Learn and Earn not Churn and Burn
What are the four basic indicators of a successful school in its operations and well-being?
Indicator 1 Population.
Indicator 2 Population.
Indicator 3, Well, no surprise here--Population.
Indicator 4, Customer service levels.
If a school is able to maintain and grow its population, then all is in order. Note I said population. Not admissions. Hitting admission numbers does not indicate the health of the institution, particularly if a school is losing 30 percent or more of its students. Simply put, if a sales team sells 100 pet rocks on Monday, but by next week 30 are returned, then how many were really sold? The sales team may be celebrating hitting its goal but the CFO is dying because the lost revenue and costs associated with selling and processing returns have basically wiped out any profit. All the company has learned is that the pet rock can be sold but has very little customer retention power and may just have been sold in a way that can lead to bigger issues down the line.
Customer service and a student's belief that, "My investment in this school will be met if not exceeded" in three types of ROI are the key to population. If students, and staff, do not believe their F-ROI (financial return on investment); E-ROI (emotional return on investment); and A-ROI (associative return on investment) are being positively impacted by the customer service level they receive, population is in trouble. And the school's well-being, finances, and morale are also in trouble.
Population stability and growth are primary indicators. Hitting retention says the students are pleased with the school, their education, and experience. Faculty members are happier because students are more receptive to instruction, do their work on time, and are more compliant with faculty directions, according to studies discussed in the January 2006 newsletter Great Service Matters (www.greatservicematters.com). Students are even pleased to go to class. Faculty morale also increases since it is much easier to teach happy and committed students. The business officer is pleased because the college will maintain solid positive revenue, on-time collections and thus operating margin/EBITDA (earings before interest, taxes, depreciation, and amortization). And believe it or not, our research indicates that if students are pleased with the customer service they receive, a school can even raise tuition and not suffer adverse effects in student acceptance.
How to do all this? Focus on customer service.
As long as students, faculty and administration are all pleased with the school, admission targets might be missed, and that is not unusual in the tight competitive market all schools are trying to draw students from, yet revenues, margins, and financial goals can be met with population maintenance/retention through increased customer service. Furthermore, if everyone is happy and population retention leads the way, admissions may have a more achievable goal. That can lead to reduced stress and will lead to fewer angry admissions people. Angry admissions staffers can hurt admissions, retention, and the whole school as the public questions the school.
I had the bi-polar pleasure of working with a school that had missed almost all of its admission goals for four years but succeeded in most of its financial goals. It worked hard to meet recruitment goals and felt crushed when it fell short. Yet, when I was able to get the focus on retention and population during the three years I led the school, we hit most all of our margin and revenue goals. How? The school worked hard to maintain the population it had through a strong and sincere focus on customer service to students and faculty, as well as focusing on meeting the three ROI's the students expected.
Return on Investment is normatively a financial formula. (ROI = Return/Investment yielding a hoped-for positive percentage.) The basic ROI formula works with colleges and customer service not as a financial plus or minus percentage basis, but on more personal and psychological formulations composed of feelings and perceptions that the investment is worthwhile. If it is, the student is comfortable, even happy, and stays. If the student does not feel there is at least a financial, emotional, and associative equity between what he or she invests and what the school returns to him or her, there will be a negative sense of ROI and the student will likely leave or trudge through unhappily, bad-mouthing the school whenever the chance arises.
F-ROI (financial return on investment) works on two levels for students. The first F-ROI is the perception of whether or not, "I am getting my money's worth. Do I feel that the money I am paying to the school is being well spent on me?" The second F-ROI is whether or not the student believes that staying at the school will finally lead to the job and career that he or she came to the school to acquire.
There then are two separate but related equations at work. For F-ROI the evaluation is a judgment of the value of a wide grouping of what might at first seem to be disparate issues that range from the obvious (such as perceived value of classroom instruction, whether or not faculty seem to care if students understand and are learning, to how staff treat students and even important physical issues such as facilities, parking, lighting, and so on). One college I studied had a low collective student sense of the F-ROI (41 percent positive) with the two major concerns indicated: "weak instructors" and "dirty bathrooms." The F-ROI was raised a quick sixteen points by cleaning and then painting the bathrooms. And retention also went up by 4.3 percent that semester.
The F-ROI that goes to future career returns on the investment is not simply of financial investment through tuition, fees, books, etc., but the feeling that "this school will help me obtain the job I am going here to get." Students must believe that the college will not only assist them in their job search but the school's position and reputation will facilitate obtaining that first job. If the school helps the students prepare for applying for jobs or, even better, if the school has an active outreach to students on careers and assistance in locating possible jobs, the F-ROI will stay in the positives.
