Tuesday, June 13, 2017

How to Figure How Much Attrition is Costing You Each Year and What to DO About It

The New York Times (6/7/17) had an article about the enrollment and revenue problems colleges and universities are facing. In it, the author Jon Marcus wrote:

Because of a dip in the number of 18 to 24-year-olds…
enrollment has been dropping for five years, meaning that there are about 300,000 fewer undergraduates to divvy up among America’s campuses than there used to be.

That makes each and every potential and current student vitally important to a college’s bottom line especially since public support of higher education has also dropped significantly over the past decade. Each student’s tuition and fees go to the bottom line of a school and thus is needed to help make the budgets, slashed as they are, work.

Yet, at least 52% of college students will drop out of colleges, universities, community colleges and career colleges before the year ends.  They will take over $250 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 dollars…. What will that translate to? Cuts, jobs lost, equipment canceled, salary freezes, benefit reductions, release time gone, larger classes, fewer sections, more deferred maintenance, (deferred maintenance in America’s schools equals around $30 billion right now)general morale shot to pieces. That is bad but not be as bad as for some schools which will have to either merge or go out of business. The Department of Education has over 500 colleges and universities on its list of schools that are performing so financially poorly that they are under heightened review for fear they could go under.  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 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.  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. 76% of all students leave aschool 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 Dean 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.

If this is helpful to you, please consider having NRaisman & Associates help you reverse the student and revenue loss. We are the leaders in increasing retention through graduation through our workshops,training, presentations and full campus audit of academic customer service.and other retention strategies. We guarantee results.
           Contact us today at nealr@GreatServiceMatters.com    or  call 413.219.6939

No comments: