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. www.GreatServiceMatters.com
info@GreatServiceMatters.com
413.219.6939

Hierarchy of Student Decision Making Step 2- Can I Afford it?

This is the third installment in an on-going discussion on the Hierarchy of Student Decision Making.
To read the introduction to the Hierarchy of Student Decision Making- How they Choose click here
To read the second installment, The First Step in the Hierarchy- Can I Get In? click here.

Hierarchy of Decision-Making Can I Afford It?

Once the primary concern of can I get in is satisfied, an immediate issue come flying forward. Can I pay for this? Though it will seem at times that some students give the impression that college should be free just like high school was, most will realize that it costs money to go to school. As to whether or not college should be free or at least affordable for most students is an issue for another day.

Very often students who are looking to go to a school concentrate so much on hierarchy question one, Can I Get In?, that they put off worrying about paying. Students will actually not encounter the reality of paying for college until they are admitted and are sent a bill. They will have an idea of costs since most will have looked at schools by some sense of cost banding.

Cost bands
A cost band is a mental grouping by tuition such as high, medium and low costs schools in relation to the student’s or the family’s self-conceived economic position and social connections. For example, students from an affluent neighborhood may assume that any of the top Name Brand schools will be affordable because they live in an affluent area and everyone else seems to be applying to Ivies or name brands. So they apply to schools in an expensive but affordable “cost band” that others would see as way out of their reach. A student from the inner city would not see her band including the expensive private schools for the most part. A student from a solidly middle class neighborhood or town would look to schools that fit within the affordability band appropriate to the family’s income. They might apply to state universities and colleges as well as a “stretch school” which expands the band itself with the hope that “if I get in, we can find a way to pay for it.” In fact, banding is a bit elastic since students are pushed to apply for a “stretch school” and worry about the costs later. Moreover, simply put, many students do not consider the real costs as they apply.

The banding often expands beyond the financial means for many families due to a couple of elasticity factors. First is the culturally promoted belief that anyone can become president and there is a way to pay for every student to attend the college or university of his or her choice. Anyone who has had to pay for school knows this is a cultural fabrication that is only true for those with the discretionary income to pay or the credit rating to take out loans that will lower the family’s fiscal stability and/or the student’s life after graduation for years to come. And the becoming president part… It’s true that C students have done it but there was that family money and connections thing.

The second band elasticity factor is set upon another misbelief often promoted by the school itself which talks vaguely about scholarships and grants available for those who qualify. As part of the recruitment approach, costs are left out of the discussion or details. “Oh tuition is $X but most of our students get scholarships and grants to help out” is a quite common line many admission reps will repeat to answer the tuition affordability cost. Scholarships and grants do exist but not in the amount or quantity required by most students to be able to afford the school of their choice. Scholarships and grants such as Pell can help out but many students who elect to go to a school that is really outside of their fiscal band will be left with large debts.

At the same time, there is a psychological aspect that restricts band elasticity from including what might be sensible and feasible financial decisions. This is the socially acceptable aspect of choices that dictate the range of schools that may be included in the band. For example, students from an affluent area would not place a community college into their band since that would carry too high a social esteem cost. The affective return on investment would be far too low. To even be known as considering a community college (which is a very wise fiscal choice for the first two years by the way) would lower the social status. So the banding is a combination of perceived financial and social cost.

The initial selection of schools to apply to might have some fiscal controls on it but once the applications go out, the “can I get in stage” takes full command. Actual costs remain secondary to gaining acceptance. During this stage, hope springs eternal and “first get in and then we’ll figure it out” attitude is prevalent until acceptance. When the letter comes welcoming a student to the school, then issue 2 takes complete importance. Reality suddenly comes in the door with the welcoming package. What often doesn’t come with the package is enough help and customer service assistance with financial aid.

