Pursuing Both Traditional and New Audiences at Branch Campuses

The theme of many of my posts over the past year has been that demographics, technology, and the preferences of adult learners are creating a disruptive environment in higher education. I've asserted that, for branches to thrive in the future, they need to orient strongly toward the changes I see coming: More of a focus on adult learners and delivering courses online or in a hybrid/blended form.

What if I'm wrong? The average age of students has decreased at many campuses, and reports are that more students attend full time. What if that trend continues? The cost of residential education means more students will choose community colleges or branch campuses, at least for part of their education, and these students may want to attend in the "traditional" way, coming to campus and taking classes face-t0-face. No doubt, some adults prefer traditional environments and find online courses intimidating.

Students who prefer a traditional approach may want access to services and student life programming, even though they are commuters, not residents. Or, for that matter, more community colleges and branches may add residence halls or apartments, providing students an opportunity that is somewhere between a fully residential, away-from-home experience and a commuter life.

Even if "traditional" branch programming continues to work well, there is no doubt that more people are seeking flexible programs, in the form of online and hybrid courses. These individuals will not come to their local branch, if such courses are not readily available. They will choose from one of the many options available to them. Over time, as students have better and better experiences with these courses, their inherent advantages will draw enrollment away from face-to-face, synchronous courses. Remember, every year, the proportion of adult learners comfortable with technology will expand, as generations age.

However, I'd point to something else as important to consider, right now. The potential students I have been writing about are not attending, today. They are nonconsumers. Specifically, they are mostly adults with some college, but no degree. By definition, they are not responding to your current marketing efforts. Doing more of the same kinds of marketing and recruiting you've always done will continue to attract the people you've always attracted. That means, you are doing a better job of marketing to a declining population. (The demographics are what they are. There are fewer 18-year-olds, but hundreds of thousands of nonconsuming adults, in nearly every state.)

Here's the punch line: If I am completely wrong about your current audience, and the advantages of branch campuses work well into the indefinite future, why not insure your success by targeting nonconsuming adults, as well? These are real people, who will be served by someone.

In a sense, if you expand online and hybrid options, you will have a more diversified portfolio of courses and programs that can aid recruitment and retention, all around. You will do a better job of serving your community, and you will take advantage of your good "brand" to better hold off competition from institutions that have not made a powerful commitment to serve the local population. In short, you will see greater net enrollment and more revenue, supporting still more program expansion in the future.

It is a no-lose proposition, provided you empower a part of your institution to focus intensely on nonconsumers, following the principles of entrepreneurial growth in a disruptive environment. (What you cannot do, successfully, is pursue nonconsumers with the marketing/recruitment techniques that work for your current audience. Offering some online courses, but in a non-programatic way, will not work, either, in my opinion. It isn't about offering some online opportunities, but taking a thoughtful, systematic approach to recruiting and serving a new audience.)

One principle that I rarely see followed in higher education is to manage various programs and audiences as a business might, recognizing that we have multiple lines of business that can be independently pursued. If we pursue multiple, nearly independent program lines, we have a chance of succeeding in all of them. For sure, though, we will be more diversified and likely to see some of our activities thrive, during times when others are struggling. I'll say more about this idea of managing multiple line of business in a future post.

Taking Advantage of Growth at Branch Campuses

So, you lead a branch campus, and enrollment is up. That's a good thing, right? Revenue should be increasing, you'd expect to be adding courses and sections, maybe considering adding to your full-time faculty, perhaps adding support services, and so on.

For a surprsing number of people I encounter, things are more frustrating than that. Some campuses, like ours at Ohio University, are independently funded. They pay an overhead to the main/home campus, which may increase as branch revenue increases, but they are in a good position to invest for more growth. Many others, however, operate on an "expenditure budget," in which they receive an allocation in the same way that main campus academic units probably do. A likely result is that increased branch campus revenue is disproportionately consumed to offset institutional budget challenges. The opportunity to add branch courses and programs, never mind services and faculty, is very limited.

In my opinion, even well-intentioned leaders remain bound by a sense of mission or priority that interferes with a deep understanding of entrepreneurial higher education. I heard a great comment the other day: If you don't understand your market and serve it effectively, you will lose the opportunity to pursue your mission. In the end, no matter how deeply institutions may be committed to their traditional mission, they need to empower units that can generate growth, in order to thrive. To me, that means unleashing the potential of branch campus and online/hybrid programs, among other things.

In these times, I cannot argue that branch campuses should keep all the revenue generated by growth. Branches, by definition, depend on main campus support for their own success. However, if an institution is prepared to invest in branch campus growth, there are some things I encourage and things I discourage.

On the "discourage" side, I would be loathe to invest in more space. Buildings at branches create more infrastructure cost that will hurt their ability to compete against the types of new approaches about which I've written before. To be sure, there are situations where construction makes sense, but the bar should be set very high.

In addition, I would be cautious and thoughtful about adding services. Student support services are critical, but institutions should keep close watch on which services make a difference to their students. If a service contributes to recruitment and retention--and you have the data to document that fact--then it is valuable. Too often, however, campuses invest in services that either go unused or make almost no difference to student success. Don't get caught up in someone's passion for providing a service, in the absence of evidence that the service makes a difference, or because it represents something he or she personally considers to be "part of what a college or university just should do." Keeping a thoughtful, critical eye on services is important to staying competitive, yet cost efficient.

On the positive side, growth creates a wonderful opportunity to expand student options. Students today are shoppers. If you can add sections of courses at different times of day or days of the week; if you can offer some online options, in addition to your traditional classes; if you can offer additional choices on general education courses; all of these may attract or retain still more students. As with services, an efficient, but attractive student-oriented schedule is likely to pay dividends.

What about adding more programs? Well, it depends. In my experience, most degree program additions do not significantly add to enrollment, unless they are specifically attractive to current nonconsumers. So, for example, if you offer an English major and choose to add History, I'm all for it, if you have the resources. However, you probably won't see much net new enrollment from expanding more or less related programs, whereas you will add some cost for courses you weren't previously offering.

On the other hand, if you do not have a Nursing program and you add one--you probably will attract students you currently miss. (Of course, the sheer cost of Nursing courses may not make this a great idea.) Similarly, we have sometimes found it necessary to offer what I call a "surrogate" for the major we really want: say a communication major with a business minor, instead of a specific business major. If growth allows adding the program students most prefer, there should be at least a modestly positive impact on enrollment, and the community service provided will be recognized and appreciated.

Investing in marketing may be the single most important use of new resources. In this area, I include stepping up your market research to support deeper understanding of both your current markets and whatever new opportunities may be out there. Strengthen your web sites, start exploring applications of social networking, and step up how you tell your story. You have an opportunity to expand awareness of your brand, as well as to target-market individual programs. Maybe you can use some money to invest in and take advantage of a quality CRM, so that you can better communicate with prospects. Whatever you do in this area, make sure your decisions are strategic and be serious about assessing the effectiveness of every single activity.

If your campus is growing, I hope you are able to invest to support the growth you've achieved and to encourage still more growth. It is a smart institutional investment, and it can support expanded access and opportunity for students. Make thoughtful, strategic, data-based decisions, however. You still are trying to get at current nonconsumers, and you surely have things to learn about your specific opportunities and the activities that will matter the most.

As always, this can be a golden age for branch campuses, if leaders recognize the trends and changes that students of the future are seeking. Those branches that continue with the same old, same old will see their enrollment start to decline, within the next five years. Growth has given you a chance to ride the wave, so go for it!

2014

If you are willing to accept what I've written about changes coming to branch campuses, then what should you do to make sure that your campus thrives? Timing is important here, as part of a strategy to respond to emerging competition.


So, let's start with a target year, in which I believe most adult learners, at least, will be choosing online and blended programs over traditional, campus-based programs. That year will be 2014, five years from now. How do I know that? Well, I don't, to be honest. Christensen mentions 2014 as a tipping point for online education, but in a different context. I've seen other references to that approximate time, and it simply feels about right to me.

