Seven Habits of Highly Effective For-Profit Colleges: What traditional colleges can learn from for-profits

Point-of-View appeared in University Business on 2/1/2011.

For-profit colleges have been under congressional scrutiny because they appear to be underperforming in enrollment, academic quality, and college loan repayment. I lead a company at the forefront of marketing traditional colleges, and our team believes that—regardless of the outcome of these investigations—traditional colleges and universities can learn some powerful lessons from the meteoric rise of their for-profit brethren. Here are seven of those lessons.

1. Embrace online channels

If you have searched lately for academic programs on Google, Yahoo!, or Bing, you are probably amazed at the dominant presence of University of Phoenix, Kaplan, Walden University and other for-profit colleges. For-profit colleges, with the intent of following their potential students, have moved the lion’s share of their marketing investments away from traditional channels toward online channels.

For instance, according to the June 9, 2008 issue of Advertising Age, University of Phoenix’s 2007 marketing budget was a whopping $222 million, with the largest share devoted to online marketing.

In contrast, many traditional colleges are still hanging on to ways of doing things that once worked, but certainly don’t anymore. Expensive direct-mail campaigns, television ads, billboards and viewbooks continue to be the staples of traditional college marketing. But all respectable polls from Pew, Harris, and Noel-Levitz clearly indicate prospective students are using the internet to make their college choices, and are largely ignoring old-style marketing.

We recommend traditional colleges, just like their for-profit counterparts, begin investing large portions of marketing budgets in interactive touch points, including web, search engine marketing, social media marketing, and relationship marketing. It will certainly yield a better return on investment.

2. Respond to mega-trends

There are two trends for-profits have embraced but traditional colleges are still struggling to accept.

First, demographics clearly indicate the conventional 18- to 22-year-old, four-year college student makes up only a small portion—less than 25 percent—of total college-bound students. More than 70 percent of new students are nontraditional or adult students.

The rapid rise of for-profit colleges is a direct result of traditional colleges’ failure to meet the special needs of nontraditional students. If traditional colleges decide to take care of this segment’s special needs—such as flexibility, service, and mature cohorts—they stand a good chance of deriving benefit from the sheer number of adult students.

Second, new students entering college are quite comfortable with online learning paradigms. They are exposed to it as early as preschool and interact with online learning at home, school, work, and in the military. For-profit colleges have accepted that hybrid learning is here to stay, and routinely deliver their curricula in online and hybrid formats. It’s time traditional colleges embrace online and hybrid learning.

3. Invest in technology infrastructure

Colleges must invest more in technology infrastructure if they wish to deliver what new students are demanding: online and hybrid learning.

For-profit colleges understandably spend more than 10 percent of their operating budget on technology infrastructure; in contrast, a traditional college spends less than 3 percent. Without investing adequately in this area, traditional colleges don’t stand a chance at capturing their fair share of the adult market or the respect of traditional students.

4. Innovate the curriculum

Traditional colleges have had a tough time balancing the dual goals of education: preparing students for professional careers and creating critical thinkers. Most for-profit colleges are biased toward professional development, so they will quickly create new courses to match current employer needs.

We believe traditional colleges have a competitive advantage in creating critical thinking skills. At the same time, they should follow their for-profit counterparts for ideas on modernizing their professional curricula.

Traditional colleges’ timeless liberal arts courses do an excellent job teaching important critical thinking skills. These classes need to stay intact. The structure should be modified, however, to quickly adapt the rest of the courses—those designed to provide practical knowledge. Preparing students for degrees in medicine, education, engineering, design, business, media, and more means teaching them how to use current technologies.

5. Go beyond conventional metrics

Metrics such as student achievement, student-to-faculty ratio, faculty load, and brand exposure have long been the measure of excellence at traditional colleges.

For-profit schools, however, have supplemented conventional metrics with new performance metrics. By understanding cost-per-lead, revenue-per-student and profit margins, for-profit colleges are quickly measuring their operational performance and making go or no-go decisions.

Today’s economic reality means traditional colleges can no longer make decisions without considering the impact on the bottom line.

6. Create an agile culture

Traditional colleges tend to move slowly because of organizational hierarchies, consensus-based decision making, and academic traditions.

For-profit colleges have organized themselves to become more agile by eliminating some hierarchies, making fact-based decisions, and creating autocratic democracies.

Traditional colleges must follow suit.

7. Excel at customer service

For-profit colleges tend to treat students like customers. They have created enrollment counselors, financial counselors, concierge services, and policies to serve students on a timely basis. Classes are often scheduled to accommodate students’ needs, rather than the convenience of professors.

With the proliferation of ranking and rating websites such as studentsreview.com, ratemyprofessors.com, and ratemycollegedorm.com, traditional colleges with good service can make substantial gains in reputation.

Back in 1997, legendary management consultant Peter Drucker made this statement: “Thirty years from now, the big university campuses will be relics. Universities won’t survive. …Higher education is in deep crisis.”

If institutions implement these suggestions, they can prevent Drucker’s prediction from becoming a reality.

Abu Noaman is CEO of Elliance, recognized as one of the world’s Top 10 interactive agencies by IMA. The Elliance Higher Education Marketing practice team challenges college presidents and cabinets to embrace a highly integrative approach to achieve enrollment, advancement, and reputation goals in the interactive age.