Making Financial Aid Even More Difficult
Yes, most schools send out some details about financial aid and what the family must do but the information usually confuses the hell out of the potential student and parents. It is almost always written in academic in-group language as well as the state and federal legalese to make sure the students and parents do not really understand what they need to do and then how to do it.. There are times when I have this cynical belief that we use confusing and technical language to dissuade families from applying for all the financial aid they might be entitled to. This is not all that far fetched cynicism either. The June 2007 Harvard Business Review has an article by Gail McGovern and Youngme Moon. The article’s title is Companies and the Customer Who Hate Them. The article discusses companies that deliberately confuse customers into making bad purchases.

Companies have found that confused and ill-informed customers, who often end up making poor purchasing decisions, can be highly profitable indeed (p79)… the majority of firms have unwittingly fallen into a trap/ Without ever making a deliberate decision to do so, they have, over a period of years taken greater advantage of their customers. (p.80)

And when schools make it even more difficult than it needs to be to properly complete financial aid requests and applications for scholarships or grants, they are doing what McGovern and Moon found companies doing. It seems as if there has developed a probably unconscious yet insidious lack of real help that frustrates, confuses and stupefies parents and students trying to complete the required forms. As colleges and universities tried to “follow state and federal rules” they found Byzantine and impervious to full understanding without seminars on them, they have simply repeated them verbatim to parents. Most all of them do not know what to do really. Want to see if it is true for your school? Just open your catalog and read what’s there. Then look at the financial aid information sent to parents. Does your information provide your customers the service they need? Likely not. It includes such helpful directions as "COMPLETE THE FAFSA ONLINE. Don’t forget to enter your pin!" Bowling or brooch?

To most people these three words are tantamount to “here is your do it yourself proctoscope kit”. I have never found anyone who has ever found completing the FAFSA easy or enjoyable even if they knew what they were doing. They remind parents and students of the joy of doing their annual taxes. What school would not want to be considered in the same thought as the IRS?

Parents hate the forms whether they are on-line or not. Colleges should realize this and provide them all the human help they can. Briarcliffe College in New York does this by having people come to the school and sit through a full introduction to the FAFSA on line. Then if the people bring their materials in, Tuition Planners help them complete the forms so they can get every penny for which they qualify. I even observed a planner helping a father whose other son was going to a different school complete the forms for the other school. I believe I heard that the father was talking to the other son about transferring to the college that provided real service for students. Service that made financial aid easier and more profitable for everyone. The students have more money to make college more affordable and the school has greater assurance of the student being able to pay and attend.

I am amazed at how many parents and students do all they can to not complete the FAFSA, either on line or in hardcopy. All they need is one excuse not to complete it and they will leave it “for later” or just never get it done. For instance, I have discovered over the years that there is one bit of information that too often provides parents a perfect excuse not to complete the FAFSA and send it in. And that one bit of information is one that you should make sure is right there for them because it affects you directly. It is the college code number. For some reason, we hide these numbers from students and their families.

Try this, go to your financial aid office and see if the code is posted in an unobstructed, easily noticeable location, or in a somewhat prominent spot or for that matter, anywhere. Odds are pretty good it is not. Yet, without that code, students cannot complete their FAFSA. And if they cannot or do not complete it, who is ultimately hurt? Sure the student, but the school too. Without the financial aid the student might get, he or she is not coming there. All the time, effort and money spent to recruit that student is just lost, as is the chance to provide that student the best education he or she could get anywhere. The faculty loses the chance to fulfill its mission to educate that student.

So get the college code out there. Post it in the office. Print it on the forms. Make sure it can be obtained easily on the financial aid section of the website. Also, help people with the form. Provide counselors who actually call to potential students to offer their aid in completing the form. Create an on-line tutorial for parents to use as they try and complete the form. Offer hybrid workshops that will take a group of parents from the start of the form through to the end. Hybrid? On line and by conference call. Also, provide them at the school. Invite parents in to complete their forms with hands-on assistance.

Payment Plans and Other Ways To Make it Affordable
Make sure you help students and their families answer the question Can I afford it? If they do not believe they can, they won’t EVEN IF THEY ACTUALLY COULD.

