How Much and By When? Essentials of ROI-Driven Enrollment Marketing

How much and by when? The essentials of ROI-driven enrollment marketing Presented by Tom Abrahamson tabrahamson@lipmanhearne.com

What we’ll cover today • The problem • ROI essentials • Case studies • Creating a plan (yes, today)

What is Accelerated Integrated Marketing (AIM)? • ROI-driven: how much and by when? • Something must get done. Now. Or soon. • Not “business as usual” • AIM layers-on • “Minds the gap”

Where we’ve done “AIM”… 32 institutions of all sizes and types, achieving a vast range of goals: • New campus and program launches • Repositioning academic quality • Targeted minority student growth • Same year enrollment turnarounds • Graduate and professional program growth and quality

So, what’s keeping you up at night?

How do you define ROI?

How do you measure ROI?

If you could wave a magic wand and achieve an enrollment goal, what would that be?

What’s standing in the way?

ROI marketing context

The Chart 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 We are here 1,000,000 500,000 0 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 Non-Public White Black Asian Hispanic American Indian

Tough if you’re in or around “white” states PA: -13% NY: -8% WV: -8% OH: -5% NJ: -2% MD: -3%

Competition is fierce 338 colleges and universities within a 100- mile radius of Philadelphia 533 colleges and universities within a 200- mile radius of Philadelphia

We have a problem

Build-a-Bear Generation Competition Money Worries

Most think we still own the conversation

International students

International students Adults

International students Adults Stop-outs

International students Adults Stop-outs Academic superstars

International students Adults Stop-outs Academic superstars Under-represented

2008 AMA/Lipman Hearne Survey: Respondents 1,012 organizations participated 101 colleges and universities

2008 AMA/Lipman Hearne Study Impact of investments not being measured effectively in terms of: Enrollment growth: 50% Experience with program/service: 38% Marketing campaign effectiveness: 35% Brand awareness: 30% Print advertising effectiveness: 17%

“Half of my advertising budget is wasted. Trouble is, I don’t know which half.” David Pottruck

ROI–driven marketing campaigns

ROI Marketing catches students “business as usual marketing” often misses.

Why do marketing? • To generate new enrollment • To retain students • To avoid decay in market share • To reinforce decisions about the institution • Oh yes … and to produce XX% of the revenue

What is expected of marketing? • To get results • To justify every penny spent • To achieve goals in the most effective manner possible • To use the appropriate marketing tools among all available

Typical marketing spending models • Percent of sales • Competitive emulation • Containment: selective funding • Correlational analysis: cause and effect • All you can afford

The marketer’s greatest skill is in defining ROI-type investment opportunities.

Some important terms • Net Present Value • ROI • Gross margin • Incremental Expenses • Cost of goods sold • Incremental customer value • Discount rate • ROI threshold or hurdle rate

1.Dream big 2.Dive deep 6 3.Pick your lures 4.Do the math STEPS TO AIM 5.Write the playbook 6.Go fishing

Set reach goals 1. Look beyond today Dream Big

Segment current students 2. Examine enrollment trends Dive Deep Prioritize who you can recruit, retain, or bring back

Determine optimal market 3. strategies for each segment (and not just new inputs) Pick Your Lures

What is the tuition impact? 4. What will it cost to get them to Do the Math. apply, enroll, and persist? Is it worth the investment?

The formula : Gross Margin – Marketing Investment ROI = Marketing Investment

ROI Tenets • The construct: all marketing expenditures viewed as investments • Three effects: Direct, Halo, Hawthorne • Measurability: expressed in terms of dollars over a specified time period • Collateral benefit: there are additional value-added “returns” incurred beyond revenue (but will not suffice as justification for failure)

An example of an ROI Campaign’s financial model: • Want to increase by 268 students by fall 2009 • $7,876 tuition per year • All new students will attend under-capacity programs • Four-year retention rate is 58%

ROI Metrics Gross tuition per semester generated by the 268 new students: 268 Students X $3,938 per semester Gross tuition: $1,055,384

ROI Metrics Investment: $351,443 in scholarships (33% discount) + $79,154 in additional staff + $527,692 in marketing Total investment: $958,289

ROI Metrics Net Revenue: $1,055,384 (tuition revenue) - $958,289 (total investment) Net Revenue: $97,095

ROI Metrics ROI for the first semester: $97,095 (net revenue) ÷ $958,289 (total investment) First semester ROI: 10.1%

ROI Metrics Carried out through the first year: 268 first semester students + 241 second semester students 509 total student tuition payments

ROI Metrics Carried out through the first year: 509 tuition payments X $3,938 per semester $2,005,230 accumulated gross tuition

Carried out over four years assuming 58% four-year retention of the cohort. Additional staffing is for recruitment only, not retention of new students. Budget Item Year One Year Two Year Three Year Four Total Gross Tuition $2,005,230 Marketing Investments $527,692 Discounts $667,741 Additional Staffing $79,154 Total Investment $1,274,587 Net Revenue $730,642 ROI 57.3%

Year Two Budget Item Year One Year Two Year Three Year Four Total Gross Tuition $2,005,230 $1,614,738 Marketing Investments $527,692 $0 Discounts $667,741 $532,863 Additional Staffing $79,154 $0 Total Investment $1,274,587 $532,863 Net Revenue $730,642 $1,081,874 ROI 57.3% 203.0%

