Customer relationship management for continuing education


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This whitepaper will show you how implementing basic CRM principles can aid your marketing and recruitment efforts. Written with continuing education in mind, it's useful for marketers working in any organization.

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Customer relationship management for continuing education

  1. 1. Customer Relationship Management for Continuing Education J. Todd Bennett This whitepaper will show you how implementing basic CRM principles can aid your marketing and recruitment efforts. Written with continuing education in mind, it's useful for marketers working in any organization. Summer 2004
  2. 2. CRM for Continuing Education Copyright 2004 J. Todd Bennett WHAT IS CUSTOMER RELATIONSHIP MANAGEMENT? Customer relationship management (CRM) became a popular buzzword in the late 1990s as savvy retailers saw an opportunity to harness the power of technology to personalize their interactions with customers while improving organizational efficiency and profitability. Such practices are now the norm in the e-commerce world and have begun to revolutionize the way we do business, education and even politics. In recent years, higher education has faced tightened state budgets, tremendous hits to endowments due to fluctuation in the stock markets, increased costs and calls for greater efficiency and accountability from trustees, accrediting boards and government. Essentially, colleges and universities are expected to do more with less at a time when expectations of prospective students are high. Indeed, higher education is trending toward increased consumerization as prospective students often view their purchase decision in terms of features, benefits and value. Such consumerization, where educational programs are viewed as products and students as customers, runs contrary to the traditional academic culture. However, this is reality for most institutions, particularly in continuing education. Call it what you will, but the need for marketing and sound business principles exists. So what is CRM? Brent Frei (as cited in Greenberg, 2002) defines it as: …a comprehensive set of processes and technologies for managing the relationships with potential and current customers and business partners across marketing, sales, and service regardless of the communication channel…. The goal of CRM is to optimize customer and partner satisfaction, revenue, and business efficiency by building the strongest possible relationships at an organizational level. Successful CRM requires a holistic approach to every relationship with the entire organization sharing and contributing to that view. (p. 16) In a nutshell, CRM is about finding new customers, collecting information about them along the way to further enhance their experience, and developing relationships to keep them for the long- term. In older CRM definitions, technology was at the center of the process. Today, the customer is the focus. Technology is simply the tool used to facilitate the interaction in a highly personalized manner. Figure 1 illustrates a CRM pyramid where technology serves as the foundation or support to the marketing, sales and service functions. At the very top of the pyramid is the customer, whose preferences and needs drive the demand for program offerings and set the direction for all relationship communication activities. The best technology platform and expensive marketing and promotion strategies are doomed to fail if the organization’s product offerings do not meet the needs of its customers. Again, the customer is key to the process.
  3. 3. CRM for Continuing Education Copyright 2004 J. Todd Bennett Figure 1. CRM pyramid shows technology as the foundation with a focus on the customer at the top. Turner (n.d.) points to the fact that many continuing education units are only able to recruit faculty by allowing them to “teach to their heart’s desire.” The result is a course catalog that in some cases is irrelevant to the adult learner, particularly career changers or career enhancers. She elaborates: Faculty must be convinced that developing courses that respond to the adult population will be more likely to yield both higher enrollments and enthusiastic students. And adult learners must be convinced that the courses and programs you offer meet their needs and goals. This underscores the need for good market research and demographic trend analysis to target program needs and marketing strategies to the diverse populations often served by continuing education. Flynn, Belzowski, and Haas (2002) indicate a trend towards offering more customized products, rather than products for the masses, as indicated in Figure 2 (p.2). Such trends are evident throughout the retail and service industries, including education. In continuing education, successful programs will be poised to provide greater product customization through the packaging of various course and program components. The advent of e-learning has facilitated the ability to create course modules that can be arranged and sold in countless combinations. New certificate programs can be offered simply by mixing and matching components of others with little or no effort required in program development. Such packaging options are a stark contrast to the traditional academic model where students select from existing programs with a fixed curriculum, cost, time and place. It is thought that customized, build to order program options may result in greater customer satisfaction and loyalty (p.10).