Do you have a payment plan? A way for normal people to make payments for school over a period of time? Most people get paid weekly, bi-weekly or even monthly yet we want it all at one time. Lump sum. No other major investment people make calls for all the money up front. A house – a mortgage. A car- five year loan. Even a doctor’s bill can be charged and paid out over time. College? Not always so.

The hardest thing for people to do in paying a college is to save it all up to make a single payment. Life often gets in the way. Yet, if they can plan for regular payments, college can be affordable. Provide a payment plan that allows them to be able to pay for school over a semester or year or even longer if possible. There are many ways to do this. Twenty percent down and then monthly payments. Run an in-house plan or let a professional like FACTS do it for you. Charge for the service or not. There are many ways to do it but do it.

If you cannot make college affordable or at least within reach of affordability, students cannot answer the step 2 question, Can I Afford IT? and will not come to school. Or of they do start they will soon run out of money and drop out. In fact this is the major reason why there are fiscal drops in the second semester and sophomore years.

AcademicMAPS has recently published a new retention white paper on the subject of retention and ROI. The paper discusses the power of retention and provides formulas for a college or university to determine the ROI loss or gains from retention. There is no cost for this white paper. It may be obtained by clicking here.

The Power of Retention: ROI Formulas - Excerpt from White Paper

This is an excerpt from an AcademicMAPS white paper The Power of Retention.If you would like a copy of the entire white paper, please just contact us at info@GreatServiceMatters.com

Calculating ROI from Retention; Three CSF Formulas

There are three primary CSFactors™,(Customer Service Factors) AcademicMAPS has formulated to help universities, colleges and career school figure out the loss or gain from retention and attrition. The CSFactors are provided as formulas schools can use to figure out how much revenue they are losing, or could and would gain if they focused on improving service to students. The formulas are quick methods to understand the financial power of retention coming out of customer service to students. Placing your college or university’s actual numbers into the formulas will quickly bring forward the real power of retention to positively affect the revenue and future or the institution.

They could also be applied to employee retention, another significant revenue and service issue but here we focus on students. The formulas were developed and tested from the research AcademicMAPS conducted during college service audits, workshops, presentations, retreats and other services provide to higher education as well as just pure research.

CSFactor 1: The Cost of Attrition CSF1 helps a college figure out how much money it is losing from its actual attrition. Factor 1 is stated as:

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 be 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 dropout. 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 and 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 a bit, 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, …. 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.

For the full white paper, please contact info@GreatServiceMatters.com

(I have been told the link is sending people to our web page where the email can be found but if you wish to skip the web page, copy and paste the address in your email editor. Sorry for any inconvenience.)

The ROI of Retention part 3 CSFactor 3

A school loses an average of 12% of its potential enrollments as soon as a prospective student makes contact with it. Whether that contact be the website which was created by the tech designers of Sites That Hoover, by telephone, email, or make it onto campus, 12% of probable enrollments are lost with actual contact. And these are most often people who were seriously thinking of enrolling in the college.

They had found an enough interest in the school to explore it and consider applying or enrolling. But then they made contact. And that contact convinced them that they were no longer interested. That leads to

Customer Service Factor 3

[(AE x12%=EL) x tuition] = CSF3

IE - Initial actual Enrollment

12% is what is lost on initial contact

EL - is the Enrollment Lost and

T once again is the tuition.

So, continuing with Mammon U, (which has just written a formal complaint about US News and World Report for not including it in its top tier of colleges and universities which everyone at Mammon knows is an error and just makes education a commodity in the minds of the public which should care about purer motives while Mammon knows that a top ranking will improve its application flow and mean a more likely full class and reduced advertising expenditures and can actually consider raising tuition for more revenue because it can still attract a class at the higher cost from the increased ranking…..)

Mammon’s original enrollment is budgeted at 200 in the Fall. They aren’t there just yet so the admission’s folks are beating the bushes and going through every potential applicant they have. They are at 180 enrollments at this point so the CFO is concerned that the budget they created in June will not be met for the third year in a row. And the president is now reading the Chronicle starting with the career section. So if Mammon does not find the last 20 enrollments, CSF3 will be calculated like this.

