Wednesday, May 16, 2012

Academic Customer Service will Increase Revenue and Budgets

The New York Times had an article recently on how colleges are trying to cope with increasing costs of operation and the need to shift the cost burden from increasing tuition al the time. It discussed how the costs of operation and the decreasing amounts of revenue coming in are creating a crisis for the colleges and universities They need to find ways to decrease costs and increase revenues. Not one of the potential solutions focused on the most immediate problem and the solution to the problem – retention.

Much of the article focused on Ohio State University which may create some of its own problem in paying the President Gordon Gee over $2 million a year. Yes he does a great job and deserves our praise as a college president.  And he raises tons of money but $2 million a year is too much to help balance the budget and keep tuition from rising. Keep in mind that though Gee is a fund raising machine most of that money does nothing to offset the basic annual budget problems. But that $2 million is small change compared to what could be brought into the college if it focused more on its retention rate.

OSU by the way does a good job in retaining students but could do better. It has a six-year graduation rate of 78.1%. That does place it high in the chart of retention but that means that almost 22% percent of its 41,348 students do not graduate in six years and most all of them leave the University. It also means that the school has an attrition rate of around 22% for each cohort that begins the University. That is 9096 students who leave.

At its tuition rate of $8,679 for instate students that means that it loses $78,944,184 per each cohort that starts. And since students leave every year of their college careers it can be safely assumed that this is an annualized loss of all the cohorts that are at the school as they move from freshman to super seniors and beyond. That is on an average year, the school loses over $78 millions dollars from attrition.

If it increased its overall attrition rate by 5% to retain another 455 students each year that would bring in additional revenue of $3,948,945. Increasing retention to 10% more a year or 909 more students retained would add $7,897,890 to the budget.

The economics of retention are clear and get stronger when we realize that every year that it loses 9096 students it has to replace them with new students. Considering that the costs of attracting and processing new freshman runs around $5,460 per student that means that OSU spends an additional $49,664,160 attracting and processing the replacements for the students who have left. That is a considerable sum that could be cut by paying greater attention to retention.

The total cost to the University due to attrition each year runs around $128.6 million. Now that is large sum of money that makes President Gee’s salary look quite small in comparison. An increase in retention of 10% would yield a savings and revenue increase to the University of around $12.6 million dollars in added tuition and saved attraction and processing costs. Actually even more since the figures look only at tuition and leave out fees and other costs to students which would add significant dollars also.

Could OSU increase its retention and save money? Absolutely. One certain way to do this would be to improve academic customer service on the main campus and make it as good as the service one receives in the Wexner Medical Center and its allied facilities. The OSU medical center and its facilities throughout the community provide a great deal of money to the University. It does so for two reasons. It provides excellent medical service as well as great customer service.

The OSU medical center makes sure that patients are treated well and with great service even in its clinics and offsite facilities. An example, the Morehouse Clinic has simple services like good signage everywhere you go so you can’t get lost easily, receptionists who act as if they are glad to see you and always greet you with smile and they guide you to where you are going and many other basic customer service facets that include an online email and phone communication system for the doctors and patients called OSUmychart. This lets doctors and patients communicate easily. Most importantly, most all of the doctors actually do return emails and phone calls within 24 hours.

Another example of good service is that parking on the main campus or on some of the outlying facilities could be problematic for some patients or who do not want to go looking for a space so the medical center provides valet parking at the main campus and one or two of its other facilities. At a newly opened facility, they have a receptionist who does nothing but walk patients to where they need to go to so they do not get lost just as the very best hotels do.

Equally important is that the doctors and nurses appear to all have been trained in good customer service. They greet patients and treat them with a smile and excellence in service. An example, my wife had to go to the Morehouse Clinic the other day. She was shown to an examining room fairly promptly but seemed to be kept waiting beyond her appointment time. It turned out that her doctor found a medical problem in another patient that had to be treated immediately. That was slowing her down since she was going to be sure to provide great service to the patient. This is not a 15 minute and out approach to medicine that one finds elsewhere.

As my wife waited, people would come into the examining room to provide her with updates on the situation and make sure she was a comfortable as possible. When her physician, Dr, Grever who is an excellent and conscientious physician finally came to her she did not rush her to try and make up time. She took her time and made sure my wife was given all the attention and care she needed.  As a result of the attention and service my wife, though a bit later than she planned, left the Morehouse Center feeling well served and pleased; not upset and ready to find another doctor.

Compare that to the service one find on the main campus where there is very poor signage to guide students across a huge campus; where receptionists seem to seldom smile and welcome students who approach them, where phone calls are not answered quite often; voice mails not returned and emails not answered among other service problems.

Among other poor service are core services provided by faculty that can be weak in that they appear to not always hold office hours, do not always  open themselves up to help students who may be having and problem and most often do not respond to emails or phone calls. This level of weak customer service adds to the attrition rate.

Our studies show that 34% of students leave college as a result of poor or weak customer service making them feel as if they don’t matter or are not important as customers paying for the University. 34%!  All the academic customer service problems account for 84% of the reasons why students leave but the most important overall is from the students being made to feel they are unimportant.

One could posit that the University could raise its retention by attending to its main campus academic customer service issues and emulate what goes on in the medical facilities more. If OSU were to do that and provide some additional training in academic customer service, it would increase retention and in so doing increase its revenue and budget. If Dr. Gee were to take on this training for the main campus he would make sure that his $2 million salary would appear even more warranted and deserved as he would increase retention and revenue at the same time.  

What could be done on the OSU campus can and should be done on yours. Increased excellence in academic customer service will and does increase revenue and adds to the budget on the plus side. Increase service to students and increase the college's viability without having to resort to tuition increases as the primary option.

N. Raisman & Associates is the leader in increasing student retention, enrollment and revenue through workshops, presentations, research, training and academic customer service solutions for colleges, universities and career colleges in the US, Canada, and Europe as well as businesses that work with them 
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