customer service. He wrote

I’ve enjoyed reading your blog and am currently reading your book, The Power of Retention. I have a question about the difference in responses of students in private versus public colleges and universities. Have you found that students who leave private universities do not leave for poor service as frequently as they do in public ones? Our retention rate is much higher than the ones in your examples.

No I don’t. In fact, customer service issues are a stronger reason for leaving a private college since there is usually more investment at stake. To start with, the higher cost of a private college or university over a publicly-assisted college brings with it higher service return demands. There is an interesting situation created by cost in reference to service provided. In all but the top schools, the higher the cost to attend, the higher the expectations.

It is the same as if you were going to an expensive restaurant versus say a McDonalds. In a higher cost eatery or bistro.(don’t you love the way the name of the place often equals overpricing? Joe’s Diner versus Joseph’s Refectory? Also why so many colleges suddenly became universities….Same food just seems more impressive?) In the bistro where a burger, (‘scuse me) ground Angus steak costs $9.90 one expects more meat, more quality and flavor and the burger or ground steak should be served with a side of pom frites fries would not do in a bistro), a side of vegetable perhaps, on nice dishes, cloth table cloth and really “your way.” The customer also expects a nice ambiance and surroundings. That guy on his cell phone on the table to the left is annoying because he is talking loud to make sure the listeners and the world hear him. But you sit on a comfortable chair, place a fresh cloth napkin on your lap and wait for a server to come to you. He or she takes your order and then presents the meal. If the burger is not cooked the way you want, you call the waiter over and expect a replacement to your satisfaction. You also expect that the waiter will be attentive to your needs as well as ask at least once if everything is okay? The waiter should be conscientious but not overly so. The bill is brought and with tax, the food and experience are $11.12 plus a $2 tip and an hour of your time

Now let’s say that in the bistro, the waiter was a bit slow to respond to your request for more water, or the burger was served cool; not hot but not cold enough to really complain. The frites were fine but there were just a few of them. And the vegetable side was slightly overdone broccoli. Was the burger and resta…uh bistro worth it?

At McDonalds, you stand in a line. Wait to shuffle to a counter where an underpaid young person waits for you to come to her. She asks for your order. You say what you want, stand and wait some more. A thin meat puck on a bun wrapped in paper and a small bag of thin fries is handed to you by the inattentive young person who simply says, thanks before turning to the next customer or friend behind the counter. You walk away; sit in a hard chair at a cold Formica topped table wipe your hands with a small, paper napkin feeling just fine with the purchase. People around you are on cell phones, talking a bit loudly and there is a kid running around the place. The bill for the Angus burger and fries - $4.96.

Less than half the cost and likely a greater fulfillment level even if the burger and fries were actually not as good as at the Bistro. Why? Because the expectations were lower for McDonalds and they were fulfilled. The Bistro costs more so more is expected. The Bistro is expected not only to provide a good burger and fried but service equal to the cost as well as an ambience to match. The noise at the Bistro is disturbing; at Mickey’D’s expected. The uncomfortable chairs, well what do you expect? It’s McDonalds. It is anticipated and there are lower expectations anyhow.

Of course the expectation commands a great deal of the fulfillment of it. Even a very negative expectation in service can lead to fulfillment and full ROI such as at a restaurant like Durgin Park in Boston as explained in my book The Power of Retention. (C’mon, You should expect I will at least mention the book which is about to go into a second printing since the first is about sold out!!)

So now to relate it to schools. A more expensive school; produces greater expectations. If one is paying $25,000 a year, that student and family will expect a $25,000 experience. If they get poor service from people at the school and it feels more like “would you like fries with that course?” the feeling of roi fulfillment will be low. If a student can’t get required classes because the number of sections were cut, that’ll feel like “we’re out of burgers tonight even though we advertised them to you. We’ll have them again Fall of next year…” The response is simple “Hey we are paying $25,000 tuition a year. If I wanted to get a $5,000 experience, I’d go to Mickey D U down the road.”

If the university serves decent academic customer service (which again folks is not just smiling and pretending to be nice though that does help) then the expectations might be met. Students will feel and calculate they are receiving return on their investments and complete the daily buying opportunities. They will go to classes and feel a part of the University.

Now to all that there is also difference in demand level based on the investment within a pricing band. A pricing band is a set of schools that are similar in what they offer within a similar price. Bands are often also governed by location since bands are flexible in whom they include. The bandings are often made by buyers much as they would consider another group of possible purchases by cost, i.e, 42 inch flat screen TV’s. from $700 to $1200. (Oh, right schools are not TV’s. Not a product that is decided by price and affordability….. And how did you decide what schools your child could look at? And you could afford?)

Schools within a price band are usually the ones that the customer compares one another too. These are what we can afford and are located where the student and we have a comfort level while offering an Angus burger. The higher the cost of a school within a band, the higher the expectation of academic service and ROI of course. So, if a private college with a $25,000 tuition is in a pricing band of private schools ranging from $12,000 to $28,000 of more or less equal brand value, the investment in the $25,000 is thus considered to be higher than most, but less than others. So students and parents will expect ROI based on cost within band; better than some, less than others.