The most important reason to choose 2014 is that it is far enough away to allow responsive institutions to make adjustments, but it is close enough to (I hope) raise anxiety, if you aren't engaging, yet. A good friend, with good judgment, said to me recently that he believes online education will be the dominant mode of delivery for adult learners in about 10 years. I think that is definitely much too far out. If you agree with my friend, please let me know. I want to come after your students!

I have also heard a number of people say things like, "We just aren't ready, yet. We can't afford to develop the classes, our faculty are resistant, and our audience prefers traditional classes." I understand that reaction, and most of it may even be valid, but it could indicate that your campus is going to be in trouble, by 2014.

To me, 2014 suggests that there is still time to start development of courses and programs in a strategic way. If you aren't active, yet, it will take you two or three years to get things rolling. A lot of institutions are ahead of you, but a lot aren't. The days of just putting something out there and generating lots of revenue are over, anyway. The "second wave" is coming, which will be much more niche oriented, focusing on high quality services, using technology in ways that are engaging and highly supportive, and making use of new business models that are keyed to this disruptive environment.

If you wait two or three years, then start development, you will be out of luck. Other providers will be in your market, and if they are providing the right programs and services, at an attractive price, there is no reason for students to switch. Most recruiting will occur by word of mouth and other low-cost marketing strategies, making it difficult for you to attract attention, especially from current nonconsumers.


Here is my advice: If you are just getting started in the development of online and blended programs, then create a team that will get up every day thinking about the audiences, programs and services that need to be developed. Study other institutions, to consider how they are approaching things. Spend a lot of time on the Internet, just looking at sites, mining them for ideas.

Continue being a cheerleader for your existing programs. Institutions don't necessarily need a lot of money to make this transition, but I strongly advise reinvesting any new revenue from outreach or branch programs in the further development of those programs. Further, you need a revenue sharing model that provides incentives for academic units to participate. If you can keep some staff focused on taking care of your current students, and on prospective students who resemble them, then you will be giving yourself time to develop the new programs and services that will attract nonconsumers.

Make sure you and all the other people involved in new program development are concentrating on nonconsumers. It isn't the students you currently serve and understand that are key. It is the students who are going to competitors or not enrolling at all that are the long-term target. As part of this focus, make sure you understand which programs cause the ears of nonconsumers to perk up, as well as which services they find valuable and how they want to engage with you (through email, IM, telephone hot line, etc.).

I'm expecting services to be even more important in the future, because you have to be very cost conscious and prepared to pass reduced costs on to students. No stadiums, no library, no health center, no student union, if your target audience isn't interested. If your existing students value these things, then that's great, but for the new audiences, you are seeking to be competitive on cost. These folks are much less likely to believe that your program is better than someone else's because it costs more. On the other hand, if your program is a better fit for their interests, and your services have a reputation for excellence, then they probably will pay at least a little more than competitors charge.

Finally, rethink geography. Branches often have a defined service area for their traditional programs. With online and blended programs, however, distance is less of a barrier. If most commuter students see 30 miles as approaching the limit of how far they will drive, 50 or 100 miles is no big deal for courses that meet on a limited number of occasions, during the term. One might think that fully online programs have no geographic limitations, but in my opinion that probably does depend on brand recognition and the uniqueness of your program. It may be difficult, for example, to differentiate your online AA degree from someone else's, when so many are available, at comparable prices.

Bringing in the Nonconsumers

Extending the discussion from my previous post, it seems to me that online education will change the nature of competition in higher education. We are approaching a tipping point, where the quality of online learning, new business/financial models, and the comfort level that prospective students feel will make traditional face-to-face classes less attractive, at least for many adult learners.

Recently, I saw a study of adult learners in Ohio, who had previously attended a higher education institution, but not graduated, and were not currently enrolled. These individuals, age 35 or younger, overwhelmingly preferred online or strongly blended/hybrid courses, as an attraction for returning to school. Less than 8% of the responders indicated that they would prefer a traditional campus-based program delivery.


