Institutional Vulnerability and Strategic
Responses in Today’s Market
Stamats, Inc.
Cedar Rapids, IA 52406
julie.staggs@stamats.com
Atlanta, GA
800-553-8878, ext. 5069
35th Annual CCCU Presidents Conference
About Stamats
Stamats is recognized and respected as the nation’s higher education integrated
marketing thought leader. Our comprehensive array of innovative services has set
the standard for pairing insightful, research-based strategic counsel with compelling
creative solutions. We promise our clients the highest level of professional service
and attention to detail in the industry because, in the end, we know our success is
measured entirely by theirs.
Research, Planning, and Consulting Services
Creative Services
•
Image, perception, and brand studies
•
Creative concepting
•
Recruiting, marketing, brand, and academic
program marketability audits
•
Web strategies
•
Recruiting and advancement
publications
•
Tuition pricing elasticity and brand value studies
© 2011 Stamats, Inc. - 2
Stamats on Your Campus
Stamats has a wide array of presentations & workshops—like
this one—that we conduct on campus for departments, senior
leadership teams, and boards
A partial list of sessions includes:
• Major Trends That Will Impact Your Ability to Recruit Students,
Raise Dollars, and Market Your Institution
• Moving Ahead With Confidence
• Developing an Integrated Marketing/Brand Marketing Strategy
Please contact me for a complete list or to discuss a session for you in
greater detail.
julie.staggs@stamats.com
Overview
•
The perfect storm
•
A tough marketplace
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How students and parents will react
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Colleges in the middle
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“Move ahead” recommendations in:
– Leadership and governance
– Academic programming
– Marketing
– Fundraising
– Recruiting
© 2011 Stamats, Inc. - 4
© 2011 Stamats, Inc. - 5
Third Rail Issues
•
As you think about this presentation, consider which of the
issues we will discuss might have third rail implications for
you?
The Perfect Storm
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A confluence of four gales:
– Changing demography
– Rising cost to attend
– Increased competition for students and donated
dollars
– Duress in the economy among:
 Students and families
 Donors
 Creditors
© 2011 Stamats, Inc. - 7
Projected Number of High School Graduates
Total of Public and Private Institutions
4.5
4
3.5
3
2
1.5
Millions
2.5
Projected
Actual
1
0.5
Sources: National Center for Education Statistics
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
0
Projected Change in H.S. Graduates to 2018–19
+6
-9
-13
-20
0
+15
+34
+4
-1
-11
+53
+11
+33
+30
+5
+10
+4
+6
+59
-12
-8
+7 +15
+1
+6
+40
+5
0
+3
+13
+22
+11
-9
+18
-16
-8
-6
-21
-4
-1
+17
-7
-19
+33
+7
> 20%
+8 +11 +41
+11% to +20%
0% to +10%
-19
-6
+23
Decreases
Source: U.S. Department of Education, National Center for Education Statistics, December 2008
© 2011 Stamats, Inc. - 9
U.S. Population Growth by Ethnicity
(Number in Thousands)
400000
350000
300000
250000
Hispanic
Caucasian
Black
Asian/Pacific Islander
American Indian
200000
150000
100000
50000
0
1997
2000
2005
2011
2015
2020
2025
2030
2035
2040
2045
2050
(Year)
• Minority population rising to about 50% of population by 2050
• 76% of Asian Americans have college degrees (only 67% of whites, 9% of
blacks, and 7% of Hispanics have degrees)
• Asians account for 26% of freshmen at MIT, 24% at Stanford, 19% at Harvard,
15% at the University of Chicago, 17% at Cornell. By 2011, >50% at UC schools
Sources: U.S. Census Data, The College Board
© 2011 Stamats, Inc. - 10
Majors of Interest to Prospective Students
•
•
Public-bound
– Undecided (8%)
– Business (10%)
– Nursing (7%)
– Education (7%)
– Engineering (6%)
– Psychology (5%)
•
Fastest-growing majors
– Business
– Social sciences and history
– Education
– Health professionals and related clinical sciences
– Psychology
– Visual and performing arts
– Communication, journalism, and related programs
– Biological and biomedical sciences
– Engineering
Private-bound
– Undecided (7%)
– Business (9%)
– Nursing (5%)
– Education (6%)
– Engineering (6%)
– Psychology (7%)
Source: The College Board and Stamats’ 2009 Spring TeensTALK®
© 2011 Stamats, Inc. - 11
Fastest Growing Occupations
•
2008–2014:
– Network systems and data communications analyst
– Nursing
– Physician assistant
– Computer software/systems engineer
– Physical therapist