CSF3 [(200 x 12%% = 24) x $13,000] = ($312,000).

The point that may hit you immediately if you are not an admissions or enrollment management person is the revenue loss of $312,000. That is a solid amount of lost revenue which may lead to starting the year with some budget, employee, equipment, maintenance or other cuts. That will usually catch most everyone’s attention. We all hate cuts.

But if you are in admission’s what you will be thinking now is “DARN (well maybe stronger than that) “Darn, we would not have just hit the 200 goal but we would have exceeded it by 4! We would be celebrating instead of commiserating”. The formula could have shown

[(200 +12%% =+224) x $13,000] = +$312,000.

Okay, So Now What?
So now the issue is what to do in the future to gain, rather than lose 12%. The list is unfortunately long for some schools but realize it all has to do with how the school presents itself and provides its services to potential customer/ clients/applicants on their first contacts with the school. Since the list is long, we will address parts of it in other postings. But for now, one of the first customer service turn-offs.

Websites and CSF3
Far too many of them simply vacuum. They do not provide viewers with what they want but with what we, a group of adults, out-of-contact with our potential students’ world and technology, think they should want. We load them up our web pages with words when the web is a visual medium. The words we use are those we are comfortable and generally have little meaning to those outside of academia. This is so since they are too often our academic-ese technical or vernacular language. The information we provide is how we would want to see our college and not how a potential student might wish to see it.

We make sure we load the web site up with things the staff and faculty ask for such as a link labeled FACULTY that if a viewer clicked on, he or she would be told it’s not for them. Foolish viewer. Thinking one might learn about the faculty from a tab labeled faculty.

We often even include the whole college catalog on our sites as if someone would want to try and read a long, turgid, ponderous, tedious, self-important document that even less than 5% of the college has ever read through. And they had to since they were assigned to do so on the catalog update committee. And what’s even more foolish is on the websites, the catalog do not even come with an active index. There is no search protocol to help users find what they are looking for. There may be the original index but fear not, the entries are not active links to take the reader to a specific section. Would not want to make the catalog accessible after all. By the way if you do want to have the catalog on the we site,at least use a program like Leadwise to make it accessible and personalized.

Even if we discount all the many, many, many words on a web page, the graphics and the layout of the pages immediately tell potential students “old skool technology.” BORING! The designs and layouts are old fashioned and the graphics used too often clichéd. There is little that conveys a message that this university is technologically exciting or even up to date. And the so-called “blog postings”, c’mon. Everyone realizes that they are either written by the PR office or by people so carefully chosen that they sound like advertising copy. They do not make the college sound up-to-date but manipulative. If you you want to use blogs, take a chance and let people say fully what they want to say.

I could go one quite a bit more but then I will sound to much like an entry on one of these web sites. Just one more issue. One that really ticks off potential students and viewers. Difficult or impossible navigation. This includes links that don’t work (and yes, I know I too have created and apologize for them). Links that take you to a page you cannot return from since there is no return link. Or links that say a reader can make contact or ask a question that take people to an “apply on-line” or fill in the request for an “admission’s person to contact you” form. That pushes the issue and makes the viewer feel once again, manipulated.

Sure the goal is to get the potential student contact admissions. But let them make the decision. Web users like to at least have a semblance of control over their use of a site. They want to be the ones to initiate the contact. So let them click on, contact admissions or apply on-line or some such link. Don’t manipulate. Even if they do complete the contact the college form that goes to admissions without their assent, the college is not getting anything more than a very weak inquiry. It is not a lead.

We will get to other negative CSF3 factors such as poor phone protocol, messages not returned, misleading or just plain ugly signage, parking problems, rude greeters and a few other issues in other postings. This one has gone on long enough.