The E-ROI refers to the emotional investment that a student and that student's family make in the school. When a student decides to attend a college, that person is making a commitment based on an expected return on investment such as the financial ones spoken of above. But, he or she is also making an emotional decision as well that is somewhat akin to an engagement. Trust, attachment, and an allegiance between the student and the school is developed in the student's mind and feelings. The student is making a pledge to the school that he or she expects will be returned. That pledge is, "I will trust you to do right by me. I will put my education and thus my future in your hands. I will trust you to treat me fairly and provide me an honest opportunity to learn and get that job I want to love." Very few, if any, students will simply make a cold business-like decision to apply, taking a chance of rejection and then finally accept the offer of engagement from a college without emotion involved. Social psychology experiments have indicated that even if applicants were not sure about the school at some time, upon acceptance, they will begin to look more favorably on the school and decide that it was a better school and choice after all.
Though students are transferring from colleges at a record rate and attending more than one institution to graduate, according to studies such as the 2006 National Survey of Student Engagement, students enter a school with a belief that they will complete a degree at that school. Students who attend to a two-year school, for instance, enter with the intention of transferring to another school after graduation, yet many do not stay to graduation. They leave.
Why? Because they fall out of love with the college. They do not perceive that their emotional investment is being returned by the school. The students I have interviewed have indicated two major perceptions of why they fall out of love with a school. First, they say, "Tthe school only cares about me for the money they get." They see the school as putting either money ahead of the students (too many adjunct faculty, not enough sections of courses, poor scheduling, canceling classes at the last minute, not enough staff, aggressive bursar and collections letters). Second, the school does not reach out to them and show it cares about the student as a person with integrity and needs (can't find faculty during office hours, can't get extra help when needed, faculty do not seem to realize students have lives too, administrators don't care or solve problems, staff are cold or rude, no one smiles, students get the run-around also known as the shuffle, issues go unresolved or with just a decision that is unexplained, etc.).
The last is A-ROI (associative return on investment). The associative is the sense that by going to this school, "I am saying something about me and my values and character. By attending I am increasing my social standing. I am investing my standing and self-value in the school." This can be seen in the clothes that students wear, especially collegiate or sports-related hats, tees, and sweatshirts. When a student wears a T-shirt, for example, with the name of a college adorning the front, it is done to make a statement to the world about the wearer. If a student is wearing the name of a college such as Harvard , University of Michigan,or the University of Miami, or one of the other name-brand colleges, he or she is trying to tell the viewer to associate him or her with the school--even if they do not go there. It is a statement that the student wants to be associated with the strength and value of the school's name.
The student is saying, "I am part of this school and it makes me feel good." It improves value and recognition. That is why when I was associate provost at the University of Cincinnati (Ohio) and the Bearcats men's basketball team made it into the NCAA Final Four, applications shot up. People wanted to be associated with a successful basketball team/school. One way a school can judge if its associative value is up or down is by counting the amount of logo- or name-laden clothing that is sold in the bookstore. If students want others to know they go to the school, they will wear the association.
The ROI on association can be a strong one if the student feels that the school is well known and respected in the community. If it is not, the school can create strong associative value by providing excellent service to the student, who will then takes pride in in the institution, even if others do not know it is so good. A school can overcome lack of current recognition if the services are strong enough. "It is an excellent school and I know it, so I feel great being associated with it even if you haven't heard of it." This is then a more personal ROI but still a very important one. Lose the student's belief in the school and the A-ROI drops. When that happens, the student does not want to be associated with the school and is a certain candidate to transfer.
The customer service consulting I have been doing since 1999 makes me realize that there are 14 simple customer service principles to changing a school from a churn and burn attitude (keep enrolling them and if they drop out we just go after even more students to make up the difference) to a learn and earn approach.
Learn and Earn is a client/customer service focus that is a variation created by AcademicMAPS based on successful models of many thriving businesses. The basics of it are: When you attain a customer, do all you can to retain him so you do not have to replace him. Furthermore, the objective is to lower the required number of new customers to balance the budget while increasing loyalty and investment in the school. The goal is to upsell students, i.e., two-year degree students stay to go for a four-year degree; bachelor students continue on for a graduate degree; graduates come back for additional courses such as license prep and professional/personal growth courses and greater alumni involvement and support.
Not retaining and upselling the students is costly for a college. Every new recruit brings significant start-up costs that must be recouped and/or amortized over the whole business. A college has to bring in at least six new students for every student lost before the end of the freshman year in a four-year program to gain full revenue from each attrition student. That's assuming an average acquisition cost of the schools I have studied at about $3,516, plus lost potential tuition and fee revenue. Yes, it really is that high when one factors in all aspects, from marketing, leads, collateral media, salaries--not just of admissions people but all the people who work to bring that student into the school--specialized activities, publications, and so on. Most schools do not recoup their initial investment in a new student until into the second semester. So, if a student quits before then that creates a negative revenue situation as well as probable bad debt, collection costs, and write-offs.
Implementing Learn and Earn is not all that difficult, but it does take a shift of focus to emphasize learning from a school's customers and then creating customer service around that knowledge as a primary operational tool and strategic advantage, rather than focusing on churning and burning admissions. Students become the teachers to the school on issues of what services they desire, need, and find lacking. And this is not the customer service that many schools think of, because education is a different business arena and culture than retail, which is where most customer service books focus. For example, in almost every book out there the old platitude "the customer is always right" is there front and center. Not only is that a false statement in business--"I wore the dress three times and now I want to return it."--but it is absolutely unrealistic in higher education. If the customer is always right, why have tests for example? Indeed, a school that simply gives the student/customer what he or she wants--like high grades with no work--will soon find accreditors and the feds breathing down its neck.
The easiest way to explain how a school can implement Learn and Earn is first, learn about and listen to the student. Understand who they really are--not what you would wish them to be. Study the social and communal demographics of the students. Forget about assuming they are Generation Y, or Millennial, or whatever term is in vogue. These are PR grand labeling generalizations and may not at all encompass the reality of the particular community of students at the school. For example, over 50 percent of all college students are adults, yet the labels do not even address them. Your students may come from a social niche, region, or mindset that has nothing to do with the labels. Learn who they really are.
Colleges that learn about their clients/students will succeed by providing the clients relevant education, good customer service, and the ultimate student goal of having companies and professions that will hire and accept their graduates. These schools use what they have learned to assure student satisfaction leading to increased retention, which is how they earn present revenue and future donations.
Provide quality learning, in an appropriate environment that speaks to actual students and offers them opportunities to enjoy themselves and their learning. Get them to want to learn more and wish to be at the school. Help the students keep focus on their goals in life and career and how the school will help them get there. How to do it? Simple. Improve your customer service focus. The result is earning-- for the school and the student.
For instance, Principle 1 in my list of fourteen is guaranteed to help a school increase its population.
Every student wants to attend what I call Cheers University and every employee wants to work there. "...where everybody knows your name and they're awfully glad you came..."
Sounds easy and it can be with some simple customer service training that focuses on the business we are in--schools and colleges. One quick lesson: Students are not exactly customers, they are more like clients. A client hires someone to study the situation, indicate what is wrong, and then offer the tools to fix what is needed to succeed. Like clients, students come to the experts (school) to find out what they must do to improve and grow so their futures will be successful. Schools need to understand their student clients, understand what they really need and want, then provide them the academic and social services to strengthen and grow. And though some skeptics might believe it is easy grades students want, it really is not. What I have found in my studies of and for schools is that most students want three things. And it all has to do with the three ROI's. They want to feel an f-roi , a solid e-roi, a full sense of an a-roi .
Customer service is an overlooked aspect in a school's success. Unfortunately, too many schools have a problem accepting that. They give into notions that customer service is some business concept that has no or little relevance to a college. People in schools have a sense that customer service is somehow a call to pander to students, to just lower standards and make them happy. That is not customer service. That is cheating the client.
Colleges and schools are businesses at their core. Granted, unique and idiosyncratic businesses, but service providers all the same. Each and every one of them has its own culture, mores, folkways, traditions, codes--both written and unwritten--and a language called academic-ese that generates its uniqueness. Yet, common to everyone is a business model including budgets, personnel, administrations, strategic plans, marketing, customer acquisition, and so on that make IHEs businesses. And they also have clients/customers called students and employees that demand services.
But higher education and its individual schools are unique from other business models and so customer service needs to recognize that. The approaches of the world of commerce and corporations do not always work. At best, they need to be adapted to recognize that the services in a school are not exactly equal to selling widgets. Platitudes will not work. What will work is recognition of concepts such as Learn and Earn and using it to assure that students get the returns on investment they seek.
And schools must keep in mind what restaurants must always be concerned with. The core service is the final product itself. A nice waiter can never make up for bad food. But a nice waiter can make good food that much better and keep customers loyal. In a school, the product is the education itself. A good education with good customer service will make for greater retention, happier students, and graduates who will support the school.
Neal A. Raisman, Ph.D., has led AcademicMAPS, a customer service consulting and research group, since its founding in 1999. He is the author of Embrace the Oxymoron: Customer Service in Higher Education (LRP; 2002) as well as two other books and over 70 articles and research pieces, many of them based on his customer service and marketing consulting at colleges and universities in the United States and Europe. He can be reached at nealr@GreatServiceMatters.com