Higher education is in the midst of an existential crisis. As enrollment continues to dwindle (by nearly nine percent since 2011, according to National Student Clearinghouse), many colleges, especially smaller private institutions that rely mostly on tuition, are facing increasing deficits that hinder their ability to invest in academic programs, student services and facilities. This is affecting schools’ ability to meet the desires of prospective students who are instead opting for larger colleges in greater numbers, further exacerbating enrollment shortfalls.
To combat the enrollment crisis, many private colleges are faced with lowering admissions standards (and therefore reputation), pricing themselves out of the market with a decade-long trend of tuition hikes, or simply continuing to miss enrollment benchmarks, ultimately leading to less and less students in their classrooms.
This perilous downward spiral has already begun to play out, as a recent spate of private school closings in the past couple years has substantiated a 2015 prediction by Moody’s that closures would triple from the average.
The Focus on Lead Quantity
Over the last decade or so, higher education marketing departments have attempted to bolster enrollment with high-touch, high-quantity lead generation strategies. The logic is that by generating as many leads as possible from a marketing perspective (often by indirect means such as purchasing third party lists or through affiliate marketing), an institution is statistically likely to convert more of those leads into students and fill the desired cohorts.
This strategy puts an emphasis on quantity over quality of leads, and it places tremendous pressure on downstream entities to handle this influx of prospective students — many of whom may not be a great fit for the college. As more leads are funneled to enrollment and admissions departments, the overhead required to cover enrollment counselors, career and financial advisors and miscellaneous administrative positions increases.
The result is a dangerous tonic of low-quality, high-touch leads who are less likely to convert and/or matriculate, who create antagonism between marketing, enrollment and other downstream departments, and who eventually put strain on faculty who must teach students who may or may not be engaged in or prepared for the classroom.
Student Lifetime Value
When discussing enrollment, it is therefore crucial to consider quantitative and qualitative factors. The latter includes elements such as type of student, ability to matriculate, ability to graduate, impact of career, etc. These create a self-sustaining referral chain, allowing colleges to avoid the trap of paying for more leads instead of relying on the ones who have already become ambassadors for them.
Overall, these concepts are often discussed in reference to the Lifetime Value (LTV) of students. LTV is not new terminology in the higher education space, but the way in which schools define it and the factors that affect it are key in creating value and new ideas for marketing and admissions departments.
LTV takes into account the amount of enrollments a university needs to satisfy certain institutional objectives — e.g. meet tuition requirements, fill particular programs, etc. — but with some important caveats. Once a student begins classes, he/she must contribute to the overall experience of the classroom, provide new ideas and insights, challenge prevailing opinions, provide an overall sense of learning and advancement and finally graduate as a positive influence on the university as a whole.
This is the “value” in LTV, and it manifests itself on both sides of the classroom — the value a student gets throughout the lifetime of his/her relationship with a college, and the resulting value for the college in terms of that student’s positive influence on the institution’s reputation and new prospects. Colleges should be evaluating their leads not in terms of potential bodies-in-seats, but by their desire to succeed inside and outside of the school. This creates an alumni referral network where future leads can feed off an already established reputation of success.
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Taking a New Approach to Higher Education Marketing
When higher education institutions view enrollments as a way to simply fill a cohort as opposed to an engaged, graduating class, there is far less value for a student in enrolling. Again, LTV should be taken into account in terms of the amount of enrollment a school needs to achieve institutional objectives and in terms of a student’s ability to contribute to the classroom, graduate, make a difference in their community, become an involved alumnus and ultimately give back to the school and their community. Rather than attempting to build an alumni network only after graduation, colleges should start investing in strong future-alumni at the start of the student journey.
Determining student LTV requires new efforts from marketing departments, and it starts with changing the way they look at lead generation. Seeing cost per lead (CPL) as the most important metric isn’t a solution, because it’s easy to generate a multitude of low-quality leads who likely won’t convert. Instead, schools need to balance lead generation at the top of the funnel with qualitative factors that take effect as the student moves through his/her educational career and beyond. By doing this, higher education institutions can begin recovering enrollment, building lasting networks and regaining their reputations.