Year Three Budget Item Year One Year Two Year Three Year Four Total Gross Tuition $2,005,230 $1,614,738 $1,372,527 Marketing Investments $527,692 $0 $0 Discounts $667,741 $532,863 $452,934 Additional Staffing $79,154 $0 $0 Total Investment $1,274,587 $532,863 $452,934 Net Revenue $730,642 $1,081,874 $919,593 ROI 57.3% 203.0% 203.0%

Year Four Budget Item Year One Year Two Year Three Year Four Total Gross Tuition $2,005,230 $1,614,738 $1,372,527 $1,166,648 Marketing Investments $527,692 $0 $0 $0 Discounts $667,741 $532,863 $452,934 $384,994 Additional Staffing $79,154 $0 $0 $0 Total Investment $1,274,587 $532,863 $452,934 $384,994 Net Revenue $730,642 $1,081,874 $919,593 $781,654 ROI 57.3% 203.0% 203.0% 203.0%

Total ROI Over Four Years Budget Item Year One Year Two Year Three Year Four Total Gross Tuition $2,005,230 $1,614,738 $1,372,527 $1,166,648 $6,159,143 Marketing Investments $527,692 $0 $0 $0 $527,692 Discounts $667,741 $532,863 $452,934 $384,994 $2,038,532 Additional Staffing $79,154 $0 $0 $0 $79,154 Total Investment $1,274,587 $532,863 $452,934 $384,994 $2,645,378 Net Revenue $730,642 $1,081,874 $919,593 $781,654 $3,513,763 ROI 57.3% 203.0% 203.0% 203.0% 133%

Prioritize strategies and tactics 5. High impact Write the Playbook Doable for fall ’09 Measurable

Exact execution 6. Measure Go Fishing Refine

Case Study #1 Kettering University The Perfect Fit

Kettering’s needs Redefine/establish Kettering 1. in the marketplace Kettering’s “big dream” Stop application decline goals Be true to the brand

Rigor in planning Conducted focus groups, 2. MPQ Kettering’s Mapped new areas to target “Deep Dive” Focus on “Perfect Fit” Invested 8 weeks in planning

Micro-targeting Right fit new suspects (not your great grandfather’s liberal arts college), dormant prospects, ets. 3. Special interest groups such Kettering’s segments as FIRST Robotics, Math and “lures” & Science Consortium Schools Parents Graduate students Referrers

If you can’t measure it, you can’t manage it. “Follow the format and fill in the blanks” 4. Financial models created for Kettering’s Math eventual net revenue

The Playbook 19 strategies developed to make the connection with the elusive “Kettering 5. Type” of student Kettering’s Playbook Avoid a catastrophic drop in Fall ’06 freshmen

How Kettering managed AIM: Launch/hoopla Involved and updated the community Constant monitoring of 6. progress Working the Plan Careful documentation of all changes and adjustments Constant tracking of % to goal Celebrated milestones

“Perfect Fit” Campaign Communications

The “Perfect Fit” student is a bit confident, bordering on cocky

Kettering students are wired differently

Parents needed to know that Kettering is the right fit for their kids

Message platform was consistent and pervasive

Results: New students 2007-09 Projected Expected

Results: Applications 2007-09

Case Study #2: University of Cincinnati Every Student Counts

79 University of Cincinnati in 2003, the challenge: • “Commuter” school, underappreciated locally • 4 consecutive years of enrollment decline • Immediate goal, April 2003: Identify and enroll an additional 1,900 students • Long-term objective: Multi-phased project to enhance reputation and increase enrollment, pride, fundraising

Our response: • Fall ’03 “Intervention” plan to mobilize the campus: Every Student Counts • Led a “studied” approach to branding and marketing planning • New look for publications, advertising (brand and retail) • ’04 to present: brand advancement, enrollment marketing, strategic PR

Every Student Counts goals: • Reverse 4-year decline • Increase enrollment by 1,900 students over prior fall • Increase credit hour enrollment by 900 FTE’s • Change business as usual: marketing spending (ROI) and practices • Do it in 8 months • Make it fun and non-threatening

Developed and implemented playbook • 21 discrete strategies • 80 staff engaged in the campaign • Internal launch and public commitment • 3 FTE additional staff • Lipman Hearne consulted, produced expansive creative tools

The brand work proceeded

Where it started: 2003

ESC Communications

ESC impact • 10,268 phone calls completed • 65,000 emails (prospects and alumni) • 134,396 postcards, personalized letters created and mailed • 156,005 fact sheets/brochures created and distributed • 10,323,400 radio, print and internet impressions

ESC Results • Headcount Goal was 1,901, actual was 1,904 (852 directly attributed to campaign) • FTE goal was 900; actual was 716 • Marketing Investment was $522,333 • Net revenue for the year without state subsidy = $4,054,984 ($642K under the net revenue goal of $4.7MM) • With state subsidy (at $579 per student) and ESC tuition, exceeded the total net revenue was $5.5 MM

Beyond Every Student Counts: Fall 2003: +1900 students Fall 2004: + 605 students Fall 2005: +15% new enrollment; largest class ever Fall 2006: Best quality class ever Fall 2007: First ever waitlist, +8% freshmen Positive revenue throughout

Let’s write a Playbook…

1. Dream big. What would be an amazing goal to achieve next fall?

2. Dive deep. Now break it down: Pick a definable segment and describe it.

3. Pick your lures. Where will you find them and what tactics will you employ? What’s your offer?

4. Do the Math. What data will you interrogate? Calculate the revenue per student – initially and over time

5. The Playbook. When will you do it and how will you measure success?

Discussion

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How Much and By When? Essentials of ROI-Driven Enrollment Marketing

by Lipman Hearne Inc. on Nov 20, 2009

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