– Medical researcher
– Occupational therapist
– Network and computer systems administrator
– Engineering (environmental)
– Elder care/social services
– Energy, especially renewable
– Security
– Government service
Sources: Business 2.0, USA Today
© 2011 Stamats, Inc. - 12
Registered 501(c)(3) Organizations – 1995–2008
1,186,915
1,128,367
1,064,191
1,045,979
1,010,395
964,418
909,574
865,096
819,008
773,934
733,790
692,524
654,186
626,225
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Source: Giving USA 2008
© 2011 Stamats, Inc. - 13
Tough Times – Jobs
•
In December 2010
– Unemployed: 15.1 million
– Unemployment rate: 9.8% (up from
9.6 last three months)
•
December 2010 unemployment – key states
– Ohio
10.1%
– Illinois
10.1%
– Michigan
13.1%
– Pennsylvania
– California
•
9.2%
12.4%
The number of long-term unemployed, those without a job for 27 weeks
or more is at 6.3 million
– Accounts for 41.9 percent of the unemployed
•
6.1:1 ratio of people looking for jobs to job openings
© 2010 Stamats, Inc. - 14
This will be a jobless recovery.
© 2011 Stamats, Inc. - 15
Tough Times – Housing
•
1/8 homeowners owe more on their house than
it is worth
•
1 in 45 homes are in foreclosure
– There are 3,141 counties in the US; half the foreclosures
are in 35 counties
© 2011 Stamats, Inc. - 16
The economy is not the cause of many of the problems
that are facing higher education.
It has merely exacerbated issues and trends that have
long been in play.
© 2011 Stamats, Inc. - 17
The biggest indicator of institutional success is not the
number of students or even your discount rate.
The key number is net tuition revenue.
Many privates had record enrollment this fall, but many
of those schools also missed their net tuition revenue
goals.
© 2011 Stamats, Inc. - 18
We Can Expect – Students and Families
•
The big issue in their minds: Affordability
•
Students will apply to more and more schools
•
More students will opt for two- and four-year publics and for-profits
•
Students will transfer more often
•
Students will seek and expect more financial assistance
•
Students will be wary of aid packages that are predominantly loan
based
•
More students will need to work while attending school
•
Students will flock to majors with clear job prospects
•
Students will attend school closer to home, even online
•
Parents will become even more involved in the college-choice process
© 2011 Stamats, Inc. - 19
A Bit About Graduate Students
© 2011 Stamats, Inc. - 20
Chronicle: College 2020
•
Three types of schools:
– Flagships and well-branded
 Will do well
– The colleges in the middle
 Unknown privates with precarious finances that largely focus on
residential, full-time students
– Commodity (public and private, for-profit)
 Most will at least do OK; some will do well
© 2011 Stamats, Inc. - 21
Eight Key Areas
•
Drawing on research, existing literature, and best practices, let’s look at
the colleges in the middle through eight lenses:
1. Institutional type and description
2. Leadership and governance
3. Finance
4. Academic programming
5. Recruiting and financial aid
6. Retention
7. Fundraising
8. Marketing
© 2011 Stamats, Inc. - 22
Queuing Up on the Front Porch
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•
Every college has at least some of these issues
Colleges in the middle have a preponderance of these issues
© 2011 Stamats, Inc. - 23
Institutional Type and Description
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•
•
•
•
•
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Private
Rural/remote
Small < 2,000 students
Tuition dependent
High discount rate
Insufficient net tuition revenue
Focus almost exclusively on traditional, full-time students
© 2011 Stamats, Inc. - 24
Leadership and Governance:
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•
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•
•
•
•
•
•
•
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President has been in place for <4 years or >12 years
Vision is not compelling nor differentiating
Senior team is not cohesive
Managing rather than leading
Trustees and senior team are at cross-purposes
Unable to identify blue ocean initiatives
Faculty are bimodal: <35 and >55
Inability to agree on challenges school is facing
Unable to make tough decisions in a timely fashion
No real commitment to execution
Cut resources in revenue-generation areas:
– Recruiting
– Fundraising
– New programs
No reward system in place that recognizes success
© 2011 Stamats, Inc. - 25
Finance