The ROI of Retention 2 - CSFactor 2

CSFactor 2

CSF2 = [(SL x CA = -E) + CSL1]

There is a universal law that it should take less energy to sit on a flagpole than to climb it. Seems logical. Climbing it numerous times to gain four different views would require burning more calories than shinnying up once and sitting up there to look around for the views.

Yet there are certainly those who seem to have not learned the lesson. Colleges that have not yet focused on the value of retention which can be increased through some simple customer service training rely on the old churn and burn approach. Keep bringing in ever increasing numbers of new students and don’t worry if they just drop out never to return. Just get some more.

These schools make admission folks in particular climb the pole over and over, burn calories, the late night compact fluorescents, and just plain burn out trying to meet ever-increasing admission goals. You’d think some universities had never heard of flag pole sitting on a pillow called retention. Or the stabilizing element of customer service that creates the toochas-saving cushioning in the pillow. Or ever concerned themselves with little issues like revenue, budgets and paying for things. Or the energy-saving and budget building value and cost-savings of retention. Because flagpole climbing not only burns calories and people, but piles of revenue.

Admissions Costs – Retention Saves CSF2

Another simple reality here. Every student a college enrolls costs it money to do so – big money too! Every student retained costs from nothing to quite little.

In fact a study we did two years ago found that the average cost of enrolling a student is $5,460. This study of 40 randomly chosen colleges, universities and career schools included ALL cost of enrolling a student. Most colleges just look at direct marketing costs per student and forget about all the associated costs. They divide marketing and advertising, maybe lead costs too, by the number of students and voila – a miscalculation.

The real costs of enrolling a student include the marketing costs yes, but also the marketing staff, advertising, publications, admission staff, clerical people, travel, orientation, printing, allocated time and effort from bursar, registrar, academics, counseling, advising, student services, financial aid, orientation, registration, and so on; mailings, emails, phone calls, website and so on and on and on. Fixed capital costs associated with most all of this add another 7-9% on the average. There are in fact very few parts of a college that are not involved at some point and time in admissions. We also found that schools were not including all students who had made inquiries to the college. Every time a student is responded to, there are costs. These all add to the time and costs. Considerable costs. $5,460 worth of costs. (For those who wish the full description, methodology and breakouts of research data, I am sorry to say we do not supply it. It is proprietary and not available.)

For some schools, the cost of recruiting a student actually outweighs the tuition received from them. The ones that survive are generally assisted by some public assistance based on an unduplicated headcount formula. But even with public assistance many schools still lose money on student acquisition when he or she who drops out. (I suppose they intend to make it up on volume?) This is especially so if the student leaves before providing tuition and fees at least equal to the acquisition costs. And every student who leaves must be replaced with at least another at another additional expenditure of $5,460. But it usually required more than one re[placement student and associated acquisition costs.

In fact, to obtain one FGE (full time graduate equivalent) at the average annualized attrition of 32%, it will take 3-4 students acquired to get one FGE at a two-year school. 6-8 will be needed at a four-year school, with an average graduation at 5 years. If average graduation is more than 5 years, add another admission needed to get the FGE.

By the way, annualized tuition is the number a school should use to figure its real attrition. Not the retention between the freshman and sophomore years which is a very popular one. 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, the freshman to sophomore percentage would be 100%.

Annualized attrition includes all students who left. It does not look at a starting class such as the freshman class as an isolated entity. It recognizes the Sophomore Bubble, the junior jump, senior slide, super senior slump and the “I’m not sure what I am except outta here” slump. Students leave at all times and should all be counted in the attrition number to be able to not just be real but to really understands how a college and its budget are actually performing.

The cost of retention at one school was reported by a participant during a workshop I was presenting at the Snowmass Institute (a very good enrollment management conference by the way). She said her university spent an average of $35 per retained student.