Although I hope that branch campuses will be more responsive than many other types of institutions to this audience, I also foresee new providers coming along and profoundly changing the competitive landscape. Someone (not me, but I can't remember where I saw or heard this) referred to a "second wave" of online providers that is developing. This second wave will include large and small public institutions, private nonprofits, and emerging for-profits. The second wave will employ a different financial model than "first wave" institutions, and it is a model that will be disruptive.

To paint a picture of what I see coming, let me be clear that I am focusing on nonconsumers--those individuals with some college, but no degree, or those individuals who never attended. What will attract these nonconsumers, however, also will attract other adult learners and at least some traditional aged students.


If you consider my previous post about disruption in higher education, and some of the challenges created by the revenue requirements to operate a traditional campus, there is a huge door though which new providers can walk. To the extent that a traditional branch has an expensive infrastructure and is overshooting the real interests of students, a model that squeezes out costs and passes the savings to consumers, rather than to stockholders or a main campus, could deliver programs at much reduced tuition and still be profitable through increased enrollment (volume).

My ideas in this area were influenced by a fascinating book, called The Fortune at the Bottom of the Pyramid, by C. K. Prahalad. I won't try to explain the concepts of that book, but I do recommend it for those who are interested in strategy. Thinking about how disruption might occur, and linking it to new business models led me to the following points.


First, to be successful in the "new online era," an institution will have to provide those programs that meet the perceived needs of adult learners. If it provides other programs at all, they will have to be in demand by other populations. Otherwise, the institution will be carrying expenses that will hurt its ability to compete. Because online options trump any protected geographic service area a branch may have, if the branch does not provide the right programs, someone else will.

Second, the institution needs to squeeze out unnecessary costs. Investment should be in the "product"--the courses and programs--and in support services for students and faculty. Marketing approaches need to be targeted in such a way that the costs are not nearly as high as most first wave institutions spend. (Effective, lower-cost marketing strategies are beginning to emerge.)

Third, cost savings should be passed on to students, pushing down the price to attend. Most instituions, if anything, do the opposite, and they are stuck, because they need the revenue to cover fixed plant and nearly fixed staffing costs. An aggressive competitor, as long as it covers its actual costs, while maintaining some "profit" margin per student, could (I believe) charge far less than most institutions and still provide high quality programs and services.

Fourth, a key to making this work is to be able to scale enrollment to much higher than common levels. You probably are familiar with the notion of "unpacking" the role of the faculty member. Institutions that build scalable programs create efficient processes for course design and development and use facilitators or coaches to work directly with students, under the supervision of a faculty member/content expert. The result is significantly reduced cost per credit hour, as enrollment increases. Thus, the business model can allow for strong financial performance at much lower tuition. (First wave institutions tend not to charge lower tuition, hence their own vulnerability to future competition. A big issue for them is their very high marketing costs!)

I know this is a sketchy presentation, but companies and institutions are out there developing this strategy. I see the change in pricing as opening up the market, with rapid effects that will start to overcome the brand advantage that existing institutions tend to rely on. If I'm right, things will change very quickly, once the tipping point is reached.


So, if I were advising a traditional branch camps administrator, what can he or she do today that will be helpful? First, I'd say, "Don't overshoot what your students value." In other words, take a hard look at costs and push them down, at least as they affect the population of students I am focused on here. Second, be very careful about plant costs, services provided, and the mix of continuing and adjunct faculty. Services should concentrate on those that are highly valued by most students. Third, start working now to incorporate online and blended courses in your curriculum, partly to provide greater flexibility to students. If you have a strong brand identity, use it, but in the end, if I am correct about the aggressive pricing of second wave institutions, brand won't likely overcome price for most campuses.


Repositioning a traditional, full-service branch, in anticipation of new forms of competition is surely a difficult challenge under the best of conditions. That, I fear, is yet another reason that campuses could be vulnerable to new competition!