A reader from Point Loma Nazarene University
sent me an email that started this piece on school costs, expectations,
retention rates and
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-affiliated college brings with it higher service return
demands. There is an interesting correlation 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. Or to be even more accurate, the
greater the personal fiscal impact, the greater the expectations. If school
costs are having a negative impact on a person’s budget, their expectations for
the school will always be high.
It is the same as if you were going to an
expensive restaurant versus 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, (excuse me) ground Angus steak costs $15.90 or more, one expects more
meat, more quality and flavor and the burger or ground steak should be served
with a side of pom frites (French 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 some 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 $18 plus a $4 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 may say “thank you”
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 burger and fries - $4.96 and no need to tip.
Less than a third of 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 fries but service equal to
the cost as well as an ambiance 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 third printing since the
first two sold out!!)
So now to relate it to schools. A more expensive
school produces greater expectations. If one is paying $35,000 a year, that student
and family will expect a $35,000 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 return on investment 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 $35,000 tuition a year. If I wanted to get a $5,000 experience,
I’d go to Mickey D College down the road.”
If the university serves decent academic customer
service and food like courses (which again 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. 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 $35,000 tuition is in a pricing band of private schools ranging from
$22,000 to $38,000 of more or less equal brand value, the investment in the $35,000
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 education”. 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 surely 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 angus burger who have to get the McD’s 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 their 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 rate 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 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. The message 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 Timex 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 an 86%
retention rate. It is doing well considering some of its factors. It is well
above the national six-year rate of 59% for four-year schools. It is doing some
things really well to get there. But, 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 in the 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 your university
can do to increase its rate and meeting student expectations today.
Get your copy of The Power of Retention referenced in this article today by clicking here.
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