The Growing Importance of Retention to Graduation

The public, employers and legislatures (local, state and federal) are starting to catch onto the fact that the number of students who start or attend a college or university at headcount day is a meaningless statistic. Granted it may improve a person to get some education and even a drop out may have added value before leaving a university. But it is the diploma that is the real indicator of the success of a student and a school. That is the certification that everyone uses to determine someone has been educated and trained enough to contribute to the economy, the culture and society. It is the diploma, indifferent to whether it really indicates the holder is truly educated or really capable, that is the sign this person can be considered for a job and add to the economy.

This is our own fault to some extent. We keep telling society and legislatures that higher education is the fuel for the engine of the economy. And they have started to believe us to the point that they want to put the emphasis on the number of graduates that schools put into the economy. This is where political accountability is starting to move. The number of grads, not just attendees. Support formulas are going to start moving to the number of graduates and work backwards to entering students.

Starting with the number of graduates will make retention and even more important issue than it is now. This is due to retention rule 4 – students who drop out from the school tend not to graduate.

CSFactor 2 Using the formula.

CSF2 = [SL x CA = -E) + CSL1]

SL - # of students lost
CA – Cost of acquisition
-E – Enrollment $ lost
CSF2 – Total revenue lost

So using the numbers from the prior CSF1 example:

[198 x $5,460 = $1,081,080 + $2,574,000) = -$3,655,080.

This school has lost $3,655,080 along with almost 200 students. If it had retained the 198 students, it would have saved the $3.6 million. Even if it did cost $35 a student to retain them, that would have cost them $6,930. Even if we wish to extend that out of four years, the $27,720 is still just a bit less than $3.6 million.

Seems again that retention saves while attrition costs. And one hell of a lot of money.

But let’s not forget the human costs of people working very hard to bring students into the school just to see them leave. We have not even worked in the costs of replacing admissions and enrollment people who simply burn out from the ever-increasing new student goals and the psychological pain of climbing the ever-growing flagpole every start when they should be able to just sit there every so often and enjoy the retention view.

Figuring the ROI of Retention and Customer Service - CSF1

Following a presentation on customer service and retention at a major conference, I was asked by one of the attendees if I would supply the way I figure ROI from retention and customer service. In my presentations I always review the students’ seeking of their personal “ROIs” as well as the fiscal ROI the school should be looking at. His interest was to use the information in his marketing to show his company would provide a good return on investment.

I was inclined to help this person since his company is one I feel most schools could benefit by using. They supply counseling to students that helps keep them enrolled. But since I receive no remuneration from companies I recommend (income-wise it would be wise to take it but ethics-wise, it would not be wise except from Leadwise™ (personalized on-line view books, catalogs and web sites which I helped create….wise) I thought it best to share the formulas with everyone who can use them.

They help schools figure out how much revenue they are losing, or could and would gain if they focused on improving service to students. Keep in mind that 72% of all attrition is due to poor, weak, even average customer service at a college or university. The formulas come from years of research I and very smart assistants conducted during college service audits, workshops, presentations, retreats and other services we provide as well as just pure research. . We have been studying aspects of retention it seems before retention was an issue. Just think back just eight years ago when I started AcademicMAPS. Who talked about retention as an important aspect of a college.? It was, , admissions, admissions and again admissions and still is at too many places. I recall quite well the statement of the CEO of a large career college group who said “there isn’t a problem that exists that can’t be fixed by enrolling more students.”

Keeping them? Not so much.

How many did we admit and did commit to the next freshman class? When we lose students, “okay. It’s planned for in the budget as long as we don’t lose too many more than we budgeted…..” Dumb business model. Planning to lose all those customers and all the costs associated with acquiring them is a confident way of making sure the institution is always running a tight budget.

Over the years, when I asked some administrators how much admitting a student cost, the general answer was to add together the marketing budget with the admission director’s and recruiters’ salaries divided by the number of new freshman and that was the cost. Not even close. Even for-profit schools use the same basic approach. That explains why some run deficits.

(Can a school that loses money claim to be for-profit? Don’t you have to make a profit? By the way, what is the difference between a good for-profit and a good not-for-profit? Accounting terms. In a for-profit, it is called profit. In a not-for-profit, it is called “fund balance” or “surplus” and most every college president is called upon to develop one – profit or surplus that is.)