  4. 4. CRM for Continuing Education Copyright 2004 J. Todd Bennett Figure 2: Paradigm shift in retailing will be seen in continuing education. Note. From Flynn, M.S., Belzowski, B.M., & Haas, S. (2002). E-CRM and the Automotive Industry: Focusing on Customers. Ann Arbor: University of Michigan Transportation Research institute, Office for the Study of Automotive Transportation. Retrieved August 10, 2004 from Building relationships contributes to customer satisfaction and is a key component of CRM. Rather than focusing on an immediate sale, continuing education marketers with a relationship focus have a long-term view, understanding that today’s customer is tomorrow’s loyal customer. Technology contributes to the success of this entire process. With the increased premium placed on consumers’ time in today’s world, anytime, anyplace information, registration, customer service and course delivery options are of great value. Web-based marketing, e-commerce and online customer service are becoming the norm in retail, and customers have come to expect the same in education. Such tools will revolutionize the way in which institutions interact with students and will require careful examination of traditional organizational models to ensure they adequately support such a paradigm shift. CRM AND THE ORGANIZATION Traditional organizational structures are hierarchical in nature. Information flows from the top to the bottom, is filtered through others or sometimes does not flow at all. Those with the greatest customer contact, front-line staff, are often the last to know important institutional information as they are at the bottom of the informational flowchart (see Figure 3). Similarly, information gleaned by those staff about customer preferences and concerns rarely makes its way back up the chart to key decision makers and leaders of the organization. To complicate matters further, many continuing education units are sub-divided into mini-organizations. It is not unusual to find divisions of credit or non-credit programs, certificate or degree programs, or online or classroom based programs. Not only are there opportunities for communication breakdowns vertically, from the top to the bottom of the organization, but horizontally across various units
  5. 5. CRM for Continuing Education Copyright 2004 J. Todd Bennett within, particularly when program planning and marketing happen independently in each sub- division. Figure 3: A traditional organizational hierarchy The result of such a scenario is a collection of independent businesses, each with separate product lines, marketing strategies and customer bases sometimes operating in an environment of competition rather than cooperation. This is known as “product departmentation” (Rue & Byars, 1992, p. 255). Implementing CRM in this environment, regardless of the technology platform, has potential pitfalls due to sometimes conflicting motivations. In such an organization, marketing strategies that target various market segments, rather than specific programs, will require cooperation and sharing of resources. It is entirely possible that one department will contribute to a marketing effort that drives customers to a website resulting in a sale for a program in a different department (i.e., the CRM tool was effective in matching program offerings to customers’ needs, which may be a program other than the one originally marketed). In an environment of scarce resources where individuals’ performance is measured by their department’s bottom line rather than the success of the entire organization, incentives to cooperate, share resources and focus on customer needs over their own are few, if not entirely absent. An alternative organizational structure would be based on “functional departmentation” (Rue & Byars, 1992, p.254). In this model, the organization would be departmentalized by functional areas such as program development, marketing, budget, customer service and sales. One advantage to this option is that it allows for specialization in each area, resulting in a more efficient use of resources. The quality of each function is increased as individuals are able to develop expertise in specific areas, rather than in every functional area (as is the case in the product departmentation model). Another advantage is that the organization can truly focus on the customer. This means reacting more quickly to changes in the external environment by creating or eliminating programs as demand dictates, focusing marketing dollars on customer-centric strategies that may cross program lines and support the overall needs of the organization, and delivering higher quality customer support by using highly trained sales and support staff who are knowledgeable in all product offerings. Competition between departments is practically eliminated
  6. 6. CRM for Continuing Education Copyright 2004 J. Todd Bennett as a spirit of teamwork and cooperation becomes a prerequisite for success. Such a model works well in the type of information-centered organization required for successful CRM (see Figure 4). Figure 4: An Information-Centered Organization Note. Adapted from Network Frontiers (n.d.) A New Model of Business. Retrieved August 17, 2004 from 20Model.html Rather than a hierarchy, what results is a hyperarchy where information is far reaching and flows throughout the organization (Network Frontiers, “A new model,” n.d.). Customer information therefore affects the decision-making in every functional area. Again, technology serves as a tool to collect and disseminate information. This organizational structure takes full advantage of such a tool and maximizes the information to the advantage of both the customer and the organization. Regardless of the organization, however, appropriate lines of communication must be established for planning and implementation of marketing efforts. MARKETING AND CRM Identifying your customers As discussed, CRM is about getting, keeping and growing customers. Customer needs, wants and preferences are the driving force for all program development and marketing. It makes sense then that the first step in marketing is identifying your customers. Continuing education providers offer a wide range of programs serving a myriad of audiences. Each of these audiences has different needs and different ways of communicating. As said before, the “one size fits all” approach to marketing is ineffective in this situation. So it is imperative that customers are first divided into audience groupings or segments.