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•
•
•
•
•
•
•
•
•
•
•
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Cost to attend is higher than major competitors
Less than 3:1 ratio between endowment and operating
budgets
No cash reserves
Short-term “bridge” financing required in final quarter of academic year
Increase in uncollectable receivables
Debt service more than 10% of annual budget
Few unallocated dollars (little ability to invest in a blue ocean initiative)
Few strategic alliances/networks/associations/consortia that allow you to
achieve economies of scale
Bond rating has been lowered
Salary freezes
Deferred maintenance
Reductions or eliminations to retirement contributions
Suspension of capital expenditures
© 2011 Stamats, Inc. - 26
Most institutions can no longer afford to be what they’ve
become. – Robert Dickeson
© 2011 Stamats, Inc. - 27
Academic Programming
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•
•
•
•
•
•
•
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Focus largely/solely on liberal arts; much less
emphasis given to pre-professional programs
Academic leadership and faculty refuse to recognize
marketplace trends
Traditional faculty undermine new academic initiatives
No new degree program offered in last two years or degree programs
designed without marketplace data
Takes longer than one year to bring new program on line
Academic core is overly complex
– Precludes transfer-student recruiting
– Encourages academic featherbedding
Chasing too many different accreditations
Academic programs are largely indistinguishable from competitors
Too many majors with too few students
© 2011 Stamats, Inc. - 28
If you don’t believe in reincarnation, come back as an
academic program and enjoy eternal life.
– Robert Dickeson
© 2011 Stamats, Inc. - 29
Recruiting and Financial Aid
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Understaffed or staff is not seasoned
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Focus largely on residential undergraduate students
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No segmentation of prospective students
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No transfer recruiting strategy
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Aid for current students is disproportionately loan based
•
Non-loan aid is disproportionally focused on new or returning students
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Have a high discount rate (uncertain brand value)
•
•
Qualification for federal financial aid has been downgraded
Parents push back on tuition increases; insist on repackaging of aid
© 2011 Stamats, Inc. - 30
Retention
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Have not developed a profile of a persisting student
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Non-existent or ineffective first-year experience program
•
No “early warning” system
•
Pressure to get the class has undermined ability to
shape the class
– More students who are not a good fit
– Students from the lower third of their high school class have less
than a 20% probability of graduating in eight years (Townsley)
•
First year to second year and four-, five-, and six-year graduation rates
are slipping
© 2011 Stamats, Inc. - 31
Fundraising
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Understaffed or staff is not seasoned
•
Annual giving is flat or declining
– Less than 20% of alumni give to annual fund
– Still doing annual fund annually
•
Capital giving is flat or declining
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Campaigns are taking longer to close
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Donors backing out of their commitments
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Trustees do not financially support the institution at a significant level
•
Size of donor pool is stagnant
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No giving pyramid
© 2011 Stamats, Inc. - 32
Marketing
•
Marketing is seen only as promotion
•
Political issues are confused as marketing issues
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No valued and differentiating brand
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Have not embraced an integrated marketing model
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Marketing plan does not dovetail with recruiting and fundraising plans
•
No consistent use of measurement to determine marketing
effectiveness
© 2011 Stamats, Inc. - 33
Is the Model Broken?
•
Our historic model of higher education depends on a sufficient number
of traditional-aged students who are willing to pay a large portion of
their tuition
•
Considerable data suggests that this pool of students is declining and
there is no data to suggest that, at least nationally, the pool will get
larger
•
If schools that largely serve traditional students wish to get larger,
someone has to get smaller
•
In the future, full-time, residential, private higher education will simply
be beyond the reach of anyone but the most affluent
© 2011 Stamats, Inc. - 34
Living Within Our Means
•
The biggest challenge facing
higher education is the need to
align mission/vision with available
resources
•
Requires:
– Data
– Vision
– Political will
– Decision-making
© 2010 Stamats, Inc. - 35
So How Do We Respond?
•
Let me offer “top line” suggestions in five
areas:
– Leadership and governance
– Academic programming
– Recruiting and financial aid
– Fundraising
– Integrated marketing
•
I am going to leave out finance because in many cases financial issues
occur because of problems in the five areas outlined above
•
Before we proceed, let’s lay a foundation
© 2011 Stamats, Inc. - 36
Demystifying Turnarounds
•
If you look at the true college turnarounds (the Elons, the USCs, the
Highpoints, the NYUs) they all have six common denominators:
– Great leadership
– Strong senior team
– Compelling vision
– Board support
– The ability to raise money
– A willingness to stay the course
© 2011 Stamats, Inc. - 37
The single biggest challenge facing colleges is cost.
© 2011 Stamats, Inc. - 38
Why College Costs So Much…an ongoing conversation
•
Yes, colleges are labor intensive (estimated at 75% of cost)
•
But some bad practices have significantly contributed to the cost run up
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Focus on “purchasing” expensive inputs
Tuition discounting
Increasing debt service
Consumerification (confusion over student “wants” vs student “needs”)
 Including athletics
Technology
Rise in number of middle managers
Too many majors with too few students
Unsustainable student/faculty ratio
Too many academic departments
Complex cores designed, in part, to keep faculty busy
Number of credit hours for a major or to satisfy core continues to climb
Federal and state compliance (regulation)
Layers of accreditation that often serve the institution rather than students
© 2011 Stamats, Inc. - 39
Students and parents are both the victims and
perpetrators of the cost escalation – Larry Large
© 2011 Stamats, Inc. - 40
Sources of Revenue
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Improve student recruiting
Enhance fundraising
Improve retention
Seek sponsored research
Seek earmarks, including stimulus dollars
Grant writing
Auxiliary services
If I Only Had Time for One Lesson…
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It would be on differentiation
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How are you truly different from competing
privates and publics in ways that students and
donors care about?
•
Finding this point of differentiation must be of
paramount importance
•
If you can’t find this point of differentiation, then
your students can’t find it either
– It is not about doing more
– It is not about being better (almost every
college is better enough)
– It is about being different in a way that is
compelling
There is almost no way to overstate the
importance of being compelling
•
1
© 2011 Stamats, Inc. - 42
You do not need to differentiate yourself from every
college in the country.
You only need to differentiate your institution from your
top four or five competitors in ways that students and
donors value.
© 2011 Stamats, Inc. - 43
If I Could Offer a Second…
2
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I would introduce the idea of centricity
•
Too often, our approach to the marketplace, to students,
to donors, and to messaging, is institutional-centric
– We (institutions) decide what our audiences want
•
Our audiences, however, are staging a mutiny
– They want a voice
– They want you to consider everything you do/are/offer from their
perspective and not merely yours
•
Some institutions—and the staff and faculty who work there—are very
uncomfortable with this idea
© 2011 Stamats, Inc. - 44
And Perhaps a Third…
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Carefully define the problem you are trying to solve
(or the opportunity you are trying to realize)
– The question is not: Should we offer online programs?
– The question is: What other audiences can we serve?
•
Create a rich constellation of ideas
•
Choose from that list
•
Swarm the ideas you wish to execute with resources
3
© 2011 Stamats, Inc. - 45
Decide…Then Do
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There is no research, none, zip, nada that says the longer we
take to make a decision the better the decision
•
In fact, there is a sense that decision cycles are actually
lengthening as colleges become increasingly wary of making a
mistake
•
Beckwith reminds us that pretty good decisions made in a
timely fashion are much better than endlessly searching for
perfect decisions that never get made
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Remember, in today’s marketplace, slow is a death wish
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Paralyzes the organization
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De-motivates the faithful
4
© 2011 Stamats, Inc. - 46
What Motivates Knowledge Workers
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What leaders thought: Recognition for good work
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What workers said: Making progress toward goals
Source: The January-February 2011 issue of the Harvard
Business Review “What Really Motivates Workers.”