So here is the first part of what will be a three or four part series on figuring retention and customer service ROI, the CSFactors™, at your school or business. By the way, if you use the formulas and publish results for any reason from marketing to self-flagellation, please be kind enough to provide attribution to us. It will be appreciated.

CSFactor 1 The Value of Retention (or the Losses from Attrition)

CSF1 helps a college figure out how much revenue/money it is losing from its actual attrition.

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 numbers and that is an error. The assumption is that attrition occurs most in the first six weeks of the freshman year. That may be close to correct but the reality is that students are leaving colleges and universities in any one of their six plus years of a four year degree and in the four plus years of a two-year degree. Students leave your school throughout their experience at the school. In fact, some schools are beginning to realize this and worry about the Sophomore Bubble. But the 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. Colleges need to be concerned with every student every day of their attendance for it could be his last.

So we look at the total population.

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 back in the population and bringing in revenue until they actually do return. If they pay a “place holding fee”, that does not count them as an student until they are actually back in classes.

Fudge with the numbers if you are overly deluded or insecure, or unethical enough to keep the PR machine going or the Board feeling better but when you use our formulas, be fully honest. It will help you understand why the budget is not working or may suddenly implode. Remember, no one likes surprises, especially ones that have parentheses around them in the budget and lead to freezes, cuts and the like.

By the way, if your school is like most everyone I work with or call for help, you likely do not have a clear fix on an annualized attrition rate. Many schools have never figured it. Go figure and use an annualized attrition rate.

SL stands for students lost annually from total population and revenue production. And T equals tuition at the school.

So here is what showed up when we analyzed CSF1 for a particular college which for our purposes we will call Mammon University. You may know it. Its motto is Omnes Por Pecunia. Anything for a Buck. More on Mammon U later.

Its total population was 500 students.

Annualized attrition was at 39.6%

So SL (students lost annually) was 198.

Times an average tuition of $13,000.

The school uses a differentiated tuition scale per program.

So, the formula becomes:

[(500 x 39.6% = 198) x $13,000] =

a revenue loss of (sound of a trumpet flourish but on a kazoo since Mammon U cannot afford a real trumpet since it has lost) ($2,574,000)!!!!

To carry this forward a bit, 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, …. 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.

Any school, college or university that doesn't want at least another $325,000 in the budget?

Plug your school’s numbers in and see how increasing retention affects your budget and instructional strength.

Focus on Customer Service and Retention to End Deficits

Ohio University (not THE Ohio State as they say in Columbus) is projecting an $11 million deficit for 2008 due to what is incorrectly labeled as an enrollment problem.

It is a population problem that ended up losing 400-468 more students to attrition or non-transfer-in than was budgeted (using their figures extrapolated out). That means the actual entire attrition number is actually quite a bit higher. Somewhere close to +/-30% of population overall and the 464 is simply above budgeted projected losses.

Enrollment is okay. OU just missed its fall freshman recruitment target by 6 students. They are bringing them in but they are losing them as the year goes along – just like most every other school. They are losing population by not focusing enough on retention.

Let’s look at some figures. By the way, you can plug your schools numbers in as we go along because the OU issue is one we all can learn from. This is especially so because OU has actually diagnosed their own problem but has neither fully used the information nor fully learned from it.

The school is projecting a deficit of somewhere between $6 to $11 million for fiscal 2008 and is considering raising tuition by another 6%. A tuition increase may stave off some fiscal problems for 2008 but it is not the answer.

The answer lies in increasing retention. Let’s look at the numbers.

OU had little trouble attracting applications. In fact, they had almost 3 applicants for every one of the 4,100 freshman openings. The actual show was 4,094 on a budget of 4,100 which would indicates a fairly strong primary desire to attend considering that the show/yield rate was at 38%. But then, something occurs to have over +/-30% leave OU prior to graduation.