  7. 7. CRM for Continuing Education Copyright 2004 J. Todd Bennett There may be a population of two million prospective students in your market. In that group there may be children, high school students, college students, working adults and retirees. Those groups might break down into smaller groups including parents, professionals, job seekers, degree seekers and so on. Each of these groups is a market segment. Understand that these groups are not mutually exclusive—there may be overlap—and your various product offerings may be marketable to multiple segments (see Figure 5). Figure 5: Market Segments may not be mutually exclusive. Program offerings may overlap one or more market segments. The customer buying experience The purchase process can be thought of in terms of the customer experience. In deciding to take a course or pursue an educational program, the prospective student moves from broad interests to a more narrowly defined goal, which eventually may result in enrollment. This process can be viewed as a “customer experience funnel” (see Figure 6). At the first stage, awareness, customers are relatively passive. They are made aware of your institution, its offerings and reputation, through various messages in the media, word of mouth, and other sources. At this stage, it is important to ask the question “what do people in this market segment know about our institution and its programs?” Sometimes what customers believe about your brand and what you want them to believe are not the same. Though people at this stage may not be in the market for what you have to offer, it is important that your general brand awareness messages still reach them so that you might be considered when they do desire such offerings. At the second stage, information seeking, customers begin actively seeking information about educational programs through such sources as the Internet, advertising, friends, employers, job training centers, etc. At this stage, customers are exploring their options. Keep in mind, the greater the awareness of your programs, the more likely you will be considered when customers are seeking specific information.
  8. 8. CRM for Continuing Education Copyright 2004 J. Todd Bennett Figure 6: Customer Experience Funnel Note. Adapted from Flynn, M.S., Belzowski, B.M., & Haas, S. (2002). E-CRM and the Automotive Industry: Focusing on Customers. Ann Arbor: University of Michigan Transportation Research institute, Office for the Study of Automotive Transportation. Retrieved August 10, 2004 from Customers begin narrowing their choices at the shopping stage. It is here that customers are influenced by the “4 Ps of marketing”—product, price, place and promotion—and are comparing the features and benefits of your products with those of your competitors. This is where prior efforts to understand the customer and create product offerings that meet their needs begin to pay dividends. In fact, rather than thinking of the traditional “4 Ps,” practitioners of CRM would view the shopping experience from a customer perspective in terms of the “4 Cs”—customer, cost, convenience and communication. Each of these factors contributes to the success or failure of a program. The fourth stage is the purchasing stage. This is what happens when the customer has decided on the program s/he wants to purchase. In higher education, this can also be one of the most confusing or frustrating stages of the entire experience as prospective students are frequently shuffled between offices and staff to jump the bureaucratic hurdles of the application, payment and registration process. It is here that a good eCRM platform with a user-friendly interface (i.e. website) can facilitate a seamless and hassle-free buying experience, regardless of internal organizational policies and processes. It means providing the convenience of online one- stop-shopping for the customer even as manual back-end processes stay the same. The program that closes the deal will be the one that has focused the most on the customer experience. What happens after the purchase? CRM does not end with ownership. The goal of CRM is to maintain the relationship with the customer over the long-term to create loyal customers. Communication continues well beyond the first purchase, not just in the marketing of future courses but through other value-added tools and resources provided by the eCRM platform. For example, a program may keep past customers coming to its website with special content for alumni, supplemental resources related to its courses, online transcript ordering, etc. Communication and the customer experience Once you understand the various stages of the customer buying experience, you will want to communicate appropriately with your customers depending on where they are in the process. In
