If online education is such a lucrative opportunity, why do so many distance learning projects fail? That's the key question many universities are struggling to answer as they prepare their budgets for the 2004-2005 academic year.
In fact, in recent weeks, university presidents and trustees have been sequestered behind boardroom doors, trying to estimate next year's tuition income from traditional classroom settings and online endeavors. Some trustees surely demanded more information about long-term Internet revenue opportunities--and failed distance learning projects from years past. And it's no wonder. For example, one online education company that spent more than $100 million developing a best-in-class distance learning platform. Yet the company's online courses attract fewer than 1,000 students. That's a development cost of $100,000 per student--a horrid return on investment that would get most university presidents fired.
Without hands-on competitive research, how can you effectively position online programs in the marketplace?
Still, for-profit education companies and some universities continue to spend lavishly on their distance education programs. In some cases, pure envy drives the digital pursuit. Instead of focusing on students' needs, many traditional universities dream of competing with the distance education arm of University of Phoenix (www.uopxonline.com), which had 99,000 online students as of February. During the first six months of its current fiscal year, the university's revenue grew a stunning 59.3 percent to $361.8 million. It's not surprising that University of Phoenix's parent company, Apollo Group Inc. (www.apollogrp.com), is a Wall Street darling. Shares in Apollo have more than doubled over the past 12 months.
In years past, business professors told their students to analyze dominant organizations like Microsoft Corp., up-and-comers such as JetBlue Airways Corp., and Fortune 500 veterans like General Electric Co. Today, those same business professors, their students, and university officials are captivated by the University of Phoenix's spectacular growth. They read about the online university's success in the pages of BusinessWeek, The Wall Street Journal, and The New York Times. Trustees of brick-and-mortar IHEs call their university presidents and demand to know, "How come we're not in that market?"
The Real Problem
In fact, most universities do offer distance learning programs. But many of them don't live up to their hype. In some cases, immature technology is to blame for the online woes. Yet far more often, distance learning initiatives fail because of internal cultural issues across multiple departments--academic, financial, marketing, and so forth.
Combat resistance. I'm willing to bet that some of your own institution's professors experienced culture shock when your university asked them to teach online courses. That's cause for alarm: You can have the best online tools in the world, but they're useless without buy-in from your faculty and staff. What can you do about such resistance? Instead of making blanket demands of your faculty, ease them into the online learning world. First, identify a few progressive professors who are willing to be early adopters (read: guinea pigs) when you're rolling out new distance learning tools. Then, have your IT team--whether internal or outsourced--work closely with your early adopters to design intuitive tools for online education. And don't forget to ask the students what they want. Too often, we forget that students are customers. Sometimes, we're so busy preaching about the value of education that we forget to ask our customers how we can serve them better. Be sure to include alumni in these exploratory conversations--especially those who earned undergraduate degrees from your university and are now seeking online MBAs and other graduate degrees.
Shop the competition. Your faculty and administration should also do some comparison shopping. You know the University of Phoenix is successful, but do you know why? Has anyone at your own institution taken a University of Phoenix online course? Without this hands-on competitive research, your university isn't qualified to effectively position its online programs in the broader marketplace. You can bet that Toyota's engineers test drive--and disassemble--Honda automobiles regularly. To stay competitive in the digital world, IHEs would be wise to take a similar approach. Once you've got a good feel for the competition, let your early adopters and target customers (that is, prospective students) test graphical user interfaces, Web sites, and other core components of your distance learning system as it is developed.
Go for the standards. All of these systems should be designed on established technology standards, such as Ethernet, TCP/IP, Linux, Unix, Windows, and SQL (structured query language). And stick with mainstream software tools such as Blackboard (www.blackboard.com) and well-known video streaming software from RealNetworks (www.real.com) or the like. I've seen far too many distance education strategies fail because the system was designed on proprietary hardware or software that mainstream IT managers and programs didn't know how to support.
Hold workshops. When your early testers give the distance learning system a green light, it's time to hold informal workshops for your faculty. Here, the early adopters can show your technophobes the inherent power and value of distance learning systems. Do this once per semester, for two or three days at a time. Videotape a few of the workshops and promote sample online courses to non-attendees through your intranet.
Think 'complementary.' Finally, instead of predicting the demise of traditional brick-and-mortar classrooms, position distance learning as a complementary tool--much in the way that a microwave oven complements (but certainly doesn't replace) a traditional oven. Also, be sure your early adopters can describe why it's critical for an entire faculty to line up and support the distance learning system. Those who rally behind the system will energize students and generate grass-roots interest in online learning among their families, neighbors, and friends.
Exploit the Web. Even the best-designed distance learning systems can't thrive without proper marketing. Far too often, I spot distance learning ads in traditional print magazines. Don't forget that the online education process occurs in a digital medium, and you can't always be sure that print readers are Web savvy. When promoting online education programs, it's smart to spend your marketing dollars on the medium you're operating in--the Internet.
Use Web tools. In addition to promoting online programs via your Web site, embrace marketing tools such as Google's AdWords (adwords.google.com) and AdSense (google.com/adsense). For a small fee, AdWords ensures that your university is prominently displayed in the advertising portion of Google's search engine. When Web surfers search keywords associated with your university (such as "online MBA" or "online graduate courses"), up pops your institution's name. Similarly, AdSense delivers your online ads to education- and college-related Web sites. Google doesn't disclose pricing for AdSense and AdWords, but it's safe to say that the advertising tools won't break your budget. I know dozens of small firms that embraced AdSense and AdWords with great results.
Launch an e-letter. Another good idea: Have your Office of Alumni Relations launch a monthly e-newsletter for graduates and friends of the university. Using a low-cost design tool like Microsoft FrontPage or Macromedia Dreamweaver, a Web designer can whip together a simple one-page e-newsletter in less than a day. Use your established e-mail system to send the e-newsletter to alumni with known e-mail addresses--but be sure to give recipients the choice to "opt out" and cancel their e-newsletter subscription.
Promote to your e-letter audience. And don't neglect to heavily promote your online graduate programs within the e-newsletter. This approach allows you to truly zero in on your core audience: Web-savvy computer users who are familiar with your university and might be interested in online courses. Assuming you follow the advice above, you'll wind up with free or low-cost electronic messaging, rather than expensive print advertising that may not reach your target audiences.
Avoid Price Wars
Don't cheapen the brand. Some universities steeply discount their distance learning courses in order to attract students. This approach can backfire, however, because it cheapens your institution's brand and may prompt your traditional brick-and-mortar students to question why they're paying higher fees than their online counterparts. It gets even trickier to manage tiered pricing when a course has online and classroom components. The wiser move is to stick with a single pricing formula across the digital and physical worlds, and, whenever possible, allow your students to move seamlessly between them.
Go back to the source. Last--but certainly not least--if the strategies above don't work out, revisit your customers. Talk to alumni, current students, and prospective students, and find out where, precisely, your online strategy went wrong.
Joseph C. Panettieri has covered Silicon Valley since 1992 writing for InformationWeek, Ziff Davis Internet, and others. He is the former editorial director of the New York Institute of Technology.