Using a 464 student budget shortfall as a base and not even touching the larger attrition number which looks to be in the range of 8,486 students from a total reported population of 28,287, we can quickly see a solution to the forecasted deficit.

Each of the lost students takes $8,727 out of the budget. So that means that the “excessive unbudgeted attrition” costs OU $4,049,328. Add to that the cost of recruiting and processing every student needed to replace that 464 and that equals another $2,442,496. Now, room and board is a revenue item in the budget so at a housing and food cost of $7,839 the lost revenue is perhaps $1,818,648 (working on a 50% housing rate of the 464). So the excess attrition (I’ll talk about this foolish concept of acceptable attrition in a minute) costs OU,

lost tuition $(4,049,328)

replacement costs (2,442,496)

lost housing revenue (1,818,648)

Hit on budget $(8,310,472)

Okay let’s agree that this is not necessarily exact since it could be that all dorm rooms remained full with replacement students and correlating budget figures to other reports from the University may not be exact. And don’t forget that these numbers have nothing to do with the other thousands of drops that were accepted in the budget. And with all that, we are still talking HUGE NUMBERS – DEFICIT ERASING NUMBERS! Not just at OU BUT AT MOST EVERY UNIVERSITY AND COLLEGE.

Imagine what OU and all schools could do with the revenues they could apply to the growth of the school, the freezing and reduction in tuition for students and families, the salaries and benefits of employees, the collections in the library, maintenance and cleanliness of facilities and on and on.

And OU already figured out what is wrong. A Follow-up Study of Involvement Intervention Efforts at Ohio University (Nov 2005) from its Institutional Research Office, found that an early intervention program with identified at-risk freshman cut attrition and increased returns of stepping-out students. Laudable results!

More of the students participating in the early intervention program said they would return (81%) followed by 56 percent of the students in the regular intervention program. Fifty-four percent of students identified in the extra-female minority intervention process said they would return (p.3) The intervention program works. Unfortunately it is only for freshman which we have already said is a sure guarantee for the sophomore retention bubble popping. Intervention and involvement should be in place for all students – even grad students.

Costs too much? Can it cost more than $8,310,472. I don’t think so.

And why do students leave OU, and all other schools? No surprise here. The issues I have been writing about, talking about, training on and trying to get schools to work with. Here is what the report cites as the first self-reported reasons.

Non-returners cited personal reasons for leaving Ohio University, for example having trouble adjusting personally to Ohio University and did not feel they fit in at Ohio University.

Cheers University is where they want to be. Good old CU! Customer Service Principle 1 (if you'd like a copy of the 15 Principles of Good Customer Service in College, click here)

Yes. That is it! Or at least a big part of it when it is success! Give them CU at OU or any U.

At-risk-for-dropping students who were personally contacted and were personally counseled by a person with a name who knew their name and showed he or she cared, tended to stay at higher numbers and return if they left. OU became CU when it showed students it would know them as an individual, a person with a name not just a tuition bill and number. And OU showed then were glad they came.

Other reasons were too far away from home; small town atmosphere. These students also did not feel the attachment to OU a student must have if they are to persevere. OU never became home or provided them a sense of security and comfort. They obviously wanted to get away from OU and go home where they felt welcome if they felt too far away. My guess is that these students never were given enough reason and care once on campus to unpack their emotional suitcases. And remember, these students had chosen OU which had about three applicants for every spot. They felt good about getting in but then wanted out.

Another reason students reported they left was they could not get the degree in their preferred field (poor sales service? Promising more than OU could deliver?) Still poor customer service here.

These are all customer service and retention issues. They can be solved or at least significantly mitigated. OU even has identified a part of the problem now they just need to figure out how to act on that information to create a customer service culture that retains more students and erases deficits

And the concept of acceptable attrition, same as collateral damage I fear. We can plan for it but that does not ever make either one acceptable.

Feel free to contact us at any time on how customer service and retention can help your bottom line. You can discuss this directly with our president, Neal Raisman, by clicking here and emailing or call at 413.219.6939.