  9. 9. CRM for Continuing Education Copyright 2004 J. Todd Bennett general, as a customer progresses from awareness to ownership, the search becomes more active and the information sought more specific (see Figure 7). Figure 7: Purchasing stages information and search patterns Note. From Flynn, M.S., Belzowski, B.M., & Haas, S. (2002). E-CRM and the Automotive Industry: Focusing on Customers. Ann Arbor: University of Michigan Transportation Research institute, Office for the Study of Automotive Transportation. Retrieved August 10, 2004 from For example, to reach customers in the awareness stage, you might focus on more general brand awareness messages in the mass media or targeted brand messages via direct mail. As the customer begins seeking information, the quality of information available on your website, the usability of the site and your time to respond to customer inquiries are increasingly important. In fact, email and the Internet have made customers relatively intolerant of slow responses. An acceptable response time that might have been days just a few years ago is now hours or even minutes. Customers also have much higher expectations for service. Many institutions consider sending frequent mass emails to build a relationship. But to develop a relationship, communications must be well-timed and relevant, and respond to individual needs. Personalization in the long-term development of relationships is key, particularly in the shopping and purchasing stages. Each point of contact with prospective students, whether it is with faculty, staff or even your website, represents your institution and your brand. It is vital that the messages and service are consistent and of high quality at all levels, especially on the front lines with staff who field customer inquiries. The marketing funnel Once you identify your market segments and understand the buyer experience, it is time to develop marketing and communication strategies to move customers in each segment from awareness of your programs to ownership of them. To do this, it is useful to group the customers in each of your segments into categories according to where they are in the buying process. These categories fall into what is known as the marketing funnel (see Figure 8). Throughout the funnel, strategies should be put in place that will move groups of people from one stage to the next. As is
  10. 10. CRM for Continuing Education Copyright 2004 J. Todd Bennett apparent from its shape, there are fewer customers at each stage of the funnel. In fact, it may take contact with tens of thousands of strangers to acquire just a few customers. Figure 8: Marketing Funnel Note. Adapted from Network Frontiers (n.d.) Marketing funnel goal. Retrieved August 17, 2004 from als.html The first stage of the funnel is “stranger.” This is by far the largest group. People at this stage don’t know you and you don’t know them. The goal at this point is to better understand them, determining their needs and whether your program offerings meet their needs. This may require sound market research. You also want to make them aware of you and get them to show an interest in what you offer. Methods for doing this may include direct mail, trade shows, advertising, the Internet or email. After a successful awareness campaign, a smaller group of people will show their awareness and become “friends.” This means that they have responded in some way by either visiting your website, calling or stopping by your booth. People at this stage may not yet show interest in a specific program and may still be anonymous. They are just “checking you out.” The goal here is to create interest in a specific program and capture contact information. In other words, you want to generate inquiries. This can be done by offering customers something in exchange for information about themselves. Offers might include free downloads, sample courses, a newsletter, reservations at an information session or a brochure. The next stage of the funnel is “shopper.” Again, this group is even smaller than the one before. These people have identified a specific interest in a program and have provided their contact information. The goal here is to convert the shopper to a customer. Using the information provided, you might achieve your goal through a combination of telephone calls, emails, brochures
  11. 11. CRM for Continuing Education Copyright 2004 J. Todd Bennett or personalized web content. The key here is a timely, personalized and detailed response to inquiries. It is also important to sustain this contact until the person becomes a customer or indicates there is no longer an interest and asks not to be contacted. Those shoppers who do not convert to customers can be a good source of market research. Why did they not buy your course? On average the resulting “customer” segment will be about 0.5% of the group of strangers you started with (Network Frontiers, n.d.) . But your job is not finished after the first sale. Customers who purchase one course are prime candidates for the next course or a related program. Additionally, satisfied customers refer others to your institution. By continuing to market to this group, you not only maintain those relationships, but you also extend your reach through word of mouth. The “loyal customer,” one who has taken multiple courses or programs, can also serve as an advisor to your programs. Focus groups and advisory committees comprised of your loyal customers can provide keen insight into areas of improvement and opportunities for new program development. Satisfied students and alumni provide compelling testimonials for your programs and can serve as active recruiters. Note that these funnel stages are generic. Depending on your internal processes, you may choose different names for each stage or even have additional stages. For example, degree programs that require a lengthier application process may have additional steps (see figure 9). Figure 9: Traditional Enrollment Management Recruitment Funnel In the traditional enrollment management recruitment funnel, many institutions have renamed the stages to move prospects through the funnel to generate applicants, admits, matriculants and graduates. The number of stages you have and what you call them is not as important as what you do with them. The development of specific marketing strategies at each stage of the funnel and a means to measure success is essential.
  12. 12. CRM for Continuing Education Copyright 2004 J. Todd Bennett Marketing strategies and measurement As discussed, the goal of all marketing strategies should be to move people from one stage of the marketing funnel to the next. Success is measured by the rate at which people move through the funnel or the “conversion rate.” This is simply the number of people at one stage of the funnel divided by the number at the prior stage, displayed as a percentage. Conversion rates may vary dramatically at various stages of the funnel, but in general they are higher as people move closer to becoming customers. Through careful measurement and tracking of conversion rates, you may find that they will vary also by market segment, program type and marketing strategy. Over time you will be able to use your actual conversion rates to determine the most successful and cost-effective marketing strategy for your targeted group at any stage of the funnel. For illustration purposes, suppose you want to do a direct mail postcard to members of the local business community to promote your upcoming “how to succeed in business” seminar. Your goal with this piece is to convert strangers to friends (i.e., get them to visit your website).You have an excellent source of names that can be purchased, but are unsure how many pieces you need to distribute to achieve your goal of 20 attendees in your workshop. If you have been tracking conversion rates on past direct mail campaigns to this audience, your calculation should be simple. Working backwards from your goal of 20, it is simple to calculate the desired targets at each stage of the funnel based on historical conversion rates (see Figure 10). Figure 10: Calculating marketing funnel targets based on conversion rates. If you have not tracked conversion rates in the past, this step may take a little bit of educated guessing. Over time, however, you will be able to refine these numbers based on actual responses from your target markets. In this example, you see that the target for the postcard is to get 250 visitors to your website. To do this you will need to purchase 5,000 names to send postcards. Once these 250 friends visit the website, you will need a strategy there to get at least 50 to convert to shoppers. For example, you might provide an offer such as “register now to download our free guide to success in business.” To get it, visitors simply provide answers to a few questions in an online form. Once they get your offer, it should be just enough to leave them wanting more. You may then institute a follow-up strategy to email each of the 50 inquiries or follow-up with a personal call to ask if they have any questions about the guide and your upcoming seminar. In just a few simple steps you have converted 5,000 strangers to 20 conference attendees. With each strategy, you should be tracking responses and determining conversion rates. However, the conversion rate alone is not necessarily the best measure of success. By factoring in
  13. 13. CRM for Continuing Education Copyright 2004 J. Todd Bennett cost, you might find that another strategy with a lower conversion rate is much more cost effective (see Figure 11.) Figure 11: Comparing cost effectiveness and conversion rates In this example, the most cost effective strategy is email to past participants. However, note that the chamber of commerce email blast resulted in a lower conversion rate than the postcard, but was much more cost effective (higher cost effectiveness ratings are better.) The calculation for cost effectiveness is simple (see Figure 12). Figure 12: Cost effectiveness calculation Basically, the cost effectiveness rating provides a consistent positive measure to compare the success of various strategies. So while the newspaper advertisement may seem successful on the surface with 100 responses, the email to past participants yielded nearly as many responses with no cost whatsoever and was exponentially more effective. Planning Clearly, marketing continuing education programs in a CRM environment can be complex. With potentially hundreds of program offerings serving a number of market segments in various combinations with targeted, personalized marketing strategies for each, the entire process might seem overwhelming. However, with a bit of planning, coordination and communication, it can all be quite manageable. The planning process can be broken down into five simple steps: 1. Identify market segments served by your organization 2. Match program offerings to each market segment 3. Within each market segment, develop marketing strategies with targeted outcomes for each stage of the marketing funnel
  14. 14. CRM for Continuing Education Copyright 2004 J. Todd Bennett 4. Implement strategies, collect data and measure results 5. Use data to drive future program development and marketing The marketing planning process is organic. Rather than a static document that is written once a year and put on a shelf, the marketing plan is constantly evolving, based on input from quality data and measured results. With careful planning, good communication, and a solid platform for data management, CRM can be a powerful tool for continuing education units looking to increase enrollments and revenue in an environment of tough competition and diminishing resources. By focusing on the customer at all levels, from program development to evaluation, institutions are likely to build brand loyalty, which will lead to long-term success.
  15. 15. CRM for Continuing Education Copyright 2004 J. Todd Bennett References Flynn, M.S., Belzowski, B.M., & Haas, S. (2002). E-CRM and the Automotive Industry: Focusing on Customers. Ann Arbor: University of Michigan Transportation Research institute, Office for the Study of Automotive Transportation. Retrieved August 10, 2004 from Greenberg, P. (2002). CRM at the Speed of Light: Capturing and Keeping Customers in Internet Real Time (2nd ed.). Berkeley, CA: McGraw-Hill. Network Frontiers (n.d.). A New Model of Business. Retrieved August 17, 2004 from Business%20Model.html Network Frontiers (n.d.). Marketing funnel goal. Retrieved August 17, 2004 from als.html Rue, L.W., & Byars, L.L. (1992). Management: Skills and Application (6th ed.). Boston: Irwin. Turner, C. (n.d.). Taming the Hydra: Toward Marketing Principles for Continuing Education. Retrieved August 17, 2004 from