If a student chooses a lower level cost within the band the expectations will be lower for it. It may not be quite as good as University A but we can afford it. The dorms are older, and it does not have as many major but it’ll give Janie a good start. Expectations will be lower and the odds of meeting them will be higher.

Now should Janie have to drop all of the schools in the band and look at a public school or even a community college, the expectations drop of course but so does the probability of success. The expectations can be met sure. But they have been dropped so low that they are not even really expectations as such. They are just acceptances. The immediate expectation of going to a private school has been replaced with an almost unpalatable alternative. So actually the expectations are that the college will not be able to meet real needs and the original ROI. In the case of community colleges chosen as a low cost alternative to a private school or even a public university. There is no way it can fully meet the expectations of a four year degree. NO WAY! Students who originally decided they wanted the Bistro burger who have to get the McD’s Angus will find it unpalatable. They will leave for the Bistro as soon as is possible. This partially explains why community colleges have such a low retention to completion rate.

There are indeed many cases in which students go to the community college which meets many parts of their multifaceted ROI such as getting the money’s worth within a caring and student-focused environment in which they feel welcome and a part. And there are numerous situations in which students find that the community college provides excellent teaching and learning which are of course central issues to a real educational ROI. They adapt to the McD’s of education and find that they are pleased and might even look forward to it keeping the Bistro burger for a later date. Some even find they don’t want the Bistro burger at all. In these cases their expectations have shifted.

That said, schools that have a clear mission that is embedded in all they do such as a religiously-based school like Point Loma will often have a higher retention than one that is not focused. Point Loma Nazarene University being a religiously-based or focused college thus has an advantage in that its students sought it out for a faith-based reason as well as an educational one Their expectations of ROI are shifted a bit from financial to emotional and affective so the money issue lessens in favor of am I getting the spiritual and personal attachments I expected and need as well as the education? The singular and fulfillment of focus is helping Point Loma

I recently did a customer service for retention audit at a very fine university that had lost its clear focus. It had moved from being one of the finest military-focused educationally universities to trying to accommodate too many focuses. Students came to the University because of the military corps culture. Both the military and civilian students selected this University because they either wanted to focus on military training and education or they felt that a school with an active military training program would be serious and safe.

They were having some retention issues starting in the sophomore year because of the loss of focus. Freshman cadets went through a training regimen that identified them and the University as the militarily-focused school they expected. Then after a full freshman year experience, the military dropped off enough to make too many students question the focus they had signed on for. Our audit pointed out the perception that the University had strayed a bit as well as some other issues. Students did not feel as if they were getting the ROI they had paid for. The President of the University is a solid leader and has been issuing clear statements of focus and purpose that have been very well received by the corps of cadets and the non-military students. That, maintaining excellent teaching and learning as it has over the years and attention to some other overt customer service issues are underway but we believe the most important finally will be the clarification of a unified and singular focus. That will retain many more students than in the past.

Finally, since Point Loma can boast of recognition in US News, it adds to the sense of value and ROI whether it is really there or not. Students and parents believe they are getting the ROI’s for the most part as a result of the external certification. For example, the 306 name brand schools have a higher retention rate than most other colleges not only because they can enroll those that fit their culture but also because students believe they will get the ROI and service based on the brand name. The difference between a Rolex and Timex. Each will tell time but people will invest more in the Rolex and believe its time is more accurate and thus worth the extra cost. The times will be accurate as well, but it is a Timex. But if the watch is a Timex and costs $25,000 it will not sell. This is due to a negative expectation. Timex belongs in a certain pricing band and if it wanders that far out of it, it cannot find a customer belief it is worth the price.

Finally, Point Loma and other schools that have a higher than average retention rate may be doing a good job of meeting student expectations and providing good academic customer service. That’ll of course increase retention rates. I was just on a university campus with a 74% retention rate, It is doing well considering some of its factors. It is well above the national six-year retention rate of 40.6% for four year schools. It is doing some things really well to get there. But as a result of my audit, we believe we can increase retention by attending to some customer service factors like how some offices work, scheduling set up, breaking done some silos, altering a couple HR processes, etc. Point Loma and other colleges and universities may well be in a similar position. Point Loma does exceed the national average with its 70.5% in past because of some of the factors mentioned above but it could still be many percentage points below what it could be. So, start looking and thinking about what the University can do to increase its rate not just accept it as above the national average.

Keep in mind that at Point Loma and likely your university, a 1% increase in enrollment could mean almost $200,000 and 7 more graduates off to meet their futures. Seems that that 1% could be quite meaningful.

Oh, if you'd like to find out your school's graduation/cohort retention rate and what it costs the school, just ask me at nealr@GreaServiceMatters. Be glad to tell you.




by clicking here

AcademicMAPS is the leader in increasing student retention, enrollment and revenue through research training and academic customer service solutions for colleges, universities and career colleges in the US, Canada, and Europe as well as businesses that seek to work with them
We increase your success
Contact Us Today

“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

No comments: