When you market curriculum to students and parents, metrics can overwhelm you. But there are some essential pieces of information that all education marketers should follow over time. You may have a good handle on some, and others could require a mental leap, but tracking them will make a difference in how you look at your school’s success and how management views your results. Most importantly, these metrics will help you to better allocate your resources in order to grow your enrollments over time.
1) Web metrics
The web is where most customers start to engage with your content. Web analytics has a long list of metrics to analyze, but you’ll want to focus on click-through rates, cost per click, unique visitors and conversion rates to show your website’s ability to bring in new prospects.
To determine your content’s “stickiness”, track bounce rates, return visits and average time on site. Be careful not to put too much weight on bounce rates as sometimes your prospects will want to view one demo and leave your site. This is fine as long as your high bounce rates are coupled with a long average time on site.
2) Gross new enrollment, net new enrollment and conversion rate
Keep track of new students, but make sure to break these out by who has finalized enrollment and who has not. A historical ratio between these is very useful for estimating future net new students. Breaking down these ratios by marketing source allows you make estimates like this: “If I mail 10,000 pieces and get a 2% response rate for 200 gross new students, then based on the historical conversion rate for mail of 60%, I can expect 120 net new students in school from this promotion.”
3) Gross and net enrollment
You always need to know your gross and net enrollment. If you have 2,000 students, but 600 haven’t finalized their paperwork or paid for classes, your managers may count on revenue for 2,000 enrolled rather than 1,400 (believe me, I’ve been in this situation and it’s not pleasant when the truth comes to light). With the historical conversion rate in hand from 2), you can estimate your net enrollment by the time all 600 non-finalized enrollments go through your operations department.
4) Revenue per student
If you start to notice a large drop in revenue per student, it may mean big changes in how you report on net enrollment. For example, let’s say you sell a course for $1,000 per year (or receive that much in state funding if you’re a charter school). That means your 5,000 students will earn you around $5 million this year. But if group sale closes at $200,000 per year for 500 new students (or if you’re a charter and you start signing on more part-time students), your revenue per student drops to $945. Management may expect $5.5 million in revenue with the increase in enrollment, but you’ll only get $5.2 million.
Keep track of average revenue per student. If it drops significantly, it may be time to track various groups of students separately so that your company will know how much revenue to expect in the coming year.
5) Free trial conversion rates
When you offer a free trial to your curriculum by letting prospects test-drive your courses, you need to know how many leads who take a trial will eventually enroll in revenue-generating courses. This ratio will show how many free trials you need to generate in order to meet your enrollment goals. If you need far more trials, you have data to support a budget increase to attract new prospects.
6) Renewal and conversion rates
Conversions can mean two things, and for that reason I refer to “free trial conversions” separately. A proper conversion is a first-year renewal. Students who have only enrolled in your curriculum for one year will renew at a much lower rate than after they make it to their second year. This can be important in projecting enrollment beyond one year and for developing different strategies to keep first-year students interested.
7) Student and parent satisfaction
Satisfaction is one of the few metrics not affected by economic turmoil or other outside factors. It benchmarks how well your school meets student and parent needs, and starts discussions between marketers, curriculum writers, teachers and school administrators about overall school improvement and business strategy. Breaking down satisfaction by feature will show where your school underperforms, and where it overachieves.
8) Student referral rates
How often do your students refer friends to your school? Word of mouth is a powerful form of marketing, but oftentimes we fail to explore how it works. Knowing referral rates is a great indicator as to the health of your school and can help you target more valuable students in the future.
9) Lifetime value
When a student enrolls for one year at a value of $1,000 per year, we sometimes forget that there’s more return than this. A student could re-enroll 4 years in a row, generating at least $4,000 over time for your school. Also, referrals can push lifetime value even higher.
Because lifetime value presents such a challenge to all marketers, I’ve included some formulas. But you’ll need to know conversion rates (first-year re-enrollment rates), ongoing renewal (re-enrollment) rates, the propensity of subscribers to refer colleagues (perhaps from a survey) and, if possible, the internal rate of return demanded by your business.
Step 1) Figure out the average lifetime of your students – ie. how long will they spend in your program
(1 – conversion rate) + [conversion rate x (1 + 1/(1 – renewal rate))]
Let’s say you have a 50% conversion rate and an 80% renewal rate. That means 50% of students drop after one year. The other 50% renew at a rate of 80% for their remaining life cycle, meaning they stay for five more years (six years in total since they already converted after the first year). So, of 100 students, 50 stick around for a combined 50 years (1 year per student) and 50 stay for a combined 300 years (6 years per student). 350 years / 100 students = average lifetime of 3.5 years.
Using the formula above…
(1 – 50%) + [50% x (1 + 1/(1 – 80%))]
(0.50) + (0.50 x (1 + 5))
(0.50 + 3) = 3.50 years per student
Step 2) Average value of a student without referrals
At a value of $1,000, you could take 3.5 years x $1,000 and conclude that the average value of a student is $3,500. But you should discount future values by your company’s internal rate of return, which is typically the average return on equity for your company (values usually range from 5% to 20%).
∑ (1 thru n): Price / [(1+R)^n] where R is the internal rate of return.
Assuming R = 10%, the first year would be valued at $1,000, the 2nd at $909, the 3rd at $751, the 4th at $683. The total lifetime value would be $1,000 + $909 + $751 + $683 x 0.5 (only 3.5 years per subscriber, not 4.0) = $3,001.
Step 3) Add referral revenue
If you find that your 100 students each refer an average of 0.2 net new students in a year, then take $3,001 and multiply it by (1 + 0.2) = $3,600.
In sum, any brand new student to your publication is worth an average of $3,600 over her lifetime, not just the $1,000, first-year-subscription price.
10) ROI – Return on Investment
A simple return-on-investment calculation takes the revenue generated from a specific campaign divided by the costs of that campaign. Revenue generated is NOT lifetime value because the promotion you sent is only responsible for whatever revenue the student brings in at that time. Therefore, if a direct mail piece costs $10,000 and yields 20 students at $1,000 per year, you have a $2.00 ROI. Anything over $1.00 is considered profitable as all curriculum development and salary costs are sunk by the time you send a promotion.
11) ROMI – Return on Marketing Investment
Because ROI is specific to a single promotion, management needs ways to gauge the effectiveness of your overall enrollment strategy. Return On Marketing Investment (ROMI) takes into account all possible marketing returns vs. all costs.
For example, in September if you spent $50,000 on salary, $50,000 on promotions, $20,000 on customer service and fulfillment and $10,000 on re-enrollment efforts, and you incrementally brought in 50 new students with a lifetime value of $3,600, your monthly ROMI would have been (incremental revenue – total marketing investment) / total marketing investment, or ($180,000 – $130,000) / $130,000 = 38%. Not bad.
To conclude, a few of these metrics may prove challenging to report on. But with greater focus on results, business owners and managers will want to know how much their students are worth over a lifetime and need an overall return on marketing investment. And in all marketing analysis, it is better to have approximate answers to pertinent questions than exact answers to irrelevant questions.