The Neglected "P" in Higher Ed Marketing - AMA 2013

Welcome

The Neglected “P” in Higher Ed Marketing: Strategic Pricing for Student Recruitment

2013 AMA Symposium for the Marketing of Higher Education

11/12/2013

Why Lipman Hearne?

Tom AbrahamsonChairman, Lipman Hearne

[email protected]

Lipman HearneMarketing for visionary

organizations

4Lipman Hearne | Southern Illinois University

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Nearly 12,000 Students Said…

SOURCE: Lipman Hearne 2013

Lipman Hearne | Southern Illinois University

How many “P’s” are you working with?

DO YOU THINK PRICING IN HIGHER EDUCATION IS

MESSY?


Pricing Situation• Approximately 80% of all freshmen in 2012 received some form of financial

aid • Nearly 90% of students who attend private college receive some sort of aid

or discount • 54% of private institutions increasing tuition discount (record high)• 42% of public institutions increasing tuition discount• Have you ever seen an institution publish its tuition discount rate?

(Moody’s, 2012)


THE GAP BETWEEN STICKER AND SALE PRICEIS VAST


MOST THINGS WE BUY = 0% DISCOUNTCAR DISCOUNT = 5%-15%

HOME DISCOUNT = 0% - 10%COLLEGE DISCOUNT = 25% - 60%

HOW WE PERPETUATE TWO MYTHS OF

PRICING


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Myth #1: College Costs are Skyrocketing


SOURCE: The College Board, Trends in Student Aid 2013

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Myth#2: Stop Out and Save Up

SOURCE: The College Board, Trends in Student Aid 2013, Figure 11A


Distribution of Outstanding Education Debt Balance

<$10,000 - $24,999 $25,000 - $99,999

$100,000 - $200,000+

Average loan: $28K/10 yearsMonthly payment: $322Salary required: $35K

4 Ways to Provide Pricing Leadership1. Leverage and segment

a. Leverage data on students’ ability and willingness to payb. Develop a need and academic segmentation strategy and tailor

communications to those segments2. Add to your institution’s “profit”

a. Devise a pricing strategy that fills capacity and builds enrollment in programs that have the highest contribution margins

3. Be ready with a position on radical price adjustmenta. Determine if a reset is right for your institution by conducting benchmark

research to understand its competitive pricing among peer institutions4. Brand: understand and improve your college’s perceived value

a. Conduct research on perceptions and price elasticityb. Institute branding efforts to elevate value and enhance communications

around tuition increases and discounts


Case Study:Southern Illinois University

Terri [email protected]

Abbey [email protected]

SIU Profile• In Carbondale IL• 18,000 students• Carnegie: “high research” university• 50 states and 92 countries represented• $291 MM total financial aid administered• 88% of SIU students receive some type

of aid• 42% Pell eligible• 39% of 2013 freshmen African American

or Hispanic• 45% first generation• Destination draw campus


Financial Aid for MarketersFundamental aspects of financial aid a marketing professional should know:• Cost of Attendance = COA• Estimated Financial Contribution = EFC• COA and EFC are consistent at every

institution• Difference is the price of institution and

awards they offer• Need-based versus need blind


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SIU Financial Aid


SIU’s financial aid program before the redesign• SIU only had enough aid for a set amount of students • SIU over-awarded by 2:1 but aid was exhausted in

early March• Communications drove students to website to find aid

amounts

SIU’s financial aid program after the redesign• SIU partnered with Lipman Hearne and Williams & Co.• A shift in funding allowed student’s offer to be partially

need-based and partially gift aid• Revised communications included the shopping list

and scholarship and institutional aid available

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SIU’s Scholarship ProgramBefore redesign: • Offers made only through February• Awards renewable for only one year led to

self-manufactured attrition• Misaligned to SIU’s access and retention

goalsAfter the redesign: • Increased award value and extended awards

to four years• Increased the number of students interviewing

for scholarships• Created new programming and premium

experience for scholars• Service requirement = 254 ambassadors


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2013 Results• Merit-based award increased five times

over prior year• 780 scholars enrolled in 2013 vs. 148 in

2012• Overall ACT score increased one full point• Revenue boosted due to increased

enrollment• Freshmen in Honors Program tripled• SIU met 94% of Need• 50% was Gift Aid• SIU enrolled its largest freshman class in

20 years


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2014 Year-to-Date• Off to a great start!• Meeting yields and goals• SIU has delivered three times the scholarship

offers compared to this time last year


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Suggestions for Collaboration• Understand FA process/undergo training • Get to know your financial aid office staff –

they are typically an untapped resource for marketing and messaging

• Set joint goals and measure progress• Work as a team to examine metrics,

results, and implications


Discussion

Copyright 2013

Thank you.