© 2011 Stamats, Inc. - 47
Do
•
For many colleges, when all is said and done, more
is said than done
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Colleges have long-struggled with “doing”
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In Execution, Bossidy noted that his job at
Honeywell was to restore the discipline of execution
to a company that had lost it
•
“I'm an impatient person,” he said, “and I get
more satisfaction from seeing things get done
than I do about philosophizing or building sand
castles”
•
College need to (re)learn how to execute
•
Amar Bhide: “Hustle as Strategy”
© 2011 Stamats, Inc. - 48
Fly Wheels
Steps forward,
consistent with
Hedgehog Concept
Build-up
Accumulation of
visible results
Flywheel builds
momentum
People line up,
energized by results
© 2011 Stamats, Inc. - 49
Doom Loops
Disappointing
results
No build-up; no
accumulated momentum
Reaction, without
understanding
New direction,
program, leader, event, fad, or
acquisition
© 2011 Stamats, Inc. - 50
The good to great companies faced just as much
adversity as the other companies, but responded to that
adversity differently. They hit the realities of their
situation head-on. As a result, they emerged from
adversity even stronger.
Organizations are more likely to fail because of what they
do to themselves rather than what the marketplace does
to them.
Jim Collins – Good to Great and How the Mighty Fall
© 2011 Stamats, Inc. - 51
A Lesson From Katrina
•
One of the military leaders involved in the rebuilding of New Orleans
after Hurricane Katrina was Lt. General Russel Honoré
© 2011 Stamats, Inc. - 52
Key Area #1: Leadership and Governance
•
This is an extraordinary time to be a well-led college
– The issues, the opportunities, and the questions have never been
more compelling
•
At the same time, it is a terrible time to be a poorly led college
– Cannot gain agreement on the issues
– Cannot discern a course of action
– Do not have the political will for the tough decisions
– Too much focus on the financials
© 2011 Stamats, Inc. - 53
We will not be managed out of this crisis.
We must be led.
Managers manage within paradigms.
Leaders lead between paradigms.
© 2011 Stamats, Inc. - 54
Followers and leaders
both orbit around the
organization’s purpose;
followers do not orbit
around the leader!
© 2011 Stamats, Inc. - 55
Is everyone on your team truly rowing together?
© 2011 Stamats, Inc. - 56
Find Your Blue Ocean
•
It’s not about being number one in your market
•
It is about being the only one in your market
Blue Ocean Strategy
Red Ocean Strategy
•
Compete in existing
market space
•
Create uncontested
market space
•
Beat the competition
•
•
Exploit existing demand
Make the competition
irrelevant
•
Create and capture new
demand
© 2011 Stamats, Inc. - 57
Blue Oceans
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Abilene’s mobile learning
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Cornell’s One-Course-At-A-Time
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Berea’s teaching and work (service)
•
Culver-Stockton’s EXP@CSC 12+3 program
•
Hartwick’s three-year BA
•
Quinnipiac’s Professional Athlete Transition Institute
•
What is your blue ocean?
© 2011 Stamats, Inc. - 58
What you will look like in five years will depend on the
decisions, in light of reduced resources, that you make
now.
© 2011 Stamats, Inc. - 59
Key Area #2: Academic Programming
•
Manage the academic experience
•
Assess the marketability of your academic programs
•
Strive for curricular innovation
© 2011 Stamats, Inc. - 60
Manage the Academic Experience
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•
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Classroom experience (lab, theatre, etc.)
Advising
Availability of classes
Student-to-faculty ratio
Faculty-to-major ratio
Technology (wireless)
Quality of other students (cohort groups)
Facilities – smart classrooms
Faculty commitment to teaching
Faculty mentorship
Opportunity to work with faculty on
research
• Internships – co-op
• Graduate school placement
• Job placement (starting salary
implied)
• Honors
• Variety of classes within the program
(can customize program)
• Library (coffee bar, study space,
connectivity)
• Registration
• Transfer friendly (both to and from)
• Travel abroad
© 2011 Stamats, Inc. - 61
Assess the Marketability of Your Programs
•
•
Fine-tune your academic offerings:
– To increase share and tuition revenue
– To identify which programs to build/expand/add
Measures of quality and demand
– Quality indicators:
 Graduation rates by major
 Student satisfaction within major
 Job placement by major w/in six months
 Graduate school placement by major w/in six months
– Demand indicators:
 Prospective student interest in major
 Enrollment by major
 Estimate of unused capacity by major
 Job and employment trends
 Percentage of top-five competitors that offer this major
© 2011 Stamats, Inc. - 62
© 2011 Stamats, Inc. - 63
Strive for Curricular Innovation
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Offer a BA in four years
– We are increasingly looking at five- and six-year graduation rates
 What happened to earning a BA in four years?
 This would give you a significant advantage vis-à-vis the
publics
•
Shorten time to degree
– Three-year BAs
•
Combine degrees
– 3+2 models (and all their variations)
•
Refine your core
– In many cases, cores are too complex and unapproachable
•
5th-year specialty programs: Pre-med intensives
•
Foreign language intensives
© 2011 Stamats, Inc. - 64
Key Area #3: Recruiting and Financial Aid
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Undertake communication-flow mapping
•
Develop a segmentation strategy
•
Implement three strategies:
– High school relations strategy
– Alumni referral network
– Transfer student strategy
•
Conduct a comprehensive financial aid assessment
© 2011 Stamats, Inc. - 65
Key Area #4: Fundraising
•
This is an extraordinary time to raise money
– There is more wealth in motion than at any other time in our
nation’s history
– Big donors are still giving
– Smaller donors are still giving, though they are supporting fewer
causes more robustly
•
Five concepts/strategies/tools to help you raise money
– Develop a compelling vision
– Expand your giving base
– Customize
– Establish a giving pyramid
– Find your donors’ animating passions
© 2011 Stamats, Inc. - 66
Discover Your Donor’s Animating Passion
•
As a fundraiser, don’t tell donors how their gift will help you achieve
your campaign goals
•
Rather, show donors how your campaign will help them achieve an
animating passion they have
•
In many respects, it is less about you, and all about them
•
When you find their hearts, you will find their checkbooks
© 2011 Stamats, Inc. - 67
Key Area # 5: Integrated Marketing
•
Everyone is talking about marketing, but not everyone has a clear idea
of what marketing is:
– According to the AMA: Integrated marketing is an organizational
function and a set of processes for creating, communicating,
and delivering value to customers and for managing customer
relationships in ways that benefit the organization and its
stakeholders (2004)
•
Marketing is a whole lot more than promotion
•
Five solid marketing moves:
– Conduct a tuition pricing elasticity and brand value study
– Build a brand
– Focus on five key programs
– Integrate broadly
– Remember mROI
© 2011 Stamats, Inc. - 68
Price Sensitivity by Position in Choice Set
© 2011 Stamats, Inc. - 69
Integrate IMP, Recruiting, and Fundraising
Fundraising
Plan
Recruiting
Plan
Integrated
Marketing Plan
© 2011 Stamats, Inc. - 70
mROI
•
If you do not measure the effectiveness of your marketing strategy,
marketing will always be considered a cost and not an investment
Cost vs. INVESTMENT
© 2011 Stamats, Inc. - 71
© 2011 Stamats, Inc. - 72
What is YOUR third rail issue?
What will you DO?
© 2011 Stamats, Inc. - 73
Resources
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Burk: Donor Centered Fundraising
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Chaleff: The Courageous Follower
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Kim: Blue Ocean Strategy
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Leslie: Wise Moves in Hard Times
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Sevier: Building Brand Momentum
•
Sevier: Moving Ahead With Confidence (Occasional Paper, Stamats)
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Townsley: The Small College Guide to Financial Health
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Zemsky: Making Reform Work
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Van Der Werf: Chronicle of Higher Education: The College of 2020: Students
© 2011 Stamats